The reciprocal tariffs announced by US President Donald Trump seem to be sinking in among industry stakeholders in India, with many agreeing with the Union government’s take that the tariffs are “not a setback”, but a mixed bag.
India’s Ministry of Commerce and Industry said it is “carefully examining” the implications of the various proclamations made by Trump. It added that discussions are ongoing between Indian and US trade teams for speedy conclusion of a mutually beneficial, multi-sectoral bilateral trade agreement.
On April 3, the US announced 27 per cent reciprocal tariffs on India saying that New Delhi imposes high import duties on American goods. Trump’s move aims to reduce America’s trade deficit and boost manufacturing.
However, essential and strategic items such as pharmaceuticals, semiconductors, lumber, copper, gold, oil, gas, coal, and certain minerals that are not available in the US have been exempted from the tariffs.
Here’s how industry stakeholders have reacted across different sectors:
Agriculture: shrimp exports to be impacted
Industry stakeholders said the additional duties are expected to raise the effective tariff barrier on Indian shrimp exports to nearly 45 per cent, which could hit shrimp shipments to the US. Until now, the US imposed a tariff of around 8 percent on shrimp imports from India, whereas India imposes a duty of over 33 percent.
Besides, a lower tariff of 10 percent imposed on Ecuador, which is also one of the major shrimp exporters to America, will be a cause of concern for Indian shrimp producers. “Ecuador also has a logistical advantage as it is located close to the US, even as India has bulk handling capacity and better packing quality,” said Gulrej Alam, General Secretary, Shrimp Feed Manufacturers Association of India.
In case of rice exports, though the US tariffs have gone from 9 to 27 percent, India maintains an edge against Vietnam and Thailand as their tariffs are even higher.
Diamonds: call for lowering tariffs
The new tariffs will hit India’s diamond exports to the US, which surpassed $9 billion in FY24. Colin Shah, Founder and Managing Director of Kama Jewellery, which is into diamond trading, called it a big setback for the sector.
“The gems and jewellery sector will be the most affected as import tariffs may go up to 20 percent from the current 0 percent on loose diamonds, and 5.5-7 percent on gold jewellery. The US is one of India's largest jewellery markets, accounting for almost 30 percent of the share exports,” he said, urging the Indian government to look at lowering tariffs on US goods exported to India.
Rajesh Rokde, Chairman, All India Gem and Jewellery Domestic Council (GJC), feels a lot depends on how India responds to the situation. “The gems and jewellery sector, with its reliance on global collaborations, faces challenges that call for strategic foresight,” he said.
Textiles: tariff competitiveness an opportunity
While Trump has announced plans to impose 27 percent reciprocal tariffs on India, its main competitors in the apparel and textile sector—China, Bangladesh, and Vietnam—face levies of 34, 37, and 46 percent, respectively. Hence, India's textile industry is looking at this as an opportunity.
According to a March report by Emkay Global, the US accounted for about 28 percent of India’s textile exports in FY24, amounting to $9.6 billion.
Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council (AEPC) highlighted that other apparel exporting nations could have an advantage over India.
“Trump’s policy gives a tariff-based edge to Brazil, Turkey, and apparel-exporting EU countries like Italy, Germany, and Spain. But it is definitely an opportunity for us, given the intrinsic strength of the Indian apparel sector, with its complete value chain and impressive range of offerings.”
Auto parts: hopeful of a positive trade agreement
The 27 percent tariff will not apply to auto parts and aluminium products, and these sectors will still attract the 25 percent tariff that Trump had announced earlier.
Industry stakeholders said the actual impact on Indian suppliers will hinge on talks between the two governments on whether exemptions could be sought for more export items, as has been the case for pharmaceuticals.
“We remain hopeful that ongoing negotiations between the Indian and US governments will lead to a balanced resolution that benefits both economies. We believe that the strong trade relationship between India and the United States, especially in the auto components sector, will encourage continued dialogue to mitigate the impact of these measures," said Shradha Suri Marwah, Chairman and Managing Director of Subros, an auto parts maker.
Alcohol: Ensure level playing field against imports
The Confederation of Indian Alcoholic Beverage Companies (CIABC) said the industry is already at a disadvantage compared to manufacturers from developed countries due to high capital and operational costs, evaporation losses, and restrictive licensing regimes.
“We believe that India and the United States should continue to engage in bilateral trade discussions to achieve a mutually beneficial and equitable outcome across all sectors. CIABC, which represents the Indian alcoholic beverage industry, has always advocated safeguarding the Indian industry to ensure a fair and level playing field against imports, whether from the US or any other country,” it said in a statement on April 3.
Electronics manufacturing services
The relatively lower tariffs imposed on India could boost the country’s electronics ecosystem, making it a more attractive exporter than its Asian peers.
“India is favourably placed in the first round of reciprocal tariff announcements, especially compared to key electronics export competitors like China, Vietnam, Thailand, and Indonesia,” said Pankaj Mohindroo, Chairman, India Cellular and Electronics Association (ICEA).
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