A day after official data propelled India’s headline growth figures into the stratosphere, a more sobering trend emerged in its trade performance with the US, the country’s largest export market.
Shipments to the US fell 28.5 per cent between May and October, underscoring the breadth of the slowdown across sectors hit by Washington’s punitive 50 per cent tariff as well as those notionally exempt.
Export values declined from $8.8bn in May to $6.3bn in October, sharpening New Delhi’s urgency to secure the withdrawal of the additional 25 per cent penalty tariff linked to purchases of Russian crude, imposed by the administration of President Donald Trump.
The Modi government is banking on the prospect of a limited agreement by the end of December, though similar expectations in the past are yet to materialise. The commerce secretary on Friday said India’s record high of $41.68 billion in October is not in the ‘worrying zone’.
Sectoral impact
An analysis carried out by trade intelligence agency Global Trade Research Initiative (GTRI) suggests that labour intensive sectors were hardest hit by tariff as it rose to 10 per cent on April 2, escalated to 25 per cent on August 7, and zoomed to 50 per cent by late August.
As of now, 52 per cent of India’s export to the US is facing a 50 per cent tariff, one of the highest in the world.
According to the report published by GTRI on Saturday, textiles and garments fell 32 per cent from $944 million to $643 million, with garment shipments alone down 40 per cent, from $515.4 million to $306.1 million.
Gems and jewellery exports slid 27 per cent dropping from $500.2 million to $363.8 million, with traditional diamond shipments down 29 per cent from $193.5 million to $138.1 million, with only lab-grown jewellery posting growth.
Marine exports sank 39 per cent, from $223 million to $136.9 million, as US shrimp buyers shifted from India to Ecuador and Vietnam.
Hit on exempted items
Smartphones, India’s single biggest product line to the US, suffered a 36 per cent decline, sliding from $2.29 billion in May to $1.50 billion in October—a loss of almost $790 million. However, a caveat in this case could be that Apple, a major exporter from India to the US, sent planeloads of smartphones to beat the reciprocal tariff Trump announced from the Rose Garden in White House, thereby frontloading exports before May.
Pharmaceutical exports, however, remained resilient, inching down 1.6 per cent from $745.6 million to $733.6 million.
Export sops
GTRI Founder Ajay Sriastava argued that the export promotion mission — announced in March and approved by the Cabinet on November 12 — still exists only on paper. Nearly eight months into the fiscal year, no schemes are operational and could miss its goal
Moreover, India should also press the US to withdraw the 25 per cent penalty tariff given Trump’s own statement that India has reduced Russian oil purchase ‘very substantially’, he said.