US-imposed tariffs and penalties significantly impact Indian exports in diamond polishing, shrimp, home textiles, and carpets sectors.
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Diamond polishers could see revenues decline by 20-25% this fiscal year amid tariff-induced pricing pressures.
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Shrimp exports to the US may drop by 7-9%, with Indian exporters facing higher tariff burdens than global competitors.
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Textiles, carpets, and other sectors face effective tariffs up to 50%, severely hindering their US market competitiveness.
While immediate disruptions, job losses, and higher US consumer prices are expected, India's expanding trade agreements may cushion long-term effects.
Impact on Indian Diamond Polishing Sector
India, as the world’s top exporter of polished diamonds, is encountering fresh hurdles following the US tariffs and penalties imposed in 2025. The US market constitutes a major portion—about 35%—of India’s natural polished diamond exports. However, a slowdown in demand, compounded by a 10% tariff announced in April and an additional 25% tariff announced in late July 2025, has compressed export volumes.
The share of the US in Indian polished diamond exports dropped sharply from 37% last fiscal to 24% in the first quarter of fiscal 2026.
Revenues for Indian diamond polishers are projected to decline by 20-25%, potentially falling to USD 10-11 billion.
Diamond polishers traditionally operate on thin margins of 4-5%, limiting their ability to absorb cost increases, forcing miners and retailers to shoulder some tariff costs.
Export revenue from natural diamonds fell 17% to USD 13.3 billion in fiscal 2025, already impacted by reduced demand from China and competition from lab-grown diamonds in the US market.
Shrimp Exports Under Pressure
The US is the largest market for Indian shrimp exports, accounting for close to 48% of shipments. The tariffs and additional financial penalties have positioned India as one of the highest taxed shrimp exporters in the US, impacting volumes and profitability.
Crisil Ratings projects a 7-9% decline in shrimp exports to the US in fiscal 2026.
Indian shrimp faces a combined tariff burden exceeding 33%, including anti-dumping, countervailing duties, and the new US tariff, compared to just 10% for Ecuador, a major competitor.
Operating margins for shrimp exporters are expected to contract by 50-100 basis points due to tariff costs and competitive pressure.
Exporters face significant challenges to credit profiles amid reduced revenue and heightened competition.
Home Textiles, Carpets, and Related Sectors
The US tariffs have also targeted Indian home textiles and carpets, with duties reaching near 50% in some product categories, drastically reducing competitiveness in the American market.
Sectors including apparel (knitted and woven), carpets, textiles/made-ups face effective US tariffs of around 50-60%.
The textile industry, one of India’s major export earners, expresses deep concern over the substantial setback caused by the new tariffs.
Industry bodies urge swift government intervention to support exporters in navigating this challenging landscape.
Broader Economic and Trade Implications
The US tariffs form part of a wider set of penalties linked to India’s continued purchase of Russian oil, uniquely targeting Indian exports while exempting other countries like China and Turkey from similar measures.
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Bilateral trade between India and the US was USD 131.8 billion in 2024-25, with exports worth USD 86.5 billion.
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The tariffs are expected to cut US-bound exports from affected sectors by 40-50%.
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Concerns include short-term market disruptions, potential job losses, and higher prices for American consumers.
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However, India’s recent free trade agreements with countries including the UK, Australia, and UAE may provide alternative avenues and reduce long-term impact.
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Negotiations on a bilateral trade agreement between India and the US continue, aiming to conclude an interim deal to address trade challenges.
In summary, CRISIL Ratings highlights that the US tariffs and associated penalties pose a significant challenge to key Indian export sectors, particularly diamond polishing, shrimp, home textiles, and carpets. While short-term pain is inevitable with falling revenues and squeezed margins, India’s diversified trade partnerships and ongoing trade talks offer hope for mitigating some of the adverse effects over time. Exporters and policymakers face critical decisions in managing competitiveness, market access, and supply chain adjustments in this evolving trade environment. The situation demands close monitoring as tariff implementation progresses and responses unfold in the coming months.
Source: ANI, The Tribune, Economic Times, India Today
