The Crossbill News Desk
The steep hike in tariffs on Indian exports to the United States came into effect on Tuesday, August 27, raising duties on several categories of goods to 50 percent and sparking alarm across India’s export sector.
The Federation of Indian Export Organisations (FIEO) on Monday expressed “grave concern” over the decision, warning that it will significantly erode India’s competitiveness in its largest export market.
“FIEO expresses grave concern over the US government’s imposition of an additional 25% tariff on Indian-origin goods - raising total duties on many export categories up to 50%, effective from August 27, 2025,” said FIEO president S.C. Ralhan.
Ralhan pointed out that textiles and apparel manufacturers in key hubs such as Tirupur, Noida and Surat have already “halted production amid worsening cost competitiveness.”
He warned that the pricing disadvantages of 30–35 percent compared to rivals from China, Vietnam, Cambodia, the Philippines and other Southeast and South Asian countries have left Indian exporters unable to compete.
“This sector is losing ground to lower-cost rivals from Vietnam and Bangladesh,” he said.
According to FIEO, the impact extends far beyond textiles.
“While for the seafood especially shrimps, as the US market absorbs nearly 40% of Indian seafood exports and the tariff increase risks stockpile losses, disrupted supply chains, and farmer distress. On other labour-intensive sectors of exports Leather, Ceramics, Chemicals, Handicrafts, Carpets etc, the industry faces a sharp erosion of competitiveness, particularly against European, South East and Mexican producers,” Ralhan reiterated.
The exporters’ body cautioned that delays, order cancellations and loss of cost advantages are already looming over these industries. Exports of low-margin, labour-intensive goods including textiles, apparel, gems and jewellery, carpets and furniture may become unviable in the US market as the tariffs push up costs for buyers. This, analysts warn, could trigger job losses in sectors already burdened by stagnant wages and high unemployment.
Experts estimate that India’s merchandise exports to the US could shrink by 40–45 percent in 2025–26 compared to the previous year, with two-thirds of shipments by value hit by the 50 percent tariff.
Global Trade Research Initiative (GTRI) earlier projected that exports could fall from nearly $87 billion in 2024–25 to about $49.6 billion this year. Clothing, both knitted and woven, faces the sharpest blow, while other textiles are also badly affected.
Tax expert Ved Jain questioned the rationale of the move, telling The Indian Express: “How is it justifiable to put pressure on a third country to achieve an objective in a fight between three countries, where one is merely a negotiator?”
The tariff shock has also prompted criticism of the Modi government’s preparedness. Former foreign secretary Vivek Katju said India needed answers, pointing to what he described as a lack of foresight in external affairs minister S. Jaishankar’s handling of the Trump administration.
FIEO has urged the Centre to act swiftly to cushion exporters, calling for renewed interest subvention schemes and greater access to export credit to maintain liquidity. “Immediate government support” is essential to help industries weather the storm, Ralhan said.
The Federation of Indian Export Organisations (FIEO) on Monday expressed “grave concern” over the decision, warning that it will significantly erode India’s competitiveness in its largest export market.
“FIEO expresses grave concern over the US government’s imposition of an additional 25% tariff on Indian-origin goods - raising total duties on many export categories up to 50%, effective from August 27, 2025,” said FIEO president S.C. Ralhan.
Ralhan pointed out that textiles and apparel manufacturers in key hubs such as Tirupur, Noida and Surat have already “halted production amid worsening cost competitiveness.”
He warned that the pricing disadvantages of 30–35 percent compared to rivals from China, Vietnam, Cambodia, the Philippines and other Southeast and South Asian countries have left Indian exporters unable to compete.
“This sector is losing ground to lower-cost rivals from Vietnam and Bangladesh,” he said.
According to FIEO, the impact extends far beyond textiles.
“While for the seafood especially shrimps, as the US market absorbs nearly 40% of Indian seafood exports and the tariff increase risks stockpile losses, disrupted supply chains, and farmer distress. On other labour-intensive sectors of exports Leather, Ceramics, Chemicals, Handicrafts, Carpets etc, the industry faces a sharp erosion of competitiveness, particularly against European, South East and Mexican producers,” Ralhan reiterated.
The exporters’ body cautioned that delays, order cancellations and loss of cost advantages are already looming over these industries. Exports of low-margin, labour-intensive goods including textiles, apparel, gems and jewellery, carpets and furniture may become unviable in the US market as the tariffs push up costs for buyers. This, analysts warn, could trigger job losses in sectors already burdened by stagnant wages and high unemployment.
Experts estimate that India’s merchandise exports to the US could shrink by 40–45 percent in 2025–26 compared to the previous year, with two-thirds of shipments by value hit by the 50 percent tariff.
Global Trade Research Initiative (GTRI) earlier projected that exports could fall from nearly $87 billion in 2024–25 to about $49.6 billion this year. Clothing, both knitted and woven, faces the sharpest blow, while other textiles are also badly affected.
Tax expert Ved Jain questioned the rationale of the move, telling The Indian Express: “How is it justifiable to put pressure on a third country to achieve an objective in a fight between three countries, where one is merely a negotiator?”
The tariff shock has also prompted criticism of the Modi government’s preparedness. Former foreign secretary Vivek Katju said India needed answers, pointing to what he described as a lack of foresight in external affairs minister S. Jaishankar’s handling of the Trump administration.
FIEO has urged the Centre to act swiftly to cushion exporters, calling for renewed interest subvention schemes and greater access to export credit to maintain liquidity. “Immediate government support” is essential to help industries weather the storm, Ralhan said.
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