US Tariff Hike May Impact 55 % Of India’s Exports: Finance Minister

New Delhi, Aug 12 (KNN) The United States’ 25 percent reciprocal tariff on imports from India, effective August 7, could cover around 55 percent of India’s total merchandise exports to the US, Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha on Monday. 

The Department of Commerce is consulting exporters, industry representatives, and other stakeholders to assess the potential impact.

Chaudhary noted that the extent of the effect on exports would depend on factors such as product differentiation, demand, quality, and contractual commitments. 

He stressed that the government is committed to safeguarding the interests of farmers, entrepreneurs, exporters, and MSMEs, and will take all necessary measures to protect national interests.

In a separate development, US President Donald Trump announced an additional 25 percent ‘ad valorem’ duty on Indian goods linked to the purchase of Russian crude oil, effective August 27. 

This will raise the total tariff on such goods to 50 percent, a move analysts say could render Indian products uncompetitive, as several Asia-Pacific countries face tariffs of only 15–20 percent. 

The US has imposed reciprocal tariffs at varying rates on imports from multiple countries.

Before the escalation in trade tensions, most agencies projected India’s GDP growth at around 6.5 percent in FY26. 

However, some have revised forecasts downward by up to 0.5 percentage points should the higher US tariffs take full effect. 

According to the Global Trade Research Initiative (GTRI), India’s exports to the US—valued at USD 86.5 billion in the previous financial year—could decline by as much as 40 percent this year. 

Labour-intensive sectors such as textiles, leather, and marine products are expected to be among the hardest hit.

Exporters have urged the government to reinstate the Interest Equalisation Scheme, which ended on December 31, 2024, and previously provided a 3 percent subsidy on pre- and post-shipment credit. 

They have also sought a five-year extension of the RoDTEP (Remission of Duties and Taxes on Exported Products) and RoSCTL (Rebate of State and Central Taxes and Levies) schemes, along with the timely clearance of pending dues, to maintain competitiveness in the US market.

(KNN Bureau)