Page 36 - The Indian EYE 081525

BUSINESS & TRADE AUGUST 08, 2025 | The Indian Eye 36

Trump’s 50% Tariff Shock Puts

Indian Exports — and Gold Jewelry

— Under Pressure

With the US set to double tariffs on Indian goods to 50% from August 27, India’s export sector — especially gold jewelry

— faces sharp competitive losses, though experts believe strong domestic fundamentals could help soften the blow

OUR BUREAU
Mumbai
fresh wave of tariff hikes from Washington is
sending ripples through India’s export com-
A munity. The Chamber of Trade and Industry
(CTI) has warned that President Donald Trump’s
decision to raise tariffs on Indian goods from 25% to
50% could severely undermine key industries, from
engineering to pharmaceuticals. CTI Chairman
Brijesh Goyal has urged Prime Minister Narendra
Modi to respond swiftly, including considering re-
taliatory measures and diversifying export markets.
The stakes are significant. In 2024, India
shipped `1.7 lakh crore worth of engineering
goods to the US — steel products, machinery, and
auto parts — taxed at 10%. Under the proposed
structure, tariffs would rise to 25%, pushing up
prices and eroding competitiveness. “A $100 item
currently sold for $110 will now cost $125,” Goyal
explained. “Export volumes could fall by 10–15%.”
Similar impacts are expected across textiles, elec-
tronics, and pharmaceuticals.
The electronics sector, a rising star in India’s
export basket, could see one of the steepest shocks.
Smartphones currently land in the US with negligi- India is the world’s largest consumer of gold and a leading exporter of diamonds and jewelry, shipping $22 billion worth in
ble duty — about 0.41%. The proposed jump to 25%
would be, in Goyal’s words, “a massive setback,” rais- FY24, with $11 billion bound for the US (ANI file photo)
ing a $100 phone’s landed price to $125 overnight.
Pharmaceuticals, another Indian export suc- growth — April 2025 exports were up 10.74% year- sia, where demand for Indian engineering goods
cess story, face a similar threat. India sent `92,000 on-year — but leaders fear the tariff wall will halt and jewelry is on the rise. On the import side, he
crore worth of medicines to the US in 2024 with this momentum. calls for reducing dependence on US goods, which
zero import duty. A 25% tariff could make Indian Beyond sector-specific concerns, the tariffs currently include high-value imports such as pre-
generics far less competitive, opening the door for raise broader economic questions. Sonal Badhan, cious stones, nuclear reactor components, and ad-
rivals such as Vietnam to grab market share. Economics Specialist at Bank of Baroda, says the vanced equipment.
The most immediate and painful hit, however, macroeconomic hit could be contained thanks to The Modi government has reiterated its com-
is to the gems and jewelry sector. Already under strong domestic consumption and resilient services mitment to maintaining India’s status as a global
a 25% US tariff, Indian gold jewelry will face an- exports, which remain beyond the reach of US tar- manufacturing hub, with a focus on quality, stan-
other 25% hike from August 27, effectively dou- iffs. She estimates a GDP impact of 0.2–0.4% if the dardization, and consumer protection. But with
bling the duty to 50%. Rajesh Rokde, Chairman full hikes take effect. Lower oil prices, she notes, millions of jobs in export-linked sectors at stake,
of the All-India Gem and Jewelry Domestic Coun- will help keep the current account deficit in check, the pressure is on to craft a calibrated response
cil, called it a “compounded blow” that endangers while targeted government stimulus could soften that protects key industries without escalating into
thousands of skilled artisans jobs and threatens to the fiscal blow. a full-blown trade war.
erode India’s centuries-old jewelry heritage. Vice Still, Badhan warns that if trade tensions per- For the gold sector in particular, the August
Chairman Avinash Gupta warned that the tariff sist, especially if tariffs expand to other high-value 27 deadline looms large. Artisans, exporters, and
shock could weaken the rupee, raise domestic gold exports like semiconductors, the Reserve Bank of traders are bracing for an abrupt shift in market
prices, and dampen demand at home — creating a India may revise its growth projections and consid- dynamics — one that could reshape supply chains,
double bind for the sector. er an additional 25bps rate cut later in the year. pricing, and consumer demand both at home and
India is the world’s largest consumer of gold Policy experts stress that India must use this abroad. As Goyal put it bluntly: “This isn’t just
and a leading exporter of diamonds and jewelry, moment to accelerate trade diversification. Goyal’s about business losses; it’s about livelihoods. Mil-
shipping $22 billion worth in FY24, with $11 billion recommendations include expanding into markets lions depend on these exports. We cannot afford
bound for the US. The industry has enjoyed strong such as Germany, the UK, Singapore, and Malay- to stand still.”

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