India Inc expresses concern over US tariff and penalty on exports

New Delhi: Indian industry expresses disappointment following US President Donald Trump’s decision to impose a 25% tariff and an unspecified penalty on Indian goods, effective 1 August.

Industry body FICCI notes that while the development is likely to impact exports, it hopes the measure remains temporary and ongoing trade talks deliver a long-term resolution.

“While this move is unfortunate and will have a clear bearing on our exports, we hope that this imposition of higher tariffs will be a short-term phenomenon and that a permanent trade deal between the two sides will be finalised soon,” says FICCI President Harsha Vardhan Agarwal.

“There is a lot our two countries can achieve together, and FICCI is confident that following the detailed deliberations that are currently underway, we will see beneficial outcomes for both countries when the contours of the final trade agreement will emerge,” he adds.

India and the US have been negotiating a bilateral trade agreement since the beginning of the year. Agarwal says the US has raised certain demands that the Indian government has declined, citing national interest.

The Confederation of Indian Textile Industry (CITI) describes the revised tariff as a stiff challenge for the sector but remains optimistic about a resolution.

 “CITI remains hopeful that the tariff issue will get resolved once the proposed bilateral trade agreement (BTA) between India and the United States is in place,” the association says.

The US remains India’s largest market for textile and apparel exports. Between January and May 2025, Indian exports in this segment to the US are valued at USD 4.59 billion, over 13% higher than the USD 4.05 billion recorded during the same period last year.

Hemant Jain, President of PHDCCI, says that although Indian MSMEs may face immediate challenges, the shift also opens up new prospects.

“With global buyers looking to de-risk from overdependence on select geographies, India is emerging as the most credible, democratic, and scalable alternative,” he notes. 

“Now is the time for Indian industry to step up with quality, compliance, and competitiveness.”

Rahul Mehta, Chief Mentor at the Clothing Manufacturers Association of India, points out the direct cost implications: “It will make our products 7% to 10% more expensive than some of our competitors, and it will certainly hurt our apparel exports to the US.”

However, he adds, “Fortunately, this setback has come at the time when we have just signed an FTA with the UK, and are proceeding rapidly with an FTA with the EU. So yes, it is tough times, but not beyond our ability to face.”