DAMAGED GOODS

As Trump's tariffs are beginning to bite India's export sector, even a deal may not prevent the long-term damage

- K. SUNIL THOMAS

India's exports to the US, its biggest trading partner, plummeted by 37 per cent from May to October. This was the clearest indication yet that President Donald Trump's punitive tariffs, amounting to 50 per cent on most goods from India, are now beginning to bite.

By some estimates, 1.35 lakh jobs have been lost in the gems and jewellery sector, one of the biggest segments in India's exports to the US, while 1.5 lakh textile and garment sector workers are now out of a job. The impact could be greater when you consider more export-oriented sectors, like seafood and marine products, which employ about 3 crore Indians.

However, there is good news and bad news.

For all the impact of the US tariffs on exports, India's economy seems to retain its glow—GDP growth in the July-September period was 8.2 per cent, with projections for the whole financial year now being raised by the Reserve Bank to upwards of 7 per cent. This will help India retain its position as the world's fastest-growing major economy.

But, there is bad news—and worse—waiting in the wings. While the fall in India's export volumes to the US was expected, what is alarming is the fall of exports in areas that have not been impacted by the punitive duties.

“There is this question of higher tariffs, but the bigger uncertainty comes from the fact that there is no deal,” said Ajay Chhibber, visiting scholar at the Institute of International Economic Policy at George Washington University. “Importers may be sourcing from other places now, thinking that with India, the situation remains very uncertain.”