India’s exports to the United States – its largest trading partner – have fallen sharply following the imposition of high US tariffs on Indian goods, representing one of the strongest trade shocks in recent years.
According to government data, India’s goods exports to the US fell 20% in September alone and nearly 40% in the last four months as Washington’s 50% import tariffs took full effect. The tariffs, introduced on August 27, impose an additional 25% penalty tied to New Delhi’s continued purchases of Russian oil.
“The US has been India’s worst-hit market since tariff escalation began,” said Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI), a Delhi-based think tank.
The new tariffs will hit India’s labor-intensive export industries hardest, including textiles, gems and jewelry, engineering goods and chemicals – all key sectors that employ millions of workers and contribute significantly to foreign exchange earnings.
Shipments to the US have now fallen for four straight months, falling from $8.8 billion (£6.5 billion) in May to $5.5 billion in September, a 37.5% decline, GTRI analysis shows.
The slump has also worsened India’s overall trading position. According to official figures, the country’s goods trade deficit widened to a 13-month high of $32.15 billion in September, reflecting both weaker exports and robust import demand.
Some of the decline in U.S. shipments was offset by stronger trade flows with the United Arab Emirates and China, which together absorbed a larger share of India’s recent export growth.
September’s sharp decline represents the first full-month impact of the Trump administration’s tariff package, which aims to punish India for its energy and trade ties with Russia while demanding better market access for U.S. agricultural and manufacturing exports.
The White House has argued that India’s continued purchase of discounted Russian crude undermines international sanctions aimed at pressuring Moscow over the war in Ukraine.
Earlier this week, President Donald Trump told reporters that Indian Prime Minister Narendra Modi had agreed to a “phase-out” of imports of Russian oil, part of what he described as “constructive energy cooperation talks.”
However, an Indian Foreign Ministry spokesman struck a more cautious tone, saying discussions with Washington were “ongoing” and that the US had shown interest in “deepening energy cooperation with India”.
Trade negotiations between the two countries have resumed after months of stalemate. An Indian delegation is currently in Washington trying to secure concessions that could mitigate the impact of the tariffs.
Talks reportedly aim to reach an agreement before the end of November, although both sides acknowledge deep differences remain – particularly over access to India’s agricultural and dairy markets.
For years, Washington has pushed for greater access to India’s protected agricultural sector, calling it a “large untapped market.” New Delhi resisted, citing food security, rural livelihoods and the need to protect the interests of hundreds of millions of small farmers.
Until recently, the US was India’s largest trading partner. Bilateral trade reached a volume of $190 billion in 2024. Both governments had previously stated a goal of more than doubling that figure to $500 billion, but the escalating tariff war has cast doubt on that goal.
Trade experts warn that the new tariffs could dampen investment sentiment and disrupt supply chains at a delicate moment for both economies.
“The timing is bad – global demand is already weakening and India’s export engines are just beginning to recover,” said Priya Nair, a Mumbai-based trade economist. “The longer these tariffs remain in place, the greater the risk of structural damage to India’s labor-intensive sectors.”
As negotiations continue, observers say the coming weeks will determine whether the two governments can turn the confrontation into a compromise – or whether the world’s two largest democracies are headed for a prolonged trade conflict.
