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
A fresh wave of tariff hikes from Washington is sending ripples through India’s export community. 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 retaliatory 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, electronics, 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 negligible duty — about 0.41%. The proposed jump to 25% would be, in Goyal’s words, “a massive setback,” raising a $100 phone’s landed price to $125 overnight.
Pharmaceuticals, another Indian export success story, face a similar threat. India sent ₹92,000 crore worth of medicines to the US in 2024 with zero import duty. A 25% tariff could make Indian generics far less competitive, opening the door for rivals such as Vietnam to grab market share.
The most immediate and painful hit, however, is to the gems and jewelry sector. Already under a 25% US tariff, Indian gold jewelry will face another 25% hike from August 27, effectively doubling the duty to 50%. Rajesh Rokde, Chairman of the All-India Gem and Jewelry Domestic Council, called it a “compounded blow” that endangers thousands of skilled artisans jobs and threatens to erode India’s centuries-old jewelry heritage. Vice Chairman Avinash Gupta warned that the tariff shock could weaken the rupee, raise domestic gold prices, and dampen demand at home — creating a double bind for the sector.
India is the world’s largest consumer of gold and a leading exporter of diamonds and jewelry, shipping $22 billion worth in FY24, with $11 billion bound for the US. The industry has enjoyed strong growth — April 2025 exports were up 10.74% year-on-year — but leaders fear the tariff wall will halt this momentum.
Beyond sector-specific concerns, the tariffs raise broader economic questions. Sonal Badhan, Economics Specialist at Bank of Baroda, says the macroeconomic hit could be contained thanks to strong domestic consumption and resilient services exports, which remain beyond the reach of US tariffs. She estimates a GDP impact of 0.2–0.4% if the full hikes take effect. Lower oil prices, she notes, will help keep the current account deficit in check, while targeted government stimulus could soften the fiscal blow.
Still, Badhan warns that if trade tensions persist, especially if tariffs expand to other high-value exports like semiconductors, the Reserve Bank of India may revise its growth projections and consider an additional 25bps rate cut later in the year.
Policy experts stress that India must use this moment to accelerate trade diversification. Goyal’s recommendations include expanding into markets such as Germany, the UK, Singapore, and Malaysia, where demand for Indian engineering goods and jewelry is on the rise. On the import side, he calls for reducing dependence on US goods, which currently include high-value imports such as precious stones, nuclear reactor components, and advanced equipment.
The Modi government has reiterated its commitment to maintaining India’s status as a global manufacturing hub, with a focus on quality, standardization, and consumer protection. But with millions of jobs in export-linked sectors at stake, the pressure is on to craft a calibrated response that protects key industries without escalating into a full-blown trade war.
For the gold sector in particular, the August 27 deadline looms large. Artisans, exporters, and traders are bracing for an abrupt shift in market dynamics — one that could reshape supply chains, pricing, and consumer demand both at home and abroad. As Goyal put it bluntly: “This isn’t just about business losses; it’s about livelihoods. Millions depend on these exports. We cannot afford to stand still.”
