• US imposed additional 25% tariffs as penalty for India's purchase of discounted Russian crude oil
• Federation of Indian Export Organizations describes US tariffs as ‘setback,’ noting 55% of US-bound shipments exposed to pricing disadvantages
• Indian exporters seek interest subvention, credit support to ‘sustain working capital and liquidity’

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US President Donald Trump's 50% tariffs on Indian imports took effect Wednesday amid calls by Prime Minister Narendra Modi for more domestic purchases to move towards “self-reliance.”

The US Department of Homeland Security issued a draft notice detailing plans to impose an additional 25% import duties on Indian goods, bringing the total levy to 50%.

US tariffs of 25% on Indian goods went into force earlier this month, but Trump imposed the additional 25% as a penalty for India's purchase of discounted Russian crude oil.

Meanwhile, negotiations for a trade deal are said to have faced a deadlock after India refused to open its agriculture market to US goods, fearing it could harm the country’s farmers.

As trade tensions between the strategic partners intensify, Modi has been stressing the need for self-reliance and urging Indians to buy more domestic products.

Trade between the US and India reached $129 billion in 2024, with Washington posting a $45.7 billion trade deficit, according to the Office of the United States Trade Representative.

Indian experts have estimated the tariffs could impact up to $50 billion worth of exports.  

US tariffs a ‘setback,’ says Indian exporters

Vijay Mangukiya, managing director of Gujarat-based company, focused on jewelry exports and diamond trading, said the tariffs was “bad news” for the industry.

“Why will customer buy item at higher cost? They will instead prefer to import from countries like Dubai, Italy and even China,” he said.

Reacting to US tariffs, the Federation of Indian Export Organizations (FIEO) expressed “grave concern,” describing US tariffs as a “setback” for the Indian exporters.

FIEO President S C Ralhan said the levies “can severely impact India's exports to the US, with approximately 55% of India’s US-bound shipments (worth $47-48 billion) now exposed to pricing disadvantages of 30–35%.”

“Textiles and apparel manufacturers in Tirupur, Noida, and Surat have halted production amid worsening cost competitiveness,” said the FIEO statement.

On seafood, especially shrimps, exports to the US which absorbs nearly 40% of such Indian imports, the statement warned tariff increase risks “stockpile losses, disrupted supply chains, and farmer distress.”

On other labor-intensive sectors of exports leather, ceramics, chemicals, handicrafts, carpets, “the industry faces a sharp erosion of competitiveness, particularly against European, South East and Mexican producers,” said Ralhan.

To mitigate losses, Ralhan urged the Indian government for interest subvention schemes and export credit support to “sustain working capital and liquidity.”  

* Writing by Islamuddin Sajid.