India's exports to the United States are facing increased scrutiny as recent data reveals a concerning decline, prompting the Congress party to raise alarms. The drop in exports, particularly those that are tariff-free, has sparked worries about the underlying causes and potential long-term consequences for the Indian economy.

Recent reports indicate a significant decrease in India's exports to the US between May and August. Overall exports to the US fell 22.2% during this period, from $8.83 billion to $6.87 billion. While a decrease in exports subject to the higher tariffs imposed by the U.S. was expected, the decline in tariff-free exports has come as a surprise.

Congress leader Jairam Ramesh has voiced concerns over this unexpected downturn, emphasizing that it is "certainly not a seasonal fall". Citing an analysis by the Global Trade Research Initiative (GTRI), Ramesh highlighted the decline in exports of tariff-free products, including pharmaceuticals and smartphones.

Smartphone exports, a major component of India's exports to the US, have experienced a steep fall. According to the GTRI, smartphone exports to the US plummeted by 58% from $2.29 billion in May to $964.8 million in August. This decline is particularly alarming because smartphones are not subject to tariffs in the US. Overall, tariff-free exports, which constituted 28.5% of India's shipments to the US in August, contracted by 41.9% between May and August, falling from $3.37 billion to $1.96 billion. Pharmaceutical exports also experienced a decrease of 13.3% during the same period.

The decline in tariff-free exports has raised questions about the factors driving this trend. The GTRI has called for an urgent investigation to determine the underlying reasons for the fall in exports, especially for products like smartphones that face no tariffs. Some experts suggest the reduction is due to decreased U.S. industrial demand rather than a loss in market position.

The imposition of higher tariffs by the U.S. on certain goods from India has also contributed to the overall decline in exports. In April 2025, the US imposed a 10% additional tariff on imports from trade partners, which was subsequently raised to 25% on August 7 and 50% by August 27. These tariff hikes have particularly impacted labor-intensive sectors, which account for a significant portion of India's exports to the US. Exports in these categories fell 10.8% from $4.82 billion in May to $4.30 billion in August, affecting sectors sensitive to price variations.

The decline in exports is not limited to tariffed goods alone. Products that have the same tariffs for all countries, such as iron, steel, aluminum, copper, and auto components, have also experienced a decrease in exports.

With September marking the first full month of the 50% tariffs, concerns are mounting that the decline in exports could worsen. The GTRI anticipates further declines in sectors like textiles, gems and jewelry, chemicals, and solar panels. Industry bodies are urging the Indian government to implement support measures to mitigate the impact of declining exports.