U.S. tariff of 10% elicits mixed reaction from Indian exporters

For the Indian exporters to the U.S., the 10% tariff is likely to have a mixed impact, varying for each sector.

While some exporters are of the view this will make Indian goods expensive, others say that Indian goods are still competitively taxed and so India will not lose its edge.

“The fact that India has been placed in the lower 10% tariff category, while several competing exporting nations, including China, Vietnam, Thailand, Türkiye, UAE, Brazil, South Africa and others, face a higher tariff of 12.5%, reflects the recognition by the U.S. of the policy measures taken by the Government of India to strengthen its framework relating to forced labour,” S.C. Ralhan, president of the Federation of Indian Export Organisations said.

“This has helped India secure a relatively favourable position compared with many of its global competitors,” he added.

Rajesh Rokde, chairman of the All India Gem and Jewellery Domestic Council is not as optimistic.

“The U.S. government’s decision… will undoubtedly create challenges for our gem and jewellery exporters, making Indian products less price competitive in one of our largest markets,” Mr. Rokde said. “While the rate is lower than that imposed on some other countries, this measure still places significant pressure on margins and could dent the growth trajectory of our industry.”

The Confederation of Indian Textile Industry (CITI) said, “The tariff imposition on the issue of forced labour is deeply unfortunate as it does not indicate an expiry date and causes reputational risks. The CITI looks forward to the Indian government taking up this issue with the U.S. given the detrimental impact it can have on textile and apparel exports from India,” said its chairman Ashwin Chandran.

“What can raise a serious challenge for Indian textile and apparel exporters is the fact that although many key competitors of ours have also been subject to the same tariff rate, a window has been opened for textile and apparel exports from these countries to enter the U.S. free of the Section 301 tariffs. This differential treatment risks diverting sourcing orders for textile and apparel items away from India,” he said.

The U.S. continues to be the single-largest market for India’s textile and apparel items. Annual export of textile and apparel products from India to the US are usually close to $11 billion. The industry maintains a zero-tolerance approach, backed by active enforcement measures and compliance mechanisms. On July 13, the Directorate General of Foreign Trade issued a notification inserting new paragraphs into the Foreign Trade Policy regarding the prohibition on import of goods produced using forced labour.

India has also implemented four Labour Codes to protect workers’ rights, he added.

An executive from an automotive components manufacturers body said, on condition of anonymity, that while any additional tariff is a concern, the 10% levy is lower than what the industry had anticipated. With competing countries such as China, the EU and others also facing US tariffs, Indian auto component exporters can emerge relatively more competitive in the U.S. market.

The Trump administration had slapped ​10% and 12.5% levies on goods from ⁠60 trading partners, alleging inadequate enforcement of forced-labour import prohibitions.