- US Supreme Court ruling resets Trump-era tariffs, affecting India’s exports from Feb 24
- Textiles, organics, machinery, leather, plastics benefit from reduced 15% tariff, down from 18%
- Gems, jewellery, and handicrafts lose previous tariff exemptions, now face 15% levy
The reset of US trade tariffs, following the Supreme Court's takedown of "illegal" levies imposed by the Donald Trump-led administration, has evoked positive reactions from several of Washington's trading partners. While New Delhi has not yet reacted, experts point to mixed gains for India.
After taking into account the new "15% global tariffs" announced by Trump, the recent developments may spell boon and bane for various Indian export sectors.
NDTV Profit learnt from tax experts that, in the Indian context, some sectors like textiles and apparels, leather and footwear, organics chemicals, plastics and rubber, and machinery emerge as clear winners under the fresh levies which come into effect from Feb. 24 onwards.
Under the US-India trade deal clinched in the beginning of this month, these sectors faced an 18% tariff. However, they would now be subjected to a blanket 15% levy following the reset.
As displayed in the chart, textiles and apparels will be the biggest beneficiary of the new 15% surcharge as it has the highest estimated export volume of up to $9 billion. Followed by organic chemicals, with $5 billion estimated export volume; machinery with $3 billion export volume; leathers and footwear with up to $3 billion export volume; and plastics & rubber with an estimated export volume of up to $2 billion.
In stark contrast to this, certain key sectors like gems & jewellery with an estimated export volume of up to $10 billion, and handicraft with an export volume of up to $2 billion come up on the losing end of this wager. The exemption from tariffs granted to both these sectors under the US-India trade pact stands nullified as of now, and they will also attract a 15% levy.
The chart shows how these two sectors, previously exempt from levies under the US-India trade deal, will now be hit with the 15% blanket tariff as soon as it comes into effect.
Shielded Sectors
Sectors like pharmaceuticals, electronics, and energy remain largely shielded against the new levies, as current tariff structures do not apply to these critical sectors, according to the tax experts.
They added that pharmaceutical and energy exports remain exempt without requiring a specific trade-off agreement, protecting India's massive generic drug and green energy markets. Of these, generic pharma and APIs have an export volume of up to $9 billion, while a $8 billion export volume has been estimated for IT and electronics.
Other goods, with a smaller trade share like tea and coffee ($0.8 billion), spices ($0.5 billion), small aircraft parts, and tropical fruits like mangoes also fall under the exempted category.
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