US Tariffs From August 27 Threaten 70% Collapse In India’s Labour-Intensive Exports: GTRI

New Delhi, Aug 26 (KNN) India’s labour-intensive export sectors face a potential collapse of up to 70 percent as steep US tariffs are set to take effect from August 27, according to a report by the Global Trade Research Initiative (GTRI). 

The US Customs Department published the draft tariff schedule on Tuesday, signalling major disruptions for Indian exporters.

The GTRI report said that 66 percent of India’s exports to the US — worth USD 60.2 billion of the total USD 86.5 billion — will face duties of 50 percent or higher. 

Only about 30 percent of shipments (USD 27.6 billion) will remain duty-free, largely in pharmaceuticals, APIs, and electronics, with medicines alone accounting for over half of the exempted exports.

The hardest hit are expected to be labour-intensive industries that employ millions across India. 

Shrimp exports worth USD 2.4 billion, which account for 32 percent of India’s US market share, will now attract a 60 percent tariff, placing aquaculture hubs in Visakhapatnam under severe strain. 

The gems and jewellery sector, with exports of USD 10 billion and a 40 percent US market share, faces tariffs of 52.1 percent, threatening jobs in Surat and Mumbai.

Similarly, textiles and apparel exports worth USD 10.8 billion will be subjected to duties of 63.9 percent, putting immense pressure on manufacturing hubs in Tirupur, NCR, and Bengaluru. 

Exports of carpets (USD 1.2 billion) and handicrafts (USD 1.6 billion) are also expected to face near-collapse, with countries such as Turkey and Vietnam positioned to take over India’s lost market share.

In addition, agrifood exports worth USD 6 billion — including basmati rice, spices, and tea — will be struck by tariffs of 50 percent, potentially boosting competitors like Pakistan and Thailand. 

Exports of steel, aluminium, and copper (USD 4.7 billion) as well as organic chemicals (USD 2.7 billion) will also face levies above 50 percent, creating further challenges for MSMEs.

To counter the impact, GTRI has suggested a series of measures, including tax reforms, ease-of-business initiatives, and a Rs 15,000 crore interest equalisation scheme to support MSME exporters. 

It has also proposed targeted credit lines and wage support for shrimp, apparel, jewellery, and carpet clusters. 

Strengthening export refund schemes such as RoDTEP (Remission of Duties and Taxes on Export Products) and RoSCTL (Rebate of State and Central Taxes and Levies for textiles and apparel) was also recommended to reduce costs and safeguard competitiveness.

The report further urged the government to accelerate market diversification through trade missions to the EU, Gulf, and East Asia, while developing ‘India+1 export hubs’ in the UAE, Mexico, and Africa to help bypass US tariff barriers.

(KNN Bureau)