How India’s export sectors are getting impacted by 50% US tariff

Strategies to cushion the impact

The Global Trade Research Initiative (GTRI) has suggested a two-pronged action plan to help India deal with the impact of U.S. tariffs, with measures targeted at both the government and industry.

On the government’s part, the report recommends reviving the Interest Equalisation Scheme with an annual outlay of ₹15,000 crore to make export credit more affordable for MSMEs. It also calls for special credit lines and wage support for severely hit sectors such as shrimp, apparel, and jewellery. In addition, the government should step up efforts to diversify markets by leading trade missions to the EU, Gulf, and East Asia, while also building “India+1” export hubs in countries like the UAE and Mexico to bypass US tariffs.

For industry players, the report advises reducing dependence on the U.S. by tapping new markets and focusing on high-value products like sustainable seafood and designer jewellery. MSMEs, it suggests, could form export consortia to pool resources, while larger companies should look at joint ventures in countries with which India has free trade agreements. The report also underlines the need to invest in e-commerce platforms and global B2B portals to cut reliance on large US buyers.

To mitigate the impact, Crisil suggests India can increase exports to other countries as well as leverage the benefits of the recently concluded trade deal with the UK and a potential deal with the European Union.

Elizabeth Master, Associate Director, Crisil Intelligence, says: “The India-UK free trade agreement is supportive for MSMEs in export-oriented sectors such as textiles, gems and jewellery, seafood, leather and pharmaceuticals. Although these account for less than 3% of imports to the UK, except RMG (6%), the deal would improve MSME competitiveness versus Bangladesh, Cambodia and Turkey, and lend an edge over China and Vietnam in RMG.”