US tariffs hit India’s export engine: GTRI report shows 37.5% slump across key sectors; smartphones, phar

India's exports to the US, its largest market, plunged 37.5% from $8.8 billion to $5.5 billion between May and September 2025, a steep decline attributed to the Trump administration's escalating tariffs that reached 50% for Indian products. A report by GTRI highlights severe impacts on key sectors, including smartphones (-58%), gems and jewellery (-59.5%), and solar panels (-60.8%), with even tariff-free goods contracting 47%. This has eroded India's competitiveness, risking significant market share loss to countries like Vietnam and China, and underscores structural vulnerabilities requiring urgent policy intervention to avoid further erosion of its export position.

Analysis

India's exports to the US, its largest market, experienced a significant 37.5% decline, falling from $8.8 billion to $5.5 billion between May and September 2025. This sharp contraction is primarily attributed to escalating US tariffs, which rose from 10% to 50% on Indian products. The GTRI report highlights this as one of the steepest short-term declines in recent years, signaling considerable trade friction.

Key sectors faced severe impacts, with smartphone exports crashing 58% and gems and jewellery plunging 59.5%, while even tariff-free goods contracted 47%. Pharmaceutical exports also saw a 15.7% drop. GTRI notes that for industrial metals, a milder 16.7% dip might be linked to a broader US industrial slowdown, but for others like solar panels (-60.8%), India's competitiveness has sharply deteriorated against rivals like China and Vietnam.

The report underscores that these tariffs have not only squeezed India's trade margins but also exposed structural vulnerabilities across key export industries. This erosion of competitiveness risks significant market share loss to countries such as Vietnam, Mexico, and China. Exporters are urging urgent policy interventions from the Indian government, including enhanced interest-equalisation support and emergency credit lines for MSMEs, to mitigate further damage.

Key Decisions for Investors

• Monitor the evolving trade policy landscape between the US and India, as further tariff actions or retaliatory measures could significantly alter market dynamics.
• Evaluate exposure to Indian export-oriented companies, particularly those in affected sectors like smartphones, gems and jewellery, and solar panels, considering potential revenue and margin pressures.
• Assess the Indian government's policy response, such as interest-equalisation support and credit lines, for its effectiveness in mitigating export declines and supporting MSMEs.
• Consider the competitive positioning of companies operating in sectors where India is gaining market share from countries like Vietnam, Mexico, and China, as these shifts could present alternative investment opportunities.