US tariff impact: Exports plunge 46% from March peak; here's what it suggests

Indian exports to the United States have tumbled nearly 46 per cent from their March 2025 peak, according to a report by JM Financial. Shipments, which had touched $10.1 billion in March, dropped sharply to $5.5 billion by September 2025.

The brokerage attributed the decline to the imposition of new US tariff measures, under which India now faces one of the steepest effective rates at 50 per cent. This includes a 25 per cent reciprocal duty and an additional 25 per cent penalty linked to India’s imports of Russian oil.

JM Financial noted that the March peak likely reflected a pre-tariff rush, as exporters accelerated shipments ahead of the new duties. The US announced a 25 per cent reciprocal tariff effective August 1, 2025, and followed up with an additional 25 per cent levy from August 27, pushing the combined rate to 50 per cent. The fall in exports, which began as early as April–May, indicates the fading of this front-loading effect.

The report warned that the policy shock comes at a time when India’s export basket is undergoing a structural transformation—from traditional commodities to high-value, technology-driven merchandise. Electronics, machinery, and pharmaceuticals are emerging as key growth drivers.

The share of electronics, electricals, and equipment in total goods exports has tripled from 3 per cent in CY05 to 9 per cent in CY24, while pharmaceuticals have risen from 2 per cent to 5 per cent. Electronics exports alone have logged a compound annual growth rate (CAGR) of 17.9 per cent over the last five years (CY19–24).

In contrast, traditional sectors have been losing ground. The contribution of diamonds and jewellery has dropped from 16 per cent of total exports in CY05 to 7 per cent in CY24, while textiles and apparel have seen their share shrink from 11 per cent to 5 per cent. Both categories have stagnated, with diamonds and jewellery posting a negative CAGR of -3.4 per cent and textiles a marginal 0.3 per cent over the past five years.

Beyond merchandise, JM Financial highlighted the growing strength of India’s services exports, which now account for 46 per cent of total exports in CY24—up from 34 per cent in CY05. Knowledge-based segments have driven this expansion, with professional and management consulting services surging from 6 per cent of services exports in CY05 to 34 per cent in CY24, propelled by the rapid rise of Global Capability Centres (GCCs)