Leather, textile, shrimp exports to be hit hard by 25% US tariff: Experts

Business Standard

2 days ago

Domestic export sectors such as leather, footwear, textiles and shrimp will be hit hard by the imposition of the 25 per cent tariff by the US, industry experts say.
"Quick estimates suggest that India's goods exports in FY 2026 may come down by 30 per cent from $ 86.5 billion in FY 2025 to $60.6 billion in FY 2026," GTRI Founder Ajay Srivastava said.
The duty, announced this week, will come into force from August 7 (9.30 am IST). These will be over and above the exiting standard import duty in the US. The 25 per cent tariff will replace the existing 10 per cent baseline tariff.
The modified tariff is one per cent less than the 26 per cent levy announced by President Donald Trump on April 2.
A White House executive order mentions that tariffs may be reduced once countries make a deal with the US.
The executive order also clarifies that goods in transit until October 5, 12:01 am eastern daylight time (EDT), or 09:30 am IST, will be subject to a 10 per cent tariff, provided that such goods have entered into transit before August 7 12:01 am EDT.
The sectors, which would bear the brunt of 25 per cent duty include textiles/ clothing (10.3 billion), gems and jewellery (12 billion), shrimp ($ 2.24 billion), leather and footwear ($ 1.18 billion), chemicals (2.34 billion), and electrical and mechanical machinery (about $ 9 billion).
According to think tank GTRI, the duty on all Indian-origin goods could severely hit the country's exports to America.
Federation of Indian Export Organizations (FIEO) Director General Ajay Sahai said that the order provides relaxation for goods in transit and those loaded on ship for final sailing to the US by August 7.
Goods cleared for consumption in the US by October 5 will also not be subject to reciprocal tariffs, thus providing some relief to exporters of goods already shipped or likely to be shipped this week, he said.
In 2024-25, the bilateral trade between India and the US stood at $ 131.8 billion ($ 86.5 billion exports and $ 45.3 billion imports).
Sudhir Sekhri, Chairman, AEPC (Apparel Export Promotion Council), said: "We request immediate government intervention to offset this huge setback.
"Exporters have their back against the wall and will have to sell below cost to keep their factories running and avoid mass layoffs." Indian shrimp exporters face an unprecedented new challenge in the US market, which contributes close to 48 per cent of their exports, Crisil Ratings Senior Director Rahul Guha said.
Exporters are hoping that early finalisation of the India-US bilateral trade agreement will help in dealing with the tariff challenges.
The negotiations between India and the US are still going on for an interim trade deal, though there will be no compromise on the red lines with regard to duty concessions on agriculture items, dairy, and genetically modified (GM) products, sources said.
The two countries are negotiating a bilateral trade agreement (BTA). They are aiming to conclude the first phase of the pact by fall (October-November) this year.