US Tariff Hike Threatens Survival Of India’s MSME-Driven Export Sector: FIEO

New Delhi, Aug 7 (KNN) The Federation of Indian Export Organisations (FIEO) on Wednesday described the United States’ decision to impose an additional 25 percent tariff on Indian goods as ‘extremely shocking’, warning that the move could affect more than half of India’s exports to its largest trading partner.

“This is a severe setback for Indian exports, with nearly 55 percent of our shipments to the U.S. directly affected,” said FIEO Director General Ajay Sahai. “The 50 percent tariff places Indian exporters at a 30–35 percent competitive disadvantage compared to countries facing lower duties.”

Key sectors expected to bear the brunt of the tariff hike include textiles, leather, and marine exports—industries largely driven by MSMEs. 

"For a large number of MSME-led sectors, absorbing this sudden cost escalation is simply not viable. Margins are already thin, and this additional blow could force exporters to lose long-standing clients," Sahai said.

FIEO warned that India now faces the highest tariff rate in the US market, on par with Brazil. 

In contrast, key competitors enjoy significantly lower duties: Myanmar (40 percent), Thailand and Cambodia (36 percent), Bangladesh (35 percent), Indonesia (32 percent), China and Sri Lanka (30 percent), Malaysia (25 percent), and Vietnam and the Philippines (20 percent).

Sahai said the Indian exporters will be forced to explore alternative markets, but warned that realigning supply chains would take time and may not fully compensate for lost US trade in the short term.

(KNN Bureau)