In September 2025, India’s merchandise exports to the United States fell 11.93% year-on-year, to USD 5.46 billion.
At the same time, imports from the U.S. rose by 11.78%, reaching about USD 3.98 billion. The decline in U.S. shipments stands out especially because India’s total merchandise exports actually rose by ~6.7% in September. The drop comes in the first full month after Washington’s 50% tariff on many Indian exports took effect (from August 27, 2025).
What’s Causing the Decline
- New U.S. Tariffs
The steep 50% tariffs imposed by the U.S. on Indian goods are the most immediate trigger. These duties apply to many major export categories, making Indian goods less competitive in the U.S. market. - Sectoral Exposure
Labour-intensive and traditional export sectors—such as textiles, gems & jewellery, leather goods, and marine products—are among the most affected by these tariffs. - Reduced Forward Orders / Buyer Shift
Some U.S. buyers are reportedly cutting orders or seeking alternatives in more tariff-friendly sourcing markets. - Import Surge & Trade Deficit Pressure
Meanwhile, India’s imports—especially in gold, silver, fertilisers, and electronics—rose sharply in September, pushing the overall trade deficit to a 13-month high of USD 32.15 billion.
Impacts & Risks
- Exporters’ Margins Under Strain
Margins for Indian exporters will shrink unless they absorb the tariff hit, which many—especially small and medium firms—may find unsustainable. - Trade Imbalance with the U.S.
With Indian imports from the U.S. rising while exports fall, the trade balance with the U.S. is worsening. - Pressure on Employment in Export Sectors
Sectors like textiles, leather, gems & jewellery, which employ large numbers of workers, may face job losses or production cuts. - Need for Diversification
India will be pushed to find alternative markets or shift supply chains to neutralize overdependence on the U.S. route. - Diplomatic & Trade Tensions
The drop reinforces pressure points in India–U.S. relations, especially since the tariffs were imposed in response to India’s continuing Russian oil imports.
Policy & Strategy Moves to Watch
- Bilateral Trade Negotiations
India and the U.S. are slated to resume talks in the near term. The Indian side reportedly plans to offer increased U.S. energy imports as part of a deal. Reuters - Tariff Exemptions or Safeguards
India may petition for exemptions or seek WTO recourse for certain goods or sectors heavily affected. - Export Incentives & Subsidy Support
The government might roll out more aid (subsidies, credit, logistical support) to cushion exporters. - Market Diversification
Pushing exports towards other markets (Africa, Latin America, ASEAN) will likely intensify. - Supply Chain Realignment
Indian exporters may need to reconfigure their input sourcing to reduce cost burdens under new tariff regimes.
