Exports of Indian goods to the United States are expected to decline sharply following the implementation of increased tariffs by the U.S. government. The tariffs, which took effect on August 27, 2025, are a consequence of India's continued purchase of Russian oil, a move that the U.S. sees as indirectly funding Russia's war against Ukraine.

The new tariffs have increased duties on many Indian products to 50%, among the highest tariffs imposed by the U.S. on any trading partner. A report by the Global Trade Research Initiative (GTRI) projects that India's exports to the U.S. could be slashed to $49.6 billion in FY2026, a 43% decline from the previous year's $86.5 billion. Market experts estimate that India's exports to the US may fall by $25–30 billion.

Several sectors are expected to be significantly affected. Micro, small, and medium enterprises (MSMEs), which account for as much as 45% of India's total exports, will be significantly impacted. The textiles, gems and jewellery, and seafood industries, where MSMEs have a large share, are likely to be the most affected. Other sectors facing potential risks include chemicals and auto components. Specifically, the following impacts are anticipated:

• Textiles: Exports to the U.S. total $3 billion, with nearly half of India's global textile exports going to the U.S. The effective tariff has increased to 59%.
• Gems & Jewellery: Exports to the U.S. are $10 billion. The effective tariff has jumped to 53.2%.
• Seafood: With about a third of India's seafood exports going to the U.S., the effective tariff has surged to 58.56%.
• Organic Chemicals: The effective tariff has surged to 54%.
• Furniture Accessories: The effective rate has risen to 52.9%.
• Knitted Apparels: The standard tariff has increased to an effective 63.9%.
• Non-Knitted Apparels: The tariff has risen to 60.3%.

The Federation of Indian Export Organisations (FIEO) has expressed grave concern over the U.S. government's imposition of the additional tariffs. FIEO President S C Ralhan stated that Indian goods have been rendered uncompetitive compared to competitors from other Asian countries. He also noted that textile and apparel manufacturers in key hubs have halted production amid worsening cost competitiveness.

The Indian government is exploring strategies to mitigate the impact of the tariffs. The Commerce Ministry has scheduled sessions to engage with exporters across various industries to explore new export markets. The government is also pushing a 'Swadeshi' mantra to reduce the economy's reliance on exports, encouraging citizens to buy local products. Financial assistance and incentives to diversify into other markets, including China, Latin America, and the Middle East, are also being considered.

Some analysts suggest that the tariffs could strain U.S.-India ties, potentially leading India to work more closely with Moscow and Beijing. However, others remain optimistic about the long-term prospects of a mutually beneficial Free Trade Agreement between the two countries. Despite the challenges, India's global trade momentum remains positive, with total goods and services exports still projected to rise in FY2026.