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India braces for export hit as steep new US tariffs loom
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India braces for export hit as steep new US tariffs loom
Aug 25, 2025 11:14 PM

MUMBAI/NEW DELHI, Aug 26 (Reuters) - Indian exporters

are bracing for disruptions after a U.S. Homeland Security

notification confirmed Washington would impose an additional 25%

tariff on all Indian-origin goods from Wednesday, ramping up

trade pressure on the Asian nation.

Indian exports will face U.S. duties of up to 50% - among

the highest imposed by Washington - after President Donald Trump

announced extra tariffs as punishment for New Delhi's increased

purchases of Russian oil earlier in August.

The new duties will apply to goods entering the U.S. for

consumption or withdrawn from warehouses for consumption from

12:01 a.m. EDT on Wednesday or 9:31 a.m. IST, according to the

Homeland Security notice.

The Indian rupee weakened 0.2% to 87.75 per U.S. dollar in

early trade, even as the greenback declined against many other

currencies. The benchmark equity indexes and

were each trading 0.8% lower.

The notification said exceptions would include in-transit

shipments with proper certification, humanitarian aid, and items

covered under reciprocal trade programs.

The notification reiterated that the action was in response

to India's indirect support of Russia's military incursion into

Ukraine.

India's Commerce Ministry did not immediately respond to an

email seeking comment on the latest notification.

"The government has no hope for any immediate relief or

delay in U.S. tariffs," said a Commerce Ministry official, who

spoke on condition of anonymity because they were not authorised

to speak to media.

Exporters hit by tariffs would be provided financial

assistance and encouraged to diversify to alternative markets

including China, Latin America and the Middle East, the official

added.

"The government has identified nearly 50 countries for

increasing Indian exports, particularly of textiles, food

processed items, leather goods, marine products."

Indian Prime Minister Narendra Modi has vowed not to

compromise the interests of the country's farmers even if there

is a heavy price to pay. Modi is also taking steps to improve

ties with China with his first visit in seven years planned for

the end of the month.

EXPORTERS SEEK AID

Exporter groups estimate hikes could affect nearly 55% of

India's $87 billion in merchandise exports to the U.S., while

benefiting competitors such as Vietnam, Bangladesh and China.

"The U.S. customers have already stopped new orders. With

these additional tariffs, the exports could come down by 20-30%

from September onward," said Pankaj Chadha, president,

Engineering Exports Promotion Council.

Chadha added that the government has promised financial aid

including increased subsidies on bank loans and support for

diversification in the event of financial losses.

"However, the exporters see limited scope for diversifying

to other markets or selling in the domestic market," he said.

Private sector analysts warn that a sustained 50% tariff

could weigh on India's economy and corporate profits - prompting

the steepest earnings downgrades in Asia - even if proposed

domestic tax cuts partly cushion the blow.

Capital Economics said last week that if full U.S. tariffs

come into force, the hit to India's economic growth would be 0.8

percentage points both this year and next.

Foreign Minister S. Jaishankar said last week trade talks

are ongoing and that Washington's concern over Russian oil

purchases was not equally applied to other major buyers such as

China and the European Union.

There is no directive from the government so far regarding

oil purchases from Russia. Companies will continue to buy oil on

the basis of economics, three refining sources said.

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