Soaring Tariffs Threaten India's Export Powerhouses

A Crisil Intelligence report warns that new U.S. tariffs will heavily impact Indian MSMEs, particularly in textiles, diamonds, and chemicals. With U.S. duties doubling to 50%, over 45% of India’s exports face challenges, jeopardizing competitiveness and squeezing margins in key sectors.

Indian micro, small, and medium enterprises (MSMEs) in crucial export sectors like textiles, diamonds, and chemicals, which together constitute nearly 45% of the nation's total exports, are bracing for a significant impact due to increased tariffs imposed by the United States, reveals a report by Crisil Intelligence.

The United States, which currently levies a 25% ad valorem duty on Indian goods, announced an additional 25% tariff set to take effect from August 27, raising the total duty to 50%. The move is expected to strain Indian exporters, particularly MSMEs dominating these industries.

Key sectors such as textiles, gems and jewellery, and seafood, representing 25% of India's shipments to the U.S., will be hardest hit. MSMEs, holding over 70% in sectors like textiles and gems, face competitive pressure from global peers as higher tariffs threaten their already tight margins and jeopardise competitiveness.