Jewellery, garments, marine goods bore the brunt of US duties in August

India's exports to the US contribute 34 per cent of readymade garments shipments and 39 per cent of cotton fabrics shipments

As the 25 per cent US tariffs on Indian goods kicked in on August 7, the country’s labour-intensive exports, such as gems & jewellery, garments, and marine products, took the maximum hit, according to disaggregated data released by the commerce department.

 

During the month, shipments of pearls, precious and semi-precious stones declined 54.2 per cent year-on-year, followed by marine products (–33 per cent), gold and other precious metal jewellery (–18.6 per cent), readymade garments (–13.2 per cent), cotton fabrics and made-ups (–10.1 per cent), drug formulations (–7 per cent), and auto components (–6.6 per cent).

 

The US accounts for 34 per cent of India’s readymade garments exports and 39 per cent of cotton fabrics shipments. Exports of precious stones and gold jewellery contribute 37 per cent and 28 per cent to total shipments, respectively, while marine products (36 per cent), drug formulations (40 per cent), and auto components (22 per cent) also form significant shares of India’s shipments.

 

The additional 25 per cent US tariff on Indian goods, which was imposed in response to New Delhi’s purchase of Russian oil, came into effect on August 27, raising the cumulative duty on Indian exports to 50 per cent. The commerce department will today (Wednesday) release trade data for September that may reflect the full impact of the 50 per cent tariff on Indian exports.

 

In August, India’s total shipments to the US remained positive at 7.15 per cent, down from 27.9 per cent in July. The growth was driven by sectors like telecom instruments (140.1 per cent), including iPhone exports, petroleum products (67 per cent), electronic components (64 per cent), electric machinery and equipment (31.1 per cent), and machinery for dairy (13.1 per cent). 

 

The US is India’s largest export destination, contributing about a fifth of India’s total shipments. Notwithstanding India’s efforts to diversify its merchandise exports, the country’s dependence on the US for its outbound shipments has increased over the past 14 years.

 

The share of the US in India’s total exports continuously declined from a high of 21.7 per cent in 1998-99 to a low of 10.1 per cent in 2010-11, according to commerce department data.

 

Most of the major economies have concluded trade deals with the US. India, on the other hand, has accelerated efforts to seal a bilateral trade deal by fall of this year. A team of officials led by Commerce Secretary Rajesh Agrawal is set to travel to Washington later this week. The visit follows a recent phone call between Prime Minister Narendra Modi and US President Donald Trump, as well as the Washington’s India Ambassador-designate Sergio Gor’s New Delhi visit.

 

Previous trade talks scheduled in August were postponed after tensions escalated over the imposition of steep US tariffs on several Indian imports. Both sides are now negotiating a comprehensive resolution that addresses pending issues in the trade deal and Washington’s concerns over India’s continued purchase of Russian oil.3