US Tariffs Impact India’s Export Growth: GTRI Report Reveals Significant Decline in Key Sectors Including Smartphones, Pharma, and Gems

India’s exports to the United States experienced a dramatic decline of 37.5% between May and September 2025, primarily due to significant tariff increases imposed by the Trump administration. This downturn, highlighted in a report by the Global Trade Research Initiative (GTRI), saw shipments plummet from $8.8 billion to $5.5 billion during this five-month period. The analysis underscores the impact of escalating tariffs, which began at 10% in April and surged to 50% by late August, affecting various sectors and raising concerns about India’s competitiveness in the global market.

Impact of Tariff Increases

The GTRI report details how the U.S. tariffs, which escalated rapidly, have severely affected India’s export landscape. The duties on Indian products started at 10% and increased to 25% by August 7, ultimately reaching 50% by the end of the month. This swift rise in tariffs has led to a significant contraction in exports, particularly in tariff-free goods, which constitute nearly one-third of India’s total shipments. These goods saw a staggering 47% decline, dropping from $3.4 billion in May to $1.8 billion in September. The report indicates that the sharp increase in tariffs has not only squeezed profit margins but has also exposed vulnerabilities within key export sectors.

Sector-Specific Declines

Certain sectors have been hit harder than others due to these tariff hikes. Notably, smartphone exports, which had previously surged by 197% during the same period the previous year, plummeted by 58%, falling from $2.29 billion in May to $884.6 million in September. The pharmaceutical sector also faced challenges, with exports decreasing by 15.7%, from $745.6 million to $628.3 million. Other sectors, such as industrial metals and auto parts, experienced milder declines, with aluminium exports dropping by 37% and copper by 25%. GTRI suggests that the overall decline may be more closely related to a slowdown in U.S. industrial activity rather than a loss of competitiveness for Indian products.

Broader Economic Implications

The report highlights that labor-intensive sectors, including textiles, gems and jewellery, chemicals, agri-foods, and machinery—accounting for nearly 60% of India’s exports to the U.S.—saw a 33% drop in exports, from $4.8 billion in May to $3.2 billion in September. The gems and jewellery sector was particularly affected, with exports plunging by 59.5%. Additionally, solar panel exports fell by 60.8%, undermining India’s position in the renewable energy market. The GTRI report emphasizes that with competitors like China and Vietnam facing lower tariffs, India’s export competitiveness has significantly deteriorated.

Call for Government Action

In light of these alarming trends, exporters are urging the Indian government to take swift action to mitigate the impact of the tariffs. The GTRI report recommends several measures, including enhanced interest-equalization support, expedited duty remission, and emergency credit lines for micro, small, and medium enterprises (MSMEs) involved in exporting. Without immediate policy intervention, there is a risk that India could lose market share to countries like Vietnam, Mexico, and China, even in sectors where it previously held a strong competitive edge. The report concludes that the current data clearly indicate that the tariffs have not only strained India’s trade margins but have also revealed deeper structural vulnerabilities across critical export industries.

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