'US too large, too important to write off': ICRIER says 70% of India’s exports face Trump heat

With nearly 70% of India’s exports facing Donald Trump’s newly announced 50% tariffs, economic think tank ICRIER has urged the government to adopt a dual strategy—offer targeted support to vulnerable sectors like textiles and gems, and re-engage the US through “smart, tactical” negotiations that address long-standing agricultural disputes.

In a paper authored by economists Ashok Gulati, Sulakshana Rao, and Tanay Suntwal, ICRIER said the US remains “too large and too important to write off” as India pursues trade deals with the UK and EU. The authors argued that upcoming trade talks should focus on resolving agricultural issues, particularly US demands on genetically modified (GM) products, based on scientific evidence rather than ideology.

The report proposed allowing GM corn for ethanol blending or poultry feed, noting that while GM soya imports are barred in seed form, India imports soya oil. It also recommended steep duty cuts on non-sensitive farm imports with low domestic output—such as walnuts (currently at 120% duty), cranberries, blueberries, and breakfast cereals.

For dairy, the economists suggested a tariff rate quota, permitting limited imports at lower duties while maintaining prohibitive tariffs above that threshold. They also floated a certification system—similar to halal—to assure buyers cattle are non-meat fed or pasture-grazed.

Beyond agriculture, the paper warned that textiles and apparel face a “tariff gap” with competitors that could cost India orders unless subsidies, rebates, or other incentives are offered. Gems, jewellery, herbal products, nutraceuticals, and shrimp exports were also identified as high-risk categories, with shrimp producers in Andhra Pradesh, West Bengal, and Odisha particularly exposed in the short term.

While agricultural exports may face smaller overall losses, semi-milled rice could lose ground to Thailand and Pakistan. The authors argued that rather than relying on protectionist tariffs, India should treat the current tariff crisis as a reform opportunity—modernising infrastructure, investing in R&D, and improving supply chain efficiency “on the scale of the 1991 liberalisation.”

Sectors most hit by Trump’s tariffs

Textiles & Apparel Faces over 30% tariff gap versus Bangladesh, Pakistan, Vietnam—key market position at risk.

Gems & Jewellery With 50% tariffs, industry warned it may “come to a standstill very soon.”

Auto Parts, Agriculture, Shrimp Expect export losses, job cuts, and order shifts across these sectors.

Shrimp Producers Andhra Pradesh, West Bengal, Odisha exposed to steep value and market share losses.

ICRIER’s 3-point strategy

Smart US Re-engagement Push for science-based talks on GM crops, ethanol corn, dairy quotas, and fair market access.

Targeted Relief Provide urgent subsidies, rebates, or incentives for hardest-hit sectors like textiles and gems.

Export Diversification Reduce US dependence—accelerate FTAs with EU, UK, CPTPP; expand trade with Africa, ASEAN.

Policy fixes and impact outlook

• Slash tariffs on low-risk imports like walnuts, berries, cereals.
• Move from protectionism to productivity: invest in R&D, logistics, and regulatory reforms.
• Economic damage isn’t system-wide but deeply concentrated in labor-heavy export sectors.