New Delhi [India], August 26 : The exports of the labour intensive sectors in the country brace for a collapse of up to 70 per cent as US tariffs set to take effect, according to a report by the Global Trade Research Initiative (GTRI).
The new tariff regime set to take effect from August 27 as US Custom department published draft on Tuesday.
As per the GTRI report it will impact a large portion of India's export basket, particularly in sectors generating massive employment.
The report said "Labour-Intensive Sectors Brace for 70 per cent Export Collapse"
The report noted that U.S. tariffs will hit 66 per cent of India's total exports worth USD 86.5 billion, amounting to USD 60.2 billion in goods, which will face duties of 50 per cent or higher.
Among the most vulnerable sectors are textiles, gems and jewellery, and shrimp exports. On the other hand, around 30 per cent of exports to the U.S. worth per cent 27.6 billion will remain duty-free, largely dominated by pharmaceuticals, APIs, and electronics.
Medicines alone account for 56 per cent of the exempted shipments, giving some relief to the sector.
Labour-intensive industries, however, are expected to take the sharpest hit.
As per data, shrimp exports worth USD 2.4 billion, which constitute 32 per cent of India's share in the U.S. market, will now face a total tariff of 60 per cent, putting aquaculture hubs in Visakhapatnam at severe risk.
The diamond and jewellery sector, with exports of USD 10 billion and a 40 per cent U.S. market share, will be hit by tariffs of 52.1 per cent, threatening lakhs of jobs in Surat and Mumbai.
Similarly, textiles and apparel exports valued at USD 10.8 billion, accounting for 35 per cent share, will face tariffs of 63.9 per cent, creating immense pressure on hubs such as Tirupur, NCR, and Bengaluru.
Carpets worth USD 1.2 billion and handicrafts of USD 1.6 billion are also expected to face near-collapse, with countries like Turkey and Vietnam poised to capture India's lost market.
Agrifood exports worth USD 6 billion, including basmati rice, spices, and tea, will also be struck by 50 per cent tariffs, allowing competitors such as Pakistan and Thailand to gain an edge.
Steel, aluminium, and copper exports worth USD 4.7 billion, along with organic chemicals worth USD 2.7 billion, will be subject to tariffs above 50 per cent, creating a crisis for MSMEs.
The GTRI report suggested several measures to counter the U.S. tariff shock. These include tax reforms and ease-of-business measures, along with a Rs 15,000 crore interest equalisation scheme to shield MSME exporters. Targeted credit lines and wage support have been proposed for shrimp, apparel, jewellery, and carpet hubs.
The report also highlighted the need to strengthen refund schemes like RoDTEP, which neutralises hidden taxes on all exports, and RoSCTL, which provides rebates on state and central levies for textiles and apparel, to help reduce costs and maintain competitiveness in global markets.
It also urged the government to push market diversification with trade missions to the EU, Gulf, and East Asia.
It further highlighted the need to establish "India+1" export hubs in the UAE, Mexico, and Africa as a strategy to bypass the steep tariffs imposed by the U.S.
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