Exporters Express Concerns Over US Tariffs Impacting Orders for Indian Goods

Exporters in India are anxious about the 25% tariffs announced by the US, effective from August 1. American buyers are either cancelling or delaying orders until there is clarity on the penalties involved. The Federation of Indian Export Organisations (FIEO) President, S C Ralhan, mentioned that the industry is awaiting the US executive order to understand the tariff and penalty details.

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US President Donald Trump declared a 25% tariff on all Indian goods starting August 1, along with an unspecified penalty for purchasing Russian crude oil and military equipment. "I have started receiving communication from my buyers for cancellation of orders. We are a bit worried," said Ralhan, a hand tool exporter from Ludhiana.

Impact on Competing Nations

Plastic product exporter Arvind Goenka expressed concern over the announcement, noting that India's competing nations like Vietnam and Thailand face lower import duties than India. "The penalty part is worrisome. If it will be imposed in addition to the 25 per cent, then buyers will stop placing orders," he stated.

A leather and footwear exporter highlighted that these tariffs could severely impact India. US buyers are waiting for clarity, creating uncertainty. If new tariffs are enforced from August 1, about 60% of orders might be cancelled, according to the exporter.

Trade Relations and Surplus

The trading community hopes for a quick interim trade deal between India and the US to remove this 25% tariff and penalty. During 2021-25, the US was India's largest trading partner, accounting for about 18% of India's total goods exports, 6.22% in imports, and 10.73% in bilateral trade.

In 2023-24, India had a trade surplus with the US of USD 35.32 billion in goods. This surplus was USD 41 billion in 2024-25 and USD 27.7 billion in 2022-23. In 2024-25, bilateral trade between India and the US reached USD 186 billion, with exports at USD 86.5 billion and imports at USD 45.3 billion.

Key Export and Import Figures

India's main exports to the US in 2024 included drug formulations and biologicals worth USD 8.1 billion, telecom instruments at USD 6.5 billion, precious stones at USD 5.3 billion, petroleum products at USD 4.1 billion, vehicle components at USD 2.8 billion, jewellery at USD 3.2 billion, cotton garments at USD 2.8 billion, and iron and steel products at USD 2.7 billion.

Imports from the US included crude oil worth USD 4.5 billion, petroleum products at USD 3.6 billion, coal at USD 3.4 billion, diamonds at USD 2.6 billion, electric machinery at USD 1.4 billion, aircraft parts at USD 1.3 billion, and gold at USD 1.3 billion.

Of the USD 45 billion worth of exports from the US to India, a significant portion came from petroleum, coal, petroleum coke, diamonds, gold, and scrap materials amounting to USD 20 billion.

In services trade with the US in 2024-25, India exported an estimated USD 28.7 billion while importing services worth USD 25.5 billion, resulting in a surplus of USD 3.2 billion.

With inputs from PTI