Even though US President Donald Trump has announced a 50 per cent tariff on Indian imports, the overall effect on India's global export performance is not likely to be significant.
Official estimates have put forward that just about 4.8 per cent of India's total global exports, estimated to have crossed a record $820 billion in 2024–25, are likely to be impacted.
A high government official explained that the new tariff action will only be imposed on goods worth around $40 billion that are shipped to the United States.
Significantly, Indian exports of some of the country's most important sectors, including pharmaceuticals and dominant electronics such as smartphones and semiconductors, remain exempt from the drastic tariff increase now. These products, including some energy items, still enjoy exemptions.
In FY25, India shipped about $10.5 billion worth of medicine and $14.6 billion of electronics—in the form of smartphones—to the US. Combined, these comprised 29 per cent of India's exports to America.
Petroleum exports, worth $4.09 billion for FY25, are equally exempt for the time being, with energy products still on the exemption list. India's total exports to the US were worth $86.51 billion in FY25.
These exemptions have not yet been withdrawn and should continue to remain valid for the next three weeks, considering the newly imposed tariffs were to take effect within 21 days.
All these temporary safeguards have ensured that Indian exports to the US have registered a significant rise after January 2025. With no further levies on these segments, US share in India's merchandise exports went up from the previous 17–18 per cent level to more than 20 per cent during January–June.
Industry experts attribute this increase to both pre-emptive export shipping by traders before the next tariff deadline as well as ongoing exemption from the 10 per cent baseline tariff introduced in April. Smartphones and drugs, especially, experienced good exports because they have been exempted from that tax.
While India's overall growth in exports was muted—rising less than 2 per cent in the first quarter of FY26 and falling more than 4 per cent in the previous quarter—exports to the US still commanded a large share. In the April–June quarter of FY26, exports to the US constituted close to 23 per cent of India's overall outward trade, a percentage that was also recorded in the first quarter of FY25.
Still, there are clouds of uncertainty. President Trump has suggested possible tariffs as much as 200 per cent on pharmaceuticals made abroad. Moreover, the present exemptions for smartphones may be reversed based on future policy changes.
In just Q1 FY26, Indian exports to the US were $25.52 billion—a near 23 per cent increase from the corresponding period of last year. Bilateral trade during the quarter stood at $32.41 billion, and for the full FY25, it crossed $86 billion, as per Commerce Ministry data.
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