The USA's decision to impose a blanket 25 per cent tariff on all Indian-origin goods effective August 7, without any exemptions, could severely hit the country's exports to America, think tank GTRI said on Friday.
According to an analysis of the White House's executive order by the Global Trade Research Initiative (GTRI), the 25 per cent tariff will now be applicable to sectors like pharmaceuticals and electronics, which were earlier exempted from import duties by the US.
India will face tariffs of 25 per cent on its exports to the US as President Donald Trump issued an executive order listing the various duties that Washington will impose on exports from countries around the world.
In the executive order titled 'Further Modifying The Reciprocal Tariff Rates', Trump announced tariff rates for nearly 70 nations.
"This blanket tariff, approved by President Trump, is one of the toughest trade actions the US has taken against a key trading partner in recent years," GTRI Founder Ajay Srivastava said, adding "What sets this action apart is that, unlike many other trading partners, India has been denied all product-level exemptions, even for products and sectors, the US exempted goods from other countries".
These tariff exempted categories included finished pharmaceutical drugs, active pharmaceutical ingredients (APIs), and other key drug inputs; energy products such as crude oil, refined fuels, natural gas, coal, and electricity; critical minerals; and a wide range of electronics and semiconductors, including computers, tablets, smartphones, solid-state drives, flat panel displays, and integrated circuits.
These exclusions do not apply to India. Instead, India is subject to a flat 25 per cent ad valorem duty across all goods, with no exceptions by product or sector, he said.
The order mentions that tariffs may be reduced once countries make a deal with the US.
Srivastava said that this order is more than just a tariff measure and a pressure tactic.
"Countries like China have retained exemptions on critical goods like pharmaceuticals, semiconductors, and energy. But India has been singled out for harsher treatment, with no product-level exemptions whatsoever. The message is clear - agree to US geopolitical views, sign a deal or suffer blanket tariffs - and India is being made the example for others, " he said.
While Indian goods will pay tariffs at the rate of 25 per cent from August 7, goods in transit can continue paying tariffs at earlier rates of 10 per cent on most products (except for steel and aluminium, where tariffs are 50 per cent and tariff-exempt products like smartphones) up to October 5, 2025, the think tank said.
"Tariff exemption to other countries and not India will doubly hit India's exports of petroleum products (USD 4.1 billion in FY2025), smartphones (USD 10.9 billion), and Pharmaceuticals (USD 9.8 billion)to the US. All other sectors, engineering goods, electronics, and textiles will also bear the brunt of the tariffs," he said.
Further, he said as per quick estimates, India's goods exports in FY 2026 may come down by 30 per cent from USD 86.5 billion in FY 2025 to USD 60.6 billion in FY 2026.
Most affected categories will be petroleum products, pharmaceuticals and electronics, and each of these has high import content and low domestic value add, he said.
The US has imposed new tariffs on imports from various countries, with rates ranging from 10 per cent to 41 per cent. These will be over and above the standard most favoured nation tariffs.
This means that imports from these countries will now face both the standard US tariff and an additional reciprocal tariff, raising overall duties significantly, the GTRI said, adding countries facing higher tariffs (25-30 per cent) include India, Brunei, Kazakhstan, Moldova, and Tunisia.
India's export competitors-- Bangladesh, Sri Lanka, Taiwan, and Vietnam -- face a 20 per cent duty.
Source Name : Economic Times