High U.S. tariffs may hit labour-intensive sectors, says GTRI

The Hindu

a day ago

The India-U.S. talks for a free trade agreement are expected to conclude soon and if the U.S. does not exempt country-specific tariff (26%) and instead reduces it to 10 %, Indian goods will attract Most Favoured Nation (MFN) tariff plus 10% surcharge, effectively raising tariffs on Indian goods to levels higher than 'pre-Trump' era levels, says the GTRI.
According to a GTRI report, India's merchandise exports to the U.S. rose to $86.5 billion in FY25, up 11.6% from $77.5 billion in FY24. Industrial goods, especially those from labour-intensive sectors, account for bulk of this trade. The risk of high tariffs is particularly acute for labour-intensive sectors, which contributed over $14.3 billion in 2024-2025. These include garments ($5.33 billion), textiles and carpets ($2.38 billion), made-ups and worn clothing ($2.95 billion), leather ($795 million), footwear ( $461 million), ceramics and stoneware ($1.55 billion), and wood and paper articles ($823 million).
These goods attract some of the steep MFN tariffs—often ranging between 8% and 20%, especially for garments and footwear.
India wants the U.S. to remove all tariffs—both MFN and country-specific—on high and medium labour-intensive goods. These sectors employ millions, particularly in rural and semi-urban regions, and are crucial to India's goals of job creation, MSME growth, and women's economic participation, the report said.