Athira Sethu
Kochi, 31 July 2025
From August 1, 2025, the U.S. will impose a 25% tariff on numerous of India’s exports. This will potentially have a significant effect on various key sectors in India, such as electronics, medicine, jewelry, and automobile components. American President Donald Trump termed India’s high tariffs as some of the world’s highest. He also threatened additional penalties because India was buying energy from Russia.
Negative impact on key industries:
Gems & Jewelry
The jewelry and gems sector is likely to take a severe hit. The U.S. is India’s biggest market for jewelry imports, with over $10 billion worth of imports every year. The new tariff will drive up costs, slow down shipments, and impact prices. This will prove to be challenging for companies operating in the industry, ranging from small workers to big manufacturers.
Pharmaceuticals
India is the biggest exporter of generic drugs to the U.S., amounting to approximately $8 billion annually. Large Indian drug firms such as Sun Pharma, Dr. Reddy’s Laboratories, and Cipla get a huge percentage of their revenues from the U.S. Indian drugs save the U.S. healthcare system billions of dollars each year. The new tariffs may drive prices higher for American consumers and hurt these firms.
Textiles and Apparel
Indian textile manufacturers produce apparel, home furnishings, and footwear for major U.S. retailers such as Walmart and Gap. The U.S. used to provide India lower rates of tariff than nations such as Vietnam, which gave India a competitive edge. But under the new tariff, Indian textile exporters will be confronted with a huge challenge, and most will find it difficult to remain competitive.
Electronics
India emerged as one of the largest suppliers of smartphones to America, particularly after Apple started producing more iPhones in India to circumvent Chinese tariffs. But a 25% tariff on Indian electronics might make Apple reconsider its plans. This might dent India’s increasing presence in the global electronics market.
Oil Refining
India imports a lot of oil from Russia, where it receives a discount on the price of crude oil. If the U.S. imposes additional sanctions on Russian oil, India’s oil refining firms, such as Reliance and Indian Oil, may have to pay more. That could damage their profitability, particularly with Russian oil having played a key role in maintaining refining margins.
Total impact on trade
The combined trade between the U.S. and India was $129.2 billion in 2024. If the new tariffs remain effective, around 10% of Indian exports may be impacted between July and September of 2025. The increase in the tariff will impose pressure on Indian businesses and may damage employment across sectors.
Though the exact effect of these tariffs remains to be seen, Indian industries that rely on export to the U.S. may have difficult times ahead. Indian businesses will be compelled to change their game plan and adapt to emerging challenges.
