A tariff has been imposed on approximately $45 billion of Indian exports. Sectors such as textiles and gems and jewelry, which rely heavily on labor, are expected to experience moderate challenges. However, sectors like pharmaceuticals, smartphones, and steel are largely protected due to exemptions, pre-existing tariff frameworks, and robust domestic demand, according to Dr. Soumya Kanti Ghosh from SBI research.
In response to the Executive Order 14329 issued by the US President on August 6, 2025, the US announced the tariffs applicable to products from India that are imported for consumption or taken from warehouses for consumption starting on August 27, 2025.
Following the announcement, Indian stock markets dropped, and the rupee weakened as foreign investors sold off assets, although local buyers helped mitigate the decline. A 50 percent tariff does not directly translate into retail price increases, as importers and exporters usually absorb much of the cost, which limits inflation for consumers but puts pressure on the profit margins of exporters.
Justin Khoo, a Senior Market Analyst for APAC at VT Markets, suggests that the most significant impact will be on textiles, gems, jewelry, footwear, furniture, and chemicals, while pharmaceuticals and semiconductor-related electronics are mostly unaffected. Steel, aluminum, copper products, and passenger vehicles continue to be managed under previous US regulations instead of the newly established ones.
Here’s how 50% US tariffs could impact the sectors
Textile Sector
According to SBI Research, the US is India’s primary destination for textile exports. India ranks as the third-largest exporter to the U.S., following China and Vietnam. Due to increased tariffs, Indian products may become less competitive, potentially benefiting countries like China and Vietnam, as the tariffs imposed on India are also higher compared to those on other Asian nations such as China (30%), Vietnam (20%), Indonesia (19%), and Japan (15%). The textile and apparel sector accounts for 2.3% of our GDP, contributes 13% to industrial output, and makes up 12% of total exports.
Gems and Jewellery
As per SBI Research, the Gems and Jewellery industry, valued at $10 billion and holding a 40% share of the US market, is subject to a 50% tariff, potentially providing an advantage to countries like Switzerland, which has a lower tariff rate of 39%. The US continues to be the largest market, representing almost one-third of the sector’s annual shipments totaling $28.5 billion. With US tariffs increasing from 25% to 50%, exporters are preparing for considerable disruptions.
Seafoods
Based on insights from SBI Research, shrimp exporters, who ship over half of their production to the US, are worried about significant losses and cancellations of orders due to the implementation of the increased tariff. This situation also influences pricing for consumers in the US, rendering India less competitive compared to competitors like Ecuador.
Tariffs Impact on Indian Stock Market
Harshal Dasani, Business Head, INVasset PMS believes if the US proceeds with the proposed 50% tariff on select Indian goods, the Indian stock market could see an initial selloff at the open. However, he believes this reaction would likely be sentiment-driven rather than structural, as broader macros remain firmly in India’s favour.
“The tariff move has been in discussion for weeks, and markets have already started digesting it. Moreover, with negotiations advancing, a trade deal between India and the US before year-end remains a realistic possibility — ironically pushing India diplomatically closer to China while maintaining peak engagement with Russia,” Dasani said.
From an investment standpoint, he suggests any dip triggered by tariff headlines should be viewed as an opportunity. Citing robust macroeconomic conditions, including steady crude oil prices, strong domestic growth momentum, GST cuts, corporate tax incentives, the RBI repo rate cuts, the recent India–UK trade deal and improving India–China relations, Dasani said that Indian market is primed for a “grand slam” rally.
“This tariff noise could well be the last overhang before the next leg higher, making corrections the ideal zone to accumulate quality names,” he said.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments believes that a panic is unlikely since this 50% tariff, which will impact segments like textiles, some machinery and gems and jewellery, is largely priced-in.
“FIIs may continue to sell, dragging the market down. But at lower levels, there will be aggressive buying by DIIs who are flush with funds. The impact of 50% tariffs on corporate earnings will be insignificant, and domestic consumption themes will be resilient,” Vijayakumar said.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
