News: U.S. 50% tariffs on Indian imports began on August 27, triggering demand drops in several labour-intensive export sectors.
Sectors Worst Hit by U.S. Tariffs on India
Mechanism of assessing impact: We can judge impacts by three signals used together:
- Dollar sales to the U.S. (how big the market is),
- U.S. share in a sector’s total exports (how dependent it is),
- The new final tariff (how steep the price penalty is).
- When all three are high, the impact is severe; when U.S. share is small, the impact is limited.
Sectors facing severe impact
- Shrimp: India exports $2.4 billion worth of shrimp to the U.S.
- It is about one-third of total shrimp (32.4%).
- Tariffs increase from 10% to 60%.
- Andhra Pradesh is going to face a severe impact.
- Diamonds, gold, jewellery: It accounts for $10 billion of exports India’s exports to the U.S.
- It is about two-fifths (40%).
- Final tariffs now, 52.1%.
- Production cuts reported in hubs like Surat; its polishing industry employs ~12 lakh people.
- Textiles & apparel: India has $10.8 billion of exports to U.S; with apparel exports of $5.4 bn.
- U.S. is 35% of India’s apparel exports.
- Final tariffs now is 63.9%( 9%+ 50%).
- This will impact Indian cities such as Tiruppur, Noida–Gurugram, Ludhiana, and Bengaluru.
- Carpets: India exports $1.2 billion worth of carpets to the U.S.
- India has high dependence on U.S. (~58.6% of total carpet exports ).
- Tariffs increase from 9% to 52.9%.
- Also hit: handicrafts; leather and shoes; furniture and bedding; basmati rice, spices, tea, pulses, sesame.
Sectors with modest impact
- Organic chemicals: Indai has $2.7 billion worth of exports.
- It is about one-eighth of total organic chemical export (13.2%).
- Tariffs increase from 4% to 54%.
- Metals (steel, aluminium, copper): India has $4.7 billion worth of exports to U.S.
- It is about one-sixth (17%).
- Global Trade Research Initiative (GTRI) warns of risks to SMEs and jobs in stainless steel, aluminium casting, copper semi-finished goods.
- Machinery & mechanical appliances: India has $6.7 billion worth of exports.
- It is about one-fifth (20%).
- Demand expected to ease.
Government response
- Leaders reiterate ‘swadeshi’ and ‘go vocal for local’.
- A multi-ministry plan (reported August 13) aims to ease short-term exporter pain.
- Medium-to-long term: diversify markets and use FTAs better;
