Massive Blow to India’s Economy! Exports Fall 37.5% After US Sanctions

Did you know? India’s exports to the United States have declined significantly by 28.5% between May and October 2025. According to reports, this decline is mainly due to substantial tariff increases imposed by the US government. According to a report by the Global Trade Research Initiative (GTRI), the value of shipments dropped from $8.83 billion to $6.31 billion during this period. These duties began at 10 percent, rose to 25 percent on August 7, and reached 50 percent by late August.

Between May and September 2025, exports plunged by 37.5 percent—from $8.8 billion to $5.5 billion—marking one of the sharpest short-term collapses in years. To understand the full extent of the impact, India’s exports to the U.S. were grouped into three categories: tariff-free products, uniformly taxed goods, and those slapped with a punitive 50
percent duty specific to India.

Three Categories

1. Tariff-Free Products

2. Uniformly Taxed Goods

3. Products with 50% Duty

Category A: Tariff-Free Exports Take the Hardest Hit

Tariff-free products – accounting for nearly one-third of India’s total shipments – saw the steepest contraction, falling 47 percent from $3.4 billion in May to $1.8 billion in September. Smartphones and pharmaceuticals sectors were deeply hit.

• Smartphone exports crashed 58 percent from $2.29 billion in May to $884.6 million in September.
• Shipments fell month after month – $2.0 billion in June, $1.52 billion in July, $964.8 million in August, and finally $884.6 million in September.
• Pharmaceutical product exports slipped 15.7 percent, from $745.6 million to $628.3 million.

Category B: Uniform-Tariff Sectors Show Milder Weakness

Industrial metals and auto parts registered a 16.7 percent decline, from $0.6 billion to $0.5 billion. Aluminum exports dropped 37 percent, copper 25 percent, auto parts 12 percent, and iron and steel 8 percent.

Category C: 50% India-Specific Tariffs Cripple Labour-Intensive Sectors

The labour-intensive sectors such as textiles, gems and jewellery, chemicals, agri-foods, and machinery account for nearly 60 percent of India’s U.S. exports and suffered a 33 percent decline—from $4.8 billion in May to $3.2 billion in September.

• Gems and Jewellery: Exports decreased 59.5 percent, from $500.2 million to $202.8 million. Gold jewellery fell 58 percent, diamond-studded pieces 63 percent, and lab-grown jewellery 37 percent. Cut and polished diamonds dropped 54 percent, while lab-grown diamond exports plunged 89 percent.
• Solar Panels: Exports of solar panels plunged 60.8 percent, from $202.6 million to $79.4 million, eroding India’s renewable-energy export edge.
• Textiles and Garments: Exports of textiles, garments, and made-ups fell 37 percent, from $944 million to $597 million. Garments alone declined 44 percent, home textiles 16 percent, and yarn and fabrics 41 percent. Within garments, knitted apparel was down 39 percent, woven apparel 50 percent, and girls’ suits 66 percent.
• Chemicals: Chemical exports shrank 35 percent – from $537 million to $350 million—driven by a 37 percent fall in agrochemicals and 44 percent in essential oils.
• Marine and Seafood: Exports of marine and seafood products declined 49 percent – from $223 million to $113 million. Vannamei shrimp exports were down 51 percent, and processed seafood 22 percent. Coastal hubs such as Nellore, Bhimavaram, Kakinada, Paradeep, Veraval, and Porbandar have been hit hard as buyers shift to Ecuador and Vietnam.
• Agriculture and Processed Foods: Agricultural exports recorded a broad-based slump. Preparations of cereals fell 27 percent, processed fruits and vegetables 44 percent, roots and tubers 45 percent, cocoa products 99 percent, oilseeds 53 percent, dairy and honey 59 percent, processed foods 35 percent, coffee and spices 40 percent, and resins 61 percent. The losses have severely affected clusters in Nashik, Gujarat, Kerala, Karnataka, Jharkhand, and Chhattisgarh, wiping out two years of steady gains.

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