Tariff Impact
US tariffs may hit Indian farm, pharma, jewellery sectors hard, says think tank
This story was originally published at 20:06 IST on 21 February 2025
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NEW DELHI – India's farm exports are likely to be the worst hit once the US rolls out reciprocal tariffs as threatened by President Donald Trump, according to a report by the Global Trade Research Initiative. The likely tariff hikes may also pose significant risks to pharmaceutical and gem and jewellery exports from India.
The US administration last week announced it will impose reciprocal tariffs on all nations, including India, based on the duty levied on the US goods. It is yet to be known if the US would impose a single tariff on all products from a country and negate the overall differential in weighted average tariff or would levy the duties sector-wise. A clarity on this is expected only in April when the US imposes the first set of reciprocal tariffs.
Indian exports may face an extra tariff of 4.9% as against the current 2.8% if the US negates only the overall differential in weighted average tariff, the report said. But if it imposes sector-wise tariffs, India may witness more severe implications with the farm sector being the worst affected, it said.
The US is India's top export destination, with a share of about 17% in India's total merchandise exports. In 2024, India exported goods worth $91.23 billion to the US and had a trade surplus of $56.89 billion.
India's farm exports to the US, which was $6.04 billion last year, may attract an additional tariff of 32.4%, according to the report. "The hardest-hit sector will be fish, meat, and processed seafood, with $2.58 billion in exports facing a 27.83% tariff differential," it said. "Processed food, sugar, and cocoa exports worth $1.03 billion will also struggle with a 24.99% tariff increase, making Indian snacks and confectionery pricier in the US."
Industrial products may attract an extra average tariff of 3.3%. Currently, the US levies only a 2.6% duty on India's industrial exports, while New Delhi levies a 5.9% duty on such products from the US, the report said.
Within industrial goods, the tariff differential between India and the US is maximum in the automobile sector at 23.10%, followed by gem and jewellery and pharmaceuticals at 13.32% and 10.90%, respectively. India's automobile exports to the US were $2.8 billion in 2024, but pharmaceuticals and chemical exports account for 20% of total merchandise exports to the US, and the gem and jewellery sector has a share of 13%, the report said.
On the other hand, the reciprocal tariffs may have positive implications for India's ores, minerals, and petroleum exports which have a negative tariff differential of 4.36%. However, India's exports of these items to the US were relatively meagre at $3.34 billion in 2024, the report said.
Even before the US government announced its reciprocal tariff plan, Trump had made several threats of imposing high tariffs on Indian goods. However, the Indian government is hopeful that Trump's stance towards New Delhi may soften after the meeting with Prime Minister Narendra Modi last week. The two leaders have agreed to negotiate a trade deal and have set a target to take bilateral trade to $500 billion by 2030.
Modi and Trump have agreed to negotiate a multi-sectoral Bilateral Trade Agreement and have set the aim to conclude its first tranche by December. India is currently examining its tariffs on various US goods, and the two sides will soon start negotiations for the trade pact. End
US$1 = INR 86.71
Reported by Krity Ambey
Edited by Saji George Titus
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