US Tariff Hike Threat on India: What It Means for Investors and Businesses in Oman
Mumbai — Indian exporters are urgently seeking ways to counter the impact of US President Donald Trump’s threat to double tariffs on Indian goods from 25% to 50%. This move targets India’s ongoing purchase of Russian oil, aiming to cut Moscow’s revenue amid its military action in Ukraine.
Economist Garima Kapoor of Elara Securities warned that with a 50% tariff, Indian products would lose all competitive advantage in the US market. India, one of the world’s largest crude oil importers, faces a deadline of August 27 to secure alternatives for roughly one-third of its current oil imports.
Though India is not a major export giant, it shipped around $87 billion worth of goods to the US in 2024. The proposed tariff hike threatens labor-intensive, low-margin sectors such as gems and jewellery, textiles, and seafood. The Global Trade Research Initiative projects a potential 60% decline in US sales for industries like garments in 2025.
Exporters are racing to ship orders before the August 27 deadline. Vijay Kumar Agarwal, chairman of Creative Group, a Mumbai-based textile and garment exporter heavily reliant on the US market, said, “Whatever we can ship before August 27, we are shipping.” However, he cautioned that this is only a temporary fix and could lead to chaos if unresolved. Agarwal also expressed deep concern for the future of his 15,000 to 16,000 employees, describing the situation as “very gloomy” with expected immense business losses.
Efforts to resolve the issue are entangled in geopolitical tensions. Trump is scheduled to meet Russian President Vladimir Putin on Friday, marking their first face-to-face encounter since Russia’s invasion of Ukraine began in February 2022. India, maintaining longstanding ties with Moscow, finds itself in a precarious position. Prime Minister Narendra Modi has spoken with both Putin and Ukrainian President Volodymyr Zelensky, advocating for a peaceful resolution.
The tariff threat is already impacting Indian businesses, with new US orders dwindling and putting future revenue and hundreds of thousands of jobs at risk. Some leading Indian apparel exporters with global operations are considering relocating US orders to lower-tariff countries. Pearl Global Industries revealed that some US buyers have asked for production shifts to countries like Vietnam and Bangladesh, where tariffs are lower. Gokaldas Exports is contemplating boosting manufacturing in Ethiopia and Kenya, where tariffs stand at 10%.
Moody’s recently warned that the wider tariff disparity may reverse India’s recent gains in attracting investment. The gems and jewellery sector, which exported over $10 billion worth in 2024 and employs hundreds of thousands, is particularly vulnerable. Ajesh Mehta from D. Navinchandra Exports noted a halt in new orders, anticipating that 150,000 to 200,000 workers could be affected. He emphasized that while a 10% tariff was manageable, a 50% levy on luxury goods is unsustainable as customers would likely cut back on spending.
Seafood exporters, some of whom have been advised by US buyers to pause shipments, are exploring alternative markets such as China, Japan, and Russia. Alex Ninan, a partner at Baby Marine Group, said, “The United States is out right now. We will have to push our products to alternative markets.” However, he acknowledged the difficulty, explaining that building new markets quickly is not feasible.
This looming tariff increase poses a severe threat to India’s export landscape and the livelihoods of millions within the country’s economy.
Special Analysis by Omanet | Navigate Oman’s Market
The escalating US tariffs on Indian exports, particularly a potential hike to 50 percent, pose significant risks to low-margin, labor-intensive industries, leading to potential job losses and disrupted supply chains. For Oman-based businesses and investors, this situation creates opportunities to fill gaps left by Indian exporters, especially in garments, gems, and seafood sectors, as companies shift production to other low-tariff markets. Smart investors should consider diversifying supply chains and exploring alternative markets alongside India to mitigate geopolitical and tariff-related risks in the near term.
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