Charts | India’s US Exports Fell 37.5% in Just 4 Months, Tariff-Exempt Sectors Also Suffered

New Delhi: India’s exports to the United States, its biggest market, have seen a massive 37.5% decline between May and September 2025, according to data released by the Global Trade Research Initiative (GTRI). There is a $3.3 billion difference between the value of exports in May ($8.8 billion) and September ($5.5 billion). There has been no official word on how several sticking points, including Russian oil and the US desire to enter India’s agricultural markets, will be balanced.

This decline in exports is unsurprising, given the crisis in the India-US trade relationship during US President Donald Trump’s second term in office. Indian goods exported to the US are currently facing a 50% tariff, making them virtually unviable in the US market when compared to cheaper imports from other countries.

Several of the labour-intensive sectors that have been the worst hit – jewellery and diamonds, textiles and garments, seafood – conform with the GTRI’s previous analysis of industries that export a lot to the US, and now suddenly face much higher tariffs. Agricultural goods too have taken a hit, with cocoa product exports falling by 99%, dairy products and honey by 59%, processed fruits and vegetables by 44%, and coffee, tea and spices by 40%. “The fall has devastated clusters across Nashik, Gujarat, Kerala, Karnataka, Jharkhand, and Chhattisgarh — reversing two years of steady growth,” GTRI notes. Given the employment crisis India was already facing, this hit to labour-intensive sectors has not been easy.

What is perhaps more surprising, though, is that even sectors that have been exempt from Trump’s rates – smartphones and pharmaceuticals – have seen a big dip in exports.

India’s smartphone exports to the US fell 58% between May and September. “Despite being duty-free, shipments plunged from $2.29 billion in May to $0.88 billion in September, signalling a U-turn after a 197% surge a year earlier,” GTRI notes.

While the graph above shows an across-the-board fall in India’s exports to the US over the last four months, not all of these sectors are equal in the way the US is treating them.

The first four are labour-intensive sectors facing 50%-plus tariffs. These are goods for which Indian exports are facing much higher tariffs than other countries. “The impact here was both deep and widespread,” notes GTRI founder Ajay Srivastava. The fifth sector, industrial metal and auto parts, is one for which countries across the world are facing an equally high tariff. The last two – smartphones and pharmaceuticals – represent sectors exempt from Trump’s tariff regime.

“Paradoxically, India’s tariff-free exports, accounting for one-third of total shipments such as smartphones, pharmaceuticals, suffered the sharpest contraction — down 47%, from US$3.4 billion in May to US$1.8 billion in September,” the GTRI has noted.

It has now been more than two months since the 50% tariff rate came into effect – 25%, according to Trump as “reciprocal” rates for India’s imposed tariffs, and another 25% as a “penalty” because India continues to purchase Russian oil. The US has also imposed sanctions on two of Russia’s top oil companies – Rosneft and Lukoil – on October 22.

The Narendra Modi government had expressed a deep confidence in its relationship with the Trump administration when the US president first announced his new tariff structures, with foreign affairs minister S. Jaishankar even saying that Trump’s priorities “suit India”. Commerce minister Piyush Goyal, whose ministry has been handling the India-US trade deal talks, said on October 31 that India is in the “advanced stages” of discussions with the US. Given how he has been routinely making similar statements – even while Trump imposed higher and higher tariffs on India – though, perhaps Indians will want to see the actual fine print before taking him for his word.

As there has been no official indication on how many contentious issues will be tackled, eg., how Russian oil and the US desire to enter India’s agricultural markets, will be balanced. The GTRI has recommended that India stop its Russian oil imports from sanctioned firms and ensure that the US withdraw its 25% penalty tariff – and only then restart trade talks, “on fair, balanced terms”.

“Only after tariff normalization should India resume trade negotiations. The two issues—sanctions and tariffs—must remain separate from the broader free trade agreement. When talks resume, India should target parity with major partners such as the European Union, seeking average industrial tariffs of around 15% and duty-free access for select export sectors including textiles, gems and jewellery, and pharmaceuticals,” Srivastava has said.

Meanwhile, with little in the public domain about the actual status of the talks, India’s exporters, manufacturers and workers continue to face the brunt of the exorbitant US tariffs.

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