A concerning development has emerged from the United States for India's export sector, signaling a significant setback for the nation's economy. According to the latest figures released by the Global Trade Research Initiative (GTRI), India's exports to the US have plummeted by a staggering 37. 5% during the period from May to September 2025. This decline represents one of the most substantial drops in Indian export performance. In recent years, raising serious questions about India's position in the American market. The primary cause of this downturn is attributed to the increased tariffs imposed by the US on Indian goods, which have Importantly escalated the cost of trade for Indian exporters.
Escalating Tariffs and Export Decline
The US administration initially imposed a 10% tariff on Indian products in April 2025, which subsequently escalated to a substantial 50% by August of the same year, while this sudden and steep increase in tariffs had an immediate and direct impact on India's exports. Following the tariff hike, India's exports to the US dropped sharply from $8. 8 billion to $5. 5 billion. This decline isn't only quantitatively significant but also presents an unprecedented challenge for Indian exporters. Experts suggest that India's performance in the US market has never been this poor before, underscoring the gravity of the current situation. This scenario has become a serious point of consideration for Indian trade policymakers.
Impact on Tariff-Free Goods
The repercussions of these tariffs weren't confined solely to goods directly subjected to the levies; even items that were previously tariff-free suffered significant losses. These tariff-free goods, which constituted approximately one-third of India's total exports to the US, experienced a substantial 47% decline. Their exports, which stood at $3. 4 billion in May, dwindled to just $1. 8 billion by September, while this indicates that the impact of the tariffs extends beyond directly affected commodities, negatively influencing the entire trading environment and indirectly harming other sectors that weren't initially targeted.
Blow to Smartphone Exports
India's smartphone export sector has been severely hit by this trade war. While smartphone exports had registered an impressive growth of 197% between April and September 2024-25, they've now witnessed a sharp decline of 58%. Exports, which were valued at $2, while 29 billion in May, fell to a mere $884. 6 million by September. This downturn poses a significant challenge to India's 'Make in India' initiative and its efforts to boost electronics manufacturing, as the US is a crucial market for Indian smartphones. The Indian electronics industry is expected to face profound consequences due to this decline.
Challenges for the Pharmaceutical Sector
India's pharmaceutical sector, renowned globally for its affordable and quality medicines, has also not been immune to the effects of this trade war. Pharmaceutical exports have seen a 15. 7% decline, dropping from $745. 6 million in May to $628. 3 million in September. The US is a major importer of Indian pharmaceutical products, and this decline could negatively impact the revenue and global market share of Indian drug companies. This situation also raises concerns for India's reputation as the 'pharmacy of the world'.
Effect on Metal and Automobile Industries
Exports of industrial metals and auto parts have also experienced a notable impact. This category recorded an average decline of 16. 7%. Specifically, aluminum exports fell by 37%, copper by 25%, auto components by 12%, and iron-steel by 8%. According to experts, this decline isn't due to a lack of competitiveness from India but rather a reduction in US industrial demand, while this suggests that there are structural issues within the US economy itself that are affecting Indian exports, beyond just the tariffs.
Devastation in Labor-Intensive Sectors
India's labor-intensive sectors, including textiles, gems-jewelry, chemicals, and agri-foods, collectively registered a 33% decline. These sectors provide employment to millions and are vital for the rural economy. A downturn in these areas could lead to widespread job losses and economic instability, posing serious concerns for India's socio-economic fabric.
Plight of the Gems and Jewelry Sector
Notably, the gems and jewelry sector has experienced a drastic 60% drop in exports. From $500. 2 million in May, exports from this sector plummeted to just $202. 8 million by September. According to GTRI, this decline has allowed countries like Thailand and Vietnam to start capturing India's market share. This indicates that US tariffs have made Indian products more expensive, prompting buyers. To turn to other countries where they can find similar products at lower costs.
Renewable Energy Sector Also Hit
The renewable energy sector, particularly solar panel exports, also witnessed a significant decline of 60, while 8%. Solar panel exports fell from $202. 6 million to $79, while 4 million. This is a setback for India's green energy goals and its role in the global renewable energy supply chain. This decline comes at a time when global demand for clean energy is. Increasing, and India has the potential to be a major player in this sector.
Benefit to Competing Nations
Meanwhile, countries like China and Vietnam are benefiting from lower tariffs (20–30%). In the US, providing them with a significant competitive advantage over Indian exporters. Mexico is also strengthening its position in the American market, while the GTRI report warns that if policy-level steps aren't taken soon, India could lose its traditional markets to countries like Vietnam, Mexico, and China. This situation presents a dual challenge for Indian exporters: the burden of US tariffs on one hand, and increasing competition from rival nations on the other.
The Way Forward and Need for Policy Intervention
The GTRI report explicitly states that these tariffs have severely squeezed the margins of Indian exporters and exposed structural weaknesses within the country's export sector, while it's imperative for the Indian government and industry to collectively address this challenge. Immediate and effective policy-level measures are required to provide relief to Indian exporters and help them maintain their competitiveness in the global market. This could include engaging in discussions with the US administration, exploring alternative markets, and implementing measures to support domestic industries.
