Negotiations on trade agreement are going on between America and India. Despite the good relations between President Donald Trump and Prime Minister Narendra Modi, the impact of heavy tariffs of up to 50% imposed by America is deeply visible on India’s exports. It is clear from the new data that India’s hold in the American market is weakening.
Continuous decline in exports
India’s exports to America decreased by 37.5% between May and September 2025. During this period, the total amount of exports declined from $8.8 billion to $5.5 billion, which is one of the sharpest declines in recent years.
Increased American tariffs become a big problem
At the beginning of the financial year, America imposed 10% tariff on India, which increased to 50% by August. Initially 25% tariff was imposed and later another 25% was added as ‘additional’ due to continued oil purchases from Russia. The damage from these tariffs began to be seen immediately as soon as they came into effect on April 2.
Many important sectors badly affected
Labour-intensive sectors like textiles, gems-and-jewellery, chemicals, agricultural products and machinery were most affected. Their export earnings declined from $4.8 billion to $3.2 billion, i.e. a decline of 33%. The situation for tariff-free products, which previously did not attract any duty, was even worse. Exports of these products declined from $3.4 billion to $1.8 billion, i.e. a decline of 47%. Exports of smartphones and medicines were most affected by this decline.
Smartphone exports declined by 58% this year after a huge increase last year. Exports of $ 2 billion in June declined to $ 884.6 million in September.
Pharma sector was also not spared and it saw a decline of 15.7%. The decline in industrial metals and auto parts was relatively mild, but the impact was still visible.
There was a decline of 16.7% in these sectors. A decline of 37% was seen in aluminium, 25% in copper, 12% in auto parts, and 8% in iron-steel.
Who is taking India’s place in the American market?
Exports of gems and jewelery declined from $500.2 million to $202.8 million, a huge decline of 59.5%. Many units of Surat and Mumbai are facing its impact, because Thailand and Vietnam have started replacing India in the American market. Solar panel exports also declined by 60.8%. India’s competitiveness reduced because while India faced 50% tariff, China had to pay only 30% and Vietnam only 20%.
MSMEs need immediate help
Exporters are demanding immediate action from the government. They want that immediate loan facility should be started for small and medium exporters. GTRI has warned that if early intervention is not done, India may lose its market share to countries like Vietnam, Mexico and China.
Trade deal talks in final stage
India says that it is in the final stages of negotiations for a trade deal with America. America is claiming that India has agreed to reduce the purchase of Russian oil, although India has neither confirmed nor denied this.