As US imposes additional 25% tariff on Indian exports, FIEO raises alarm on sectoral fallout

New Delhi August 26, 2025: The Federation of Indian Export Organisations (FIEO) expresses grave concern over the US government’s imposition of an additional 25% tariff on Indian-origin goods - raising total duties on many export categories up to 50%, effective from August 27, 2025. The move will severely disrupt the flow of Indian goods to its largest export market. FIEO President, S C Ralhan describes the development as a setback and adds that it can severely impact India's exports to the US, with approximately 55% of India’s US-bound shipments (worth USD 47–48 billion) now exposed to pricing disadvantages of 30–35%, rendering them uncompetitive in comparison to its competitors from China, Vietnam, Cambodia, Philippines and other Southeast and South Asian countries.
 
Textiles and apparel manufacturers in Tirupur, Noida, and Surat have halted production amid worsening cost competitiveness. This sector is losing ground to lower cost rivals from Vietnam and Bangladesh. While for the seafood especially shrimps, as the US market absorbs nearly 40% of Indian seafood exports and the tariff increase risks stockpile losses, disrupted supply chains, and farmer distress.
 
On other labour-intensive sectors of exports Leather, Ceramics, Chemicals, Handicrafts, Carpets etc, the industry faces a sharp erosion of competitiveness, particularly against European, South East and Mexican producers, reiterated Mr Ralhan. Delays, order cancellations, and negated cost advantages loom large on these sectors. 
 
Looking at the current emerging scenario, FIEO Chief urges there is need for immediate Government support which includes push for interest subvention schemes and export credit support to sustain working capital and liquidity. To further support this, low cost of credit and easy availability of credit with emphasis on MSMEs with the support from banks and financial institutions with special direction in this regard both from the Govt and the Reserve Bank of India is needed. 
 
Ralhan also urges for moratorium on payment of principal and interest for loans up to a period of 1 year. Additionally, automatic enhancement of the existing limit by 30% along with collateral free lending on ECLGS lines may also be pushed as these will help in addressing the stress of these companies without much burden on the exchequer. 
 
Besides, expanding PLI schemes, enhancing infrastructure, and invest in cold-chain/storage assets to strengthen competitiveness and aggressive market diversification through accelerated trade agreements (FTAs) with the EU, Oman, Chile, Peru, GCC, Africa, and other Latin American countries with a provision for early-harvest for labour-intensive sectors should be prioritized. However, leveraging negotiating window for urgent diplomatic engagement with US still remains the key. Yet another approach could be promotion of Brand India & Innovation through enhanced global branding, invest in quality certifications, and embed innovation in export strategy to make Indian goods more attractive globally.
 
FIEO appeals for swift, coordinated action among exporters, industry bodies, and government agencies to protect livelihoods, reinforce global trade links, and navigate this turbulent phase. The steps taken now will determine how effectively India withstands external shocks and reasserts its presence in the global export landscape.