India-US trade deal to offer relief to a third of exports hit hard by 50% tariff: Moneycontrol analysis

Textiles emerge as the most vulnerable segment for Bangladesh and Pakistan

• India-US trade deal cuts tariffs on Indian exports from 50% to 18%
• Nearly one-third of India's exports to US were hit hard by previous tariff hike
• Exporters in affected sectors expect revival as price competitiveness improves

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The India-US trade deal is expected to provide relief to nearly one-third of India’s exports to the US, which were sharply hit after Washington imposed a 50 percent tariff, a Moneycontrol analysis shows.

Tariffs on New Delhi are expected to decline to 18 percent, US President Donald Trump announced on February 2 after a phone call with Prime Minister Narendra Modi. The US deal comes days after India had signed a deal with the EU, which the leaders had termed as “mother of all deals”.

Between September and November, India exported close to $19 billion worth of goods to the US. Of this, more than $6 billion worth of exports—almost a third—recorded a year-on-year contraction of over 30 percent following the tariff hike.

In aggregate, exports over the three-month period amounted to nearly $4 billion, with several labour-intensive and commodity segments seeing shipments virtually collapse.

Some categories came to a complete halt. Basmati rice exports to the US dropped to zero, compared with $83 million worth of shipments during the same period a year earlier. Pomfret exports also fell to negligible levels, while maize and corn flour shipments suffered a similar decline.

The impact was particularly severe in gems and jewellery. Non-industrial diamond exports plunged 96 percent, falling by $156 million to just $14.4 million after the tariffs came into effect. Cut and polished diamonds—among India’s largest export categories to the US—saw shipments decline 74 percent, despite accounting for nearly $1 billion in trade during the September-November period last year.

Several food and consumer categories also recorded steep contractions. Dried pasta exports fell 70 percent, while gold jewellery shipments declined by nearly 50 percent. Exports of black pepper, tea bags and battery chargers were also down by about half compared with the previous year.

Winter-season apparel was not spared. Woollen jackets and blazers, typically in high demand during the September-November window, recorded a 35 per cent year-on-year decline, reflecting their high price sensitivity to tariff shocks.

Not all segments were adversely affected. Electronics exports remained resilient, with smartphone shipments rising 217 percent during the period, while personal computer exports jumped more than 400 percent. These gains highlight the relative insulation of certain categories from tariff actions and the benefits of ongoing supply-chain diversification.

India’s total exports to the US fell just 1 percent from the previous September-November period.

With the trade deal now in place, exporters in the hardest-hit segments are likely to see a revival in shipments as price competitiveness improves and deferred orders return, potentially reversing a significant portion of the losses incurred after the tariff hike.