India’s exports to the US are expected to drop significantly, with estimates suggesting a decline of nearly 55% in 2025-26 due to the newly imposed 50% tariff. This could severely impact labor-intensive sectors such as textiles, gems, and seafood, potentially leading to job losses and slower economic growth.
Overview of Tariff Implementation
(a) Effective Date: August 27, 2025
(b) Total Tariff Rate: 50% on two-thirds of Indian exports to the U.S.
(c) Reason for Tariff: India’s continued purchase of Russian oil, viewed as a national security concern by the U.S.
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(d) Estimated Export Losses: Exporter groups estimate the tariffs could affect nearly 55% of India’s $87 billion in merchandise exports to the U.S., while benefiting competitors such as Vietnam, Bangladesh and China. This means Indian exporters could face a loss of about 48 billion USD when many goods are still exempt from 50% tariff. Once other goods and services are also covered, this loss can be monumental for Indian exporters.
(e) Economic Consequences: The following are the economic consequences of 50% tariff by U.S.:
(i) Job Losses: Hundreds of thousands of jobs have already been slashed in export hubs of India.
(ii) Overall Export Decline: Total exports to the US could decrease by 55% or more in the fiscal year 2025-26.
(iii) Competitiveness: Indian products may lose market share to competitors like China and Vietnam, which face lower tariffs.
The imposition of these tariffs would have a profound impact on India’s economy. FDI and FII have already left India in 2025 as they have no hope for the revival of Indian economy, corporate earnings and stock market of India till 2030 says Praveen Dalal.
See impact of 50% tariff upon FDI in India
See impact of 50% tariff upon FIIs
See combined impact of 50% tariff upon FDI and FIIs
It seems India has started succumbing to U.S. demands and secretly spending money upon U.S. imports like big defense procurement. Modi has to maintain his false image of a strong man, when in truth he has already failed India big and accepted his defeat long ago says Praveen Dalal.
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Some media reports in India have also claimed that India has reduced its crude oil purchase from Russia to 25% since July 2025 and has increased purchase of U.S. crude oil by 50%. We would cover this aspect in detail in other article(s).
But for the time being, Modi has failed India big time and he has proved to be a major diplomatic failure due to his and his team’s intellectual bankruptcy. All he can do now is peddle lies, jumlabaazi and moronic IT cell narratives says Praveen Dalal.