Impact of U.S. Tariff on Indian Imports: A Sector-by-Sector Analysis

At the time of going to print, it was reported that the US has temporarily suspended additional tariffs on India for 90 days, until July 9, 2025 offering a relief to Indian exporters. This feature highlights the future prospects of tariff in India through an analysis that explores the ripple effects across key sectors—aviation, pharmaceuticals, textiles, gems and jewellery, automotive, and electronics—while assessing broader economic consequences and potential mitigation strategies.

- SUDEEP SHARMA CEO, Safe Fly Aviation

1. Indian Aviation: Rising Costs and Supply Chain Strain

Though not a major direct exporter to the U.S., India's aviation sector will feel indirect pressure from the tariff due to its reliance on U.S.-made aircraft parts and services.

Key Challenges:

• Higher Financing Costs: A weaker Indian rupee (INR), potentially sliding to 85-87 against the USD due to reduced export revenue, could raise dollar-denominated lease and loan expenses. For airlines like IndiGo and Air India, this might increase financing costs by 2-5%, adding millions annually. U.S. lessors could also raise lease rates by 3-5%, boosting per-aircraft payments by $15,000-$25,000 monthly.

• Maintenance Cost Surge: If India retaliates with tariffs on U.S. aviation imports (e.g., Boeing parts, GE engines), maintenance, repair, and overhaul (MRO) costs could rise by 10-15%. A $3 million engine overhaul might incur an additional $600,000-$900,000 in duties. Supply chain disruptions could extend aircraft downtime, costing $100,000 daily per grounded plane.

• Limited Alternatives: Most Indian fleets rely on Boeing and Airbus (often with U.S. engines), so shifting suppliers is impractical. Stockpiling parts could add $2.6 million in tariff-related costs to a $10 million inventory.

• Silver Lining: The tariff could accelerate India's "Make in India" initiative, fostering domestic MRO and component manufacturing-though benefits will take years to materialize.

2. Key Export Sectors Under Pressure

The tariff directly threatens industries that rely heavily on the U.S. market, with billions in annual exports at stake.