How will the 27% US tariff impact India’s shrimp, gold exports?

New Delhi: India's export sectors, including shrimp, carpets, medical devices, and gold jewellery, are set to face challenges following the United States' decision to impose a 27 percent additional import duty, an official has said. However, sectors such as electronics, textiles, and pharmaceuticals may gain a competitive edge in the US market.

On April 2, US President Donald Trump announced a new tariff policy aimed at reducing the trade deficit and boosting domestic manufacturing. The policy includes a universal 10 percent tariff on all imported goods, effective from April 5, which will be increased to 27 per cent from April 9. Over 60 countries, including India, are impacted by these measures.

Shrimp exports to take a hit

The US is the largest market for India's shrimp industry, accounting for 40 percent of the country's total shrimp exports. The higher tariffs will make Indian shrimp significantly less competitive in the US market. India already faces anti-dumping and countervailing duties on shrimp exports to the US.

In 2023-24, India exported 7,16,004 tonnes of frozen shrimp, of which 2,97,571 tonnes were shipped to the US. Other key markets include China (1,48,483 tonnes), the European Union (89,697 tonnes), and Japan (35,906 tonnes). The US remained the largest importer of Indian seafood in terms of value, with imports worth USD 2.55 billion, accounting for a 34.53 percent share. Frozen shrimp continued to be the principal export item to the US, making up 91.90 percent of shipments.

Impact on carpet and jewellery exports

The US is also the largest importer of Indian carpets, with imports valued at approximately USD 2 billion in 2023-24. Similarly, India's gems and jewellery sector will be significantly affected by the tariff increase. In 2023-24, India exported gems and jewellery worth USD 32.85 billion globally, with the US accounting for 30.28 percent (USD 10 billion). The export of diamonds, gold, and silver stood at USD 11.88 billion, with a tariff differential of 13.32 percent.

"It is a big setback for India as the US has announced retaliatory tariffs," said Kama Jewellery MD Colin Shah.

"The gems and jewellery sector will be the most affected, as import tariffs may rise to 20 percent from the current zero on loose diamonds and from 5.5-7 percent on gold jewellery. The US is one of India's largest jewellery export markets, accounting for almost 30 percent of the share."

Medical devices industry faces challenges

The imposition of a 27 percent reciprocal tariff on medical device exports to the US is expected to pose significant challenges to the sector’s growth, according to the Association of Indian Medical Device Industry (AiMeD). In 2023-24, India's medical device exports to the US stood at USD 714.38 million, while imports from the US to India were significantly higher at USD 1.52 billion.

Potential gains for apparel and electronics sectors

Despite the tariff hike, India's apparel sector may benefit as competing countries such as China, Bangladesh, Vietnam, Cambodia, and Sri Lanka face even higher tariffs.

"The current Trump tariff offers a tariff-based edge to Brazil, Turkey, and other EU apparel-exporting countries like Italy, Germany, and Spain. However, given India's strong apparel value chain, my initial assessment is that it will ultimately work in our favour, and we should prepare to capitalise on this opportunity," said Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council (AEPC).

The US is the world's largest apparel importer, sourcing primarily from Asia. The US accounts for about 35 percent of Indian apparel exports. In 2024, apparel exports to the US were valued at USD 5.2 billion, marking an 11.2 percent increase over 2023.

Similarly, America remains the largest market for India's electronics exports. The US accounts for 33 percent of total shipments, valued at approximately USD 30 billion in 2023-24. The top five export markets for Indian electronics include the US, UAE, Netherlands, UK, and Italy.

Pharmaceuticals remain exempt

The US administration has exempted pharmaceuticals from the new reciprocal tariffs. India exported pharmaceuticals worth approximately USD 9 billion to the US in 2023-24.

Reports indicate that medicines from Indian companies contributed USD 219 billion in savings to the US healthcare system in 2022 and a total of USD 1.3 trillion between 2013 and 2022. Indian generics are expected to generate an additional USD 1.3 trillion in savings over the next five years.

Currently, Indian pharmaceuticals face no import duty in the US. During April-January of the last fiscal year, exports rose 7.84 percent to USD 24.3 billion, compared to USD 22.53 billion in the previous year. The full-year export figure for 2023-24 stood at USD 27.84 billion.

"This vital decision secures the uninterrupted flow of essential and affordable medicines to Americans," said Pharmexcil Chairman Namit Joshi.

PTI