As the United States moves ahead with a steep 50 per cent tariff on Indian imports, the ruling Bharatiya Janata Party (BJP) has sought to downplay the impact, stating that over 95 per cent of India’s exports will remain unaffected. The statement comes as export bodies and think tanks warn of significant disruption to trade, especially with the US being one of India’s top export destinations.
According to data cited by the BJP, out of India’s total exports worth $820 billion in the financial year 2024–25, nearly $780 billion are not subject to the newly imposed tariffs. The party has asserted that just around $40 billion—or 4.8 per cent—of exports are likely to face the additional US duties. Sectors like electronics, pharmaceuticals, auto components, metals, and services are safe from the tariff blow, the party stated.
On August 6, the United States announced an additional 25 per cent levy on all Indian imports, doubling the existing rate to 50 per cent from August 27 onwards. The White House cited India’s continued procurement of Russian oil as the reason for the move.
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Earlier, the Global Trade Research Initiative (GTRI) warned of far-reaching consequences.
GTRI founder Ajay Srivastava cautioned that this step may make Indian goods significantly costlier in the American market, potentially slashing exports to the US by 40 to 50 per cent, news agency PTI reported. He pointed out that although China imported more Russian oil than India in 2024—USD 62.6 billion compared to India’s USD 52.7 billion—it has not faced similar punitive measures. Srivastava remarked that “Washington avoids targeting Beijing because of China’s leverage over critical materials such as gallium, germanium, rare earths, and graphite, vital for US defence and technology.”
Srivastava further noted that the US has ignored comparable transactions by its allies, including the European Union, which imported USD 39.1 billion worth of Russian goods, of which USD 25.2 billion was oil. Even the US itself imported USD 3.3 billion worth of strategic commodities from Russia, he added.
Echoing the concerns, the Federation of Indian Export Organisations (FIEO) called the new tariff regime “extremely shocking”, estimating that 55 per cent of India’s exports to the US would be hit. According to PTI, FIEO Director General Ajay Sahai said, “With nearly 55 per cent of our shipments to the US market directly affected, this is a severe setback for Indian exports.”
He added, “The 50 per cent reciprocal tariff effectively imposes a cost burden, placing our exporters at a 30–35 per cent competitive disadvantage compared to peers from countries with lesser reciprocal tariffs.” Sahai also noted that several orders had already been halted, as buyers reconsider sourcing due to higher landed costs.
Highlighting the challenges for MSMEs, he warned that absorbing the increased costs may not be feasible. “Margins are already thin, and this additional blow could force exporters to lose long-standing clients,” he added. He urged exporters to start scouting for alternate markets to cushion the blow.
Post the latest hike, India now faces the highest tariff rate imposed by the US—alongside Brazil—at 50 per cent. In comparison, competitors face lower tariffs: Myanmar (40 per cent), Thailand and Cambodia (36 per cent each), Bangladesh (35 per cent), Indonesia (32 per cent), China and Sri Lanka (30 per cent each), Malaysia (25 per cent), and Vietnam and the Philippines (20 per cent each).
