Statsguru: Jobs in India to face the heat as 50% US tariffs hit exports

With 50% US tariffs hitting labour-intensive exports like textiles, leather, and gems, millions of Indian jobs and industrial credit flows face mounting risks

With the 50 per cent United States (US) tariffs on Indian goods in full flow, the labour-intensive exports to the US are facing turbulence, as millions of jobs in India are at stake. With Indian products becoming uncompetitive in the US market, it could sound the death knell for the labour-abundant manufacturing sector in the country, unless corrective actions are taken.

 

India’s primary labour-intensive exports to the US consist of textiles, agricultural products, gems & jewellery, auto components, plastic and leather articles. Together, their share in India’s exports to the US in FY25 was around 35 per cent, down from nearly 50 per cent in FY19.  

 

The US is a major buyer of India’s labour-intensive exports. In FY25, around 30 per cent of India’s textile exports were US-bound. For gems & jewellery, the share was even higher. With such large dependence on one buyer for such exports, these sectors are poised to face headwinds in their growth.  

 

Au contraire, the US has diversified its import sources. Only 8.6 per cent of the US’ textile imports came from India in 2024, compared with 26.6 per cent from China. In the case of sectors like auto components and leather, India was ranked eighth in terms of US’ import value.  

 

Textiles and apparel manufacturing had more than 3 million people engaged in India in FY24, accounting for 15.58 per cent of total number of people engaged in manufacturing.

 

This was followed by 2.16 million people engaged by the food products sector in FY24. These employment numbers are bound to fall if the export orders dwindle.  

 

Textile and apparel accounted for nearly 11 per cent of total wages and salaries paid to workers and employees in the entire manufacturing sector in FY23. Out of the wages and salaries in the textile sector, 55.49 per cent went to workers (excluding supervisory, managerial and other staff), as opposed to just 41.86 per cent in the case of the entire manufacturing sector.  

 

One-fifth of the outstanding industrial credit of scheduled commercial banks was owed by above-mentioned labour-intensive sectors, led by textiles and the food processing sector, in FY25. The textiles and food processing industries accounted for 7 per cent and 5.6 per cent of the outstanding industrial credit of scheduled commercial banks in FY25, respectively.