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India’s diamond polishing, shrimp, home textile, and carpet industries face a major revenue squeeze after US imposed an additional 25% tariff
US Tariffs
India’s diamond polishing, shrimp, home textile, and carpet industries face a major revenue squeeze after the United States imposed an additional 25% tariff on Indian goods effective August 27, Crisil Ratings warned. The levy—introduced as a penalty for India’s crude oil imports from Russia—comes on top of an existing 25% reciprocal tariff, making US exports unviable for many companies.
The impact will vary across sectors based on US market exposure, cost pass-through ability, and competitiveness versus other exporters, Crisil said in a credit alert. It also cautioned of “second-order effects” from weaker US demand and global trade realignment due to uneven tariffs worldwide.
The US accounts for about 20% of India’s merchandise exports. Sectors most exposed include diamond polishing, shrimp, home textiles, carpets, garments, chemicals, agrochemicals, capital goods, and solar panel manufacturing.
Diamonds: Roughly a quarter of diamond polishers’ revenue comes from US exports. Tariffs and sluggish US demand for natural diamonds could severely dent revenue and margins, Crisil said, adding that American retailers are unwilling to absorb higher costs—leading to slower inventory clearance and delayed payments.
Shrimp: Nearly half of shrimp exporters’ revenue comes from the US, which already imposes anti-dumping and countervailing duties. The higher tariff may further cut volumes, especially against lower-tariff competitor Ecuador. “The sector’s thin margins will be squeezed even more,” Crisil noted.
Textiles & Carpets: With the US buying 60% of India’s home textile exports and half of its carpets, higher tariffs could trigger steep revenue and profit declines. The discretionary nature of these products limits retailers’ ability to pass on costs.
Other Sectors:
- Garments: 10–15% US revenue share; risks losing ground to China and Vietnam.
- Agrochemicals: 11–12% US revenue share; faces Chinese competition in alternate markets.
- Specialty Chemicals: 5% US revenue; still recovering from margin pressures.
- Capital Goods: 15% US revenue; can absorb some costs but may lose orders to Mexico.
- Solar Panels: 10–12% US revenue; domestic demand may offset losses.
Pharmaceuticals and smartphones remain exempt for now, while steel, aluminium, and certain auto component tariffs are unchanged. However, Crisil warned that overall US tariffs could dampen discretionary spending and trigger trade shifts, with rival exporters potentially diverting goods to India, straining local industries until markets rebalance.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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