- US imposed 10% tariffs on India following forced-labour probes.
- India's exports to the US fell 16% to $26.2 billion during March-May 2026 from $31.31 billion in the corresponding period a year ago.
- Exports in tariff-covered categories fell to $6.28 billion during March-May 2026 from $11.79 billion a year earlier, a decline of nearly 47 percent.
- These categories accounted for almost 24% of India's exports to the US during the period, underscoring that a substantial portion of shipments remains vulnerable despite the broader tariff advantage.
- India's textile and apparel industry did not receive tariff-rate quota (TRQ) exemptions, while countries such as Bangladesh, Cambodia, Indonesia, and Malaysia did.
- Despite the temporary but huge impact of last year’s tariffs, the US remains India’s biggest trading partner, cornering 20% of total exports.
- The US is yet to announce its decision on the investigation into 16 major economies including India, China and Japan, examining structural excess manufacturing capacity and overproduction.
India's exports to the US have seen a significant decline, falling 16% to $26.2 billion during March-May 2026 compared to $31.31 billion a year earlier. Exports in tariff-covered categories plummeted 47% to $6.28 billion, which represents 24% of total exports, indicating vulnerability despite a competitive edge from 10% tariffs imposed by the US.3
The 10% tariffs have provided India with a competitive advantage over some peers, but uncertainty looms as further tariffs may be introduced. The US has already targeted India's textiles and pharmaceuticals, with potential tariffs rising to 20% overall. The textiles industry, in particular, is losing its competitive edge, while the pharmaceutical sector faces steep tariffs from 2028.
Despite these challenges, the US remains India's largest trading partner, accounting for 20% of total exports, significantly ahead of the UAE at 6-8%. The ongoing Section 301 investigation into excess manufacturing capacity could further impact trade relations. Radhika Piplani, chief economist at Motilal Oswal Financial Services, noted, “With the forced-labor investigation now concluded, attention shifts to resolving the remaining Section 301 review on excess capacity.”
“India's exports in tariff-covered categories plummeted nearly 47% to $6.28 billion during March-May 2026, highlighting the ongoing pressure on key sectors. Despite the US being India's largest trading partner, uncertainty looms as the US reviews tariffs on 16 major economies, including India.”
