US tariff hike puts $48 billion of Indian exports at risk, FIEO seeks urgent govt action
From August 27, 2025, the US will levy additional tariffs on Indian exports, raising duties on several products to 50%. The move follows an earlier 25% tariff imposed this month as part of Washington’s response to India’s continued purchase of Russian oil and defence equipment.
- Aug 26, 2025,
- Updated Aug 26, 2025 6:47 PM IST
The United States will impose an additional 25% tariff on Indian-origin goods, significantly increasing total duties on many export categories to up to 50%, effective from August 27, 2025. This move poses a severe disruption to Indian exports, affecting a large portion of India's shipments to the US. The Federation of Indian Export Organisations (FIEO) has raised alarms regarding the potential impact, stating that this tariff increase could severely hamper India's competitive edge in the US market, which is the largest destination for Indian exports.
Major production hubs, like Tirupur, Noida, and Surat, have already started experiencing the fallout, as textile and apparel manufacturers halt production due to declining cost competitiveness. The seafood industry, notably the shrimp sector, faces risks of stockpile losses and supply chain disruptions, given that the US market accounts for about 40% of Indian seafood exports. Similarly, labour-intensive sectors such as leather, ceramics, chemicals, handicrafts, and carpets are witnessing increased competition from European, Southeast Asian, and Mexican producers.
FIEO President S C Ralhan emphasised the urgent need for government support to mitigate these adverse effects. Proposed measures include interest subvention schemes and export credit support to maintain liquidity and working capital. Moreover, Mr Ralhan suggests that easier access to low-cost credit, particularly for MSMEs, with the assistance of banks and financial institutions, is critical. He also advocates for a one-year moratorium on loan repayments and calls for collateral-free lending enhancements to alleviate companies' financial stress.
Additional strategies proposed by FIEO focus on strengthening India’s competitive position through expanded Production-Linked Incentive (PLI) schemes and infrastructure enhancements. There is also a push for market diversification via accelerated trade agreements with regions such as the EU, GCC, and Latin America. However, FIEO stresses that diplomatic engagement with the US remains crucial in addressing the tariff issue, which poses significant risks to the Indian economy.
Another part of FIEO's strategy includes promoting Brand India and innovation to boost global appeal. This involves investing in quality certifications and embedding innovation within export strategies, making Indian goods more attractive on the international stage. This comprehensive strategy aims to safeguard livelihoods and secure India’s foothold in the global export market despite the ongoing challenges posed by the US tariffs.
FIEO calls for a coordinated response among exporters, industry groups, and government bodies to navigate this challenging period. The actions taken now will play a pivotal role in determining India's resilience to external economic shocks and its ability to re-establish itself within the global export landscape.
The United States will impose an additional 25% tariff on Indian-origin goods, significantly increasing total duties on many export categories to up to 50%, effective from August 27, 2025. This move poses a severe disruption to Indian exports, affecting a large portion of India's shipments to the US. The Federation of Indian Export Organisations (FIEO) has raised alarms regarding the potential impact, stating that this tariff increase could severely hamper India's competitive edge in the US market, which is the largest destination for Indian exports.
Major production hubs, like Tirupur, Noida, and Surat, have already started experiencing the fallout, as textile and apparel manufacturers halt production due to declining cost competitiveness. The seafood industry, notably the shrimp sector, faces risks of stockpile losses and supply chain disruptions, given that the US market accounts for about 40% of Indian seafood exports. Similarly, labour-intensive sectors such as leather, ceramics, chemicals, handicrafts, and carpets are witnessing increased competition from European, Southeast Asian, and Mexican producers.
FIEO President S C Ralhan emphasised the urgent need for government support to mitigate these adverse effects. Proposed measures include interest subvention schemes and export credit support to maintain liquidity and working capital. Moreover, Mr Ralhan suggests that easier access to low-cost credit, particularly for MSMEs, with the assistance of banks and financial institutions, is critical. He also advocates for a one-year moratorium on loan repayments and calls for collateral-free lending enhancements to alleviate companies' financial stress.
Additional strategies proposed by FIEO focus on strengthening India’s competitive position through expanded Production-Linked Incentive (PLI) schemes and infrastructure enhancements. There is also a push for market diversification via accelerated trade agreements with regions such as the EU, GCC, and Latin America. However, FIEO stresses that diplomatic engagement with the US remains crucial in addressing the tariff issue, which poses significant risks to the Indian economy.
Another part of FIEO's strategy includes promoting Brand India and innovation to boost global appeal. This involves investing in quality certifications and embedding innovation within export strategies, making Indian goods more attractive on the international stage. This comprehensive strategy aims to safeguard livelihoods and secure India’s foothold in the global export market despite the ongoing challenges posed by the US tariffs.
FIEO calls for a coordinated response among exporters, industry groups, and government bodies to navigate this challenging period. The actions taken now will play a pivotal role in determining India's resilience to external economic shocks and its ability to re-establish itself within the global export landscape.