NEW DELHI: India’s export sectors such as shrimp, carpet, medical devices and gold jewellery will face the impact of the 27 per cent additional import duties announced by the US on Wednesday, an official said.
However, export segments like electronics, textiles, and pharma will get an edge over its competitor countries in the US.
On April 2, US President Donald Trump announced a major new tariff policy designed to reduce the US trade deficit and boost domestic manufacturing.
The announcement includes a universal 10 per cent tariff on all imported goods, effective April 5. It will be replaced by 27 per cent duty on April 9. Over 60 countries are affected by the measures announced by America.
The US is the largest market of domestic shrimp industry.
Shrimp will now become significantly less competitive in the US market due to the higher tariffs.
America already has anti-dumping and countervailing duties on Indian shrimp.
Out of India’s total shrimp exports, the country ships 40 per cent to America. Ecuador and Indonesia are major competitors of the domestic exporters in the US market.
The export of frozen shrimps during 2023-24 was 7,16,004 tonnes. The US imported 2,97,571 tonnes last fiscal year, followed by China (1,48,483 tonnes), the European Union (89,697 tonnes), and Japan (35,906 tonnes).
The US continued to be the major importer of Indian seafood in value terms, with an import worth USD 2.55 billion, accounting for a share of 34.53 per cent.
Frozen shrimp continued to be the principal item exported to the US, with a share of 91.90 per cent. Exports of black tiger shrimp to the US increased 35.37 per cent in quantity terms and 32.35 per cent in value in terms.
Similarly, America is the largest importer of carpets from India. It was about USD 2 billion in 2023-24.
In 2023-2024, India exported gems and jewellery worth USD 32.85 billion globally, with the US accounting for 30.28 per cent (USD 10 billion).
In 2024, India exported diamonds, gold, and silver worth USD 11.88 billion in exports. It has a tariff differential of 13.32 per cent.
The country exports wide range of products, including cut and polished diamonds, studded gold jewellery, plain gold jewellery, lab-grown diamonds, and silver jewellery.
Kama Jewellery MD Colin Shah said that “it is a big setback for India as the US has announced retaliatory tariffs”.
“The gems and jewellery sector will be the most affected as import tariffs may be up to 20 per cent from the current zero on loose diamonds and 5.5-7 per cent on gold jewellery. The US is one of India’s largest jewellery export markets, accounting for almost 30 per cent of the share,” he said.
Imposition of 27 per cent reciprocal tariff on medical device exports to US may pose challenges to the sector’s growth, Association of Indian Medical Device Industry (AiMeD) said on Thursday.
In 2023-24, India’s medical device exports to the US stood at USD 714.38 million, while imports from the US to India were significantly higher at USD 1.52 billion.
On the positive side, despite the steep hike of tariff for India, it prima facie seems to be a case of India advantage for the apparel sector, with India’s major competing countries like China, Bangladesh, Vietnam, Cambodia, and Sri Lanka having been slapped higher tariffs by the US.
“The current Trump tariff, however, offers tariff-based edge to Brazil, Turkey and other apparel exporting EU countries like Italy, Germany and Spain. But, given the intrinsic strength of Indian apparel sector in terms of presence of the entire value chain, my initial assessment is that it will work out in India’s favour eventually and we should gear ourselves to encash this opportunity,” Mithileshwar Thakur, Secretary General, AEPC (Apparel Export Promotion Council), said.
The US is the world’s single largest apparel importing country, primarily sourcing from Asia.
AEPC said the US accounts for about 35 per cent of Indian apparel exports. In 2024, the apparel exports to the US were USD 5.2 billion with a growth of 11.2 per cent over 2023.
America is also the largest market for India’s electronics exports. The US accounts for 33 per cent of the total shipments of about USD 30 billion in 2023-24.
The United States, the UAE, the Netherlands, the UK, and Italy have emerged as the top five export markets for Indian electronics goods.
The US administration has exempted pharmaceuticals from reciprocal tariffs. The country’s exports to America in the sector stood at about USD 9 billion.
As per reports, medicines from Indian companies provided USD 219 billion in savings to the US healthcare system in 2022 and a total of USD 1.3 trillion between 2013 and 2022, and generics from Indian companies are expected to generate an additional USD 1.3 trillion in savings over the next five years.
At present, there is no import duty on Indian pharmaceuticals in the US. During April-January of the last fiscal year, exports rose 7.84 per cent to USD 24.3 billion as against USD 22.53 billion in the year-ago period. In the entire 2023-24 fiscal year, it was USD 27.84 billion.
“This vital decision secures the uninterrupted flow of essential and affordable medicines to Americans,” Pharmexcil Chairman Namit Joshi said. (PTI)