On 7 August 2025, the United States imposed a 25% tariff on Indian exports, with another 25% threatened, on account of India’s import of Russian crude. If implemented, Indian goods could face duties as high as 50%. For exporters, this is not just a pinch at the margins -- it is an existential challenge. Labour-intensive sectors such as textiles, gems and jewellery, and auto components are already reporting paused orders, squeezed pricing, and the first signs of job risks.
The Alaska summit between President Trump and President Putin has added another layer of uncertainty for Indian exporters. While the optics suggested dialogue, the outcome did not translate into relief on U.S. tariffs linked to India’s Russian oil imports. President Trump hinted at possible reviews “in two or three weeks,” but without concrete timelines, exporters cannot plan on political vagueness.
For India, the message is clear: the fate of its exports to the U.S. is being tied, however tenuously, to its energy security choices -- a sovereign decision. This linkage means that textiles, gems, auto components, and other labour-intensive sectors are effectively hostages to geopolitical bargaining. The Alaska talks did not break that chain. If anything, they underscored how transactional the current trade environment has become.
Indian policy must therefore decouple relief expectations from U.S.–Russia diplomacy and proceed on two fronts: immediate negotiation for sector-specific tariff exclusions, and rapid diversification into alternative markets. Depending on Alaska’s “aftershocks” risks prolonging uncertainty. Exporters require predictability; investors require timelines. Without them, orders will continue to pause, jobs will be threatened, and India’s export machine will sputter. The Alaska meeting was no reset button -- it was a reminder that resilience must be built at home.
Three Anchors for a Response
First, stabilise the US relationship. India and the US have precedents for finding pragmatic solutions: reciprocal concessions in energy and defence purchases, targeted tariff exclusions, and technical standards cooperation. What business needs most is predictability. A time-bound tariff truce, with automatic review clauses, can give firms the confidence to invest and hire.
Second, accelerate diversification with depth. The UAE, EU, UK, Singapore, and Saudi Arabia already absorb large volumes of Indian exports. With FTAs either signed or close to conclusion, these markets can be scaled quickly if exporters invest in compliance readiness, traceability, and last-mile logistics. The Netherlands offers a gateway into Europe; Dubai and Singapore remain unmatched as re-export hubs. But barriers are real -- CBAM in the EU, strict rules-of-origin in the GCC, fragmented standards in ASEAN. Meeting these costs upfront is no longer optional; it is the price of admission into resilient markets.
Third, ring-fence services. Unlike goods, India’s services exports to the US -- IT, R&D, financial services, and professional mobility -- are both balanced and resilient. Digital trade disciplines, smoother visa pathways, and mutual recognition of standards can ensure that services remain a stabiliser when goods trade falters.
Government and Industry Must Move in Tandem
The government has tools to cushion exporters: extend interest equalisation, fast-track RoDTEP and RoSCTL dues, enhance ECGC cover, and front-load working capital. Diplomacy must focus simultaneously on securing US exclusions and on closing the UK and EU FTAs by end-2025. At the same time, exporters must conduct HS-line audits to identify new tariff savings, maintain meticulous rules-of-origin documentation, and budget for compliance costs in pricing strategies.
From Shock to Strategy
For too long, Indian exporters have relied on the comfort of scale and stability in the US market. Shifting elsewhere seemed costly and uncertain. But today’s tariff escalation shows that concentration is more expensive. Diversification, standards compliance, and service-sector resilience are not defensive tactics; they are the building blocks of a stronger, higher-value export portfolio.
Tariffs may close one door. But they can push us to open others that we should have unlocked long ago. The real test of this tariff shock is not whether India can survive it, but whether India can use it to graduate into a more diversified, resilient, and competitive trading future.
The author is chairman of RIS, an MEA-run think tank
The Alaska summit between President Trump and President Putin has added another layer of uncertainty for Indian exporters. While the optics suggested dialogue, the outcome did not translate into relief on U.S. tariffs linked to India’s Russian oil imports. President Trump hinted at possible reviews “in two or three weeks,” but without concrete timelines, exporters cannot plan on political vagueness.
For India, the message is clear: the fate of its exports to the U.S. is being tied, however tenuously, to its energy security choices -- a sovereign decision. This linkage means that textiles, gems, auto components, and other labour-intensive sectors are effectively hostages to geopolitical bargaining. The Alaska talks did not break that chain. If anything, they underscored how transactional the current trade environment has become.
Indian policy must therefore decouple relief expectations from U.S.–Russia diplomacy and proceed on two fronts: immediate negotiation for sector-specific tariff exclusions, and rapid diversification into alternative markets. Depending on Alaska’s “aftershocks” risks prolonging uncertainty. Exporters require predictability; investors require timelines. Without them, orders will continue to pause, jobs will be threatened, and India’s export machine will sputter. The Alaska meeting was no reset button -- it was a reminder that resilience must be built at home.
Three Anchors for a Response
First, stabilise the US relationship. India and the US have precedents for finding pragmatic solutions: reciprocal concessions in energy and defence purchases, targeted tariff exclusions, and technical standards cooperation. What business needs most is predictability. A time-bound tariff truce, with automatic review clauses, can give firms the confidence to invest and hire.Second, accelerate diversification with depth. The UAE, EU, UK, Singapore, and Saudi Arabia already absorb large volumes of Indian exports. With FTAs either signed or close to conclusion, these markets can be scaled quickly if exporters invest in compliance readiness, traceability, and last-mile logistics. The Netherlands offers a gateway into Europe; Dubai and Singapore remain unmatched as re-export hubs. But barriers are real -- CBAM in the EU, strict rules-of-origin in the GCC, fragmented standards in ASEAN. Meeting these costs upfront is no longer optional; it is the price of admission into resilient markets.
Third, ring-fence services. Unlike goods, India’s services exports to the US -- IT, R&D, financial services, and professional mobility -- are both balanced and resilient. Digital trade disciplines, smoother visa pathways, and mutual recognition of standards can ensure that services remain a stabiliser when goods trade falters.
Government and Industry Must Move in Tandem
The government has tools to cushion exporters: extend interest equalisation, fast-track RoDTEP and RoSCTL dues, enhance ECGC cover, and front-load working capital. Diplomacy must focus simultaneously on securing US exclusions and on closing the UK and EU FTAs by end-2025. At the same time, exporters must conduct HS-line audits to identify new tariff savings, maintain meticulous rules-of-origin documentation, and budget for compliance costs in pricing strategies.From Shock to Strategy
For too long, Indian exporters have relied on the comfort of scale and stability in the US market. Shifting elsewhere seemed costly and uncertain. But today’s tariff escalation shows that concentration is more expensive. Diversification, standards compliance, and service-sector resilience are not defensive tactics; they are the building blocks of a stronger, higher-value export portfolio.Tariffs may close one door. But they can push us to open others that we should have unlocked long ago. The real test of this tariff shock is not whether India can survive it, but whether India can use it to graduate into a more diversified, resilient, and competitive trading future.
The author is chairman of RIS, an MEA-run think tank
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
