Are India’s $25 billion pharma and electronics exports safe from new US tariffs?
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Synopsis
Despite the recent announcement of a 25% tariff by US President Donald Trump on Indian imports due to elevated tariffs on American goods, India's pharma and electronics exports, amounting to over $25 billion, remain unaffected. This article delves into the implications and current standing of these vital sectors amidst ongoing trade tensions.
Key Takeaways
- $25 billion worth of exports from India to the US are currently exempt from new tariffs.
- Pharmaceuticals account for $10.5 billion while electronics represent $14.6 billion of total exports.
- Exports to the US increased from 17-18% to over 20% in the first half of 2025.
- Potential risks remain with the threat of up to 200% tariffs on foreign drugs.
- US trade policies may impact India's overall economic stability.
New Delhi, July 31 (NationPress) In response to India's elevated tariffs on US products, President Donald Trump has announced a 25% tariff on Indian imports. Nevertheless, shipments exceeding $25 billion, particularly in the sectors of smartphones and pharmaceuticals, are currently exempt from these increased tariffs.
In the fiscal year 2025, pharmaceuticals and electronics (mainly smartphones) contributed $10.5 billion and $14.6 billion respectively to India's total exports to the US.
As of now, these vital industries have not been affected by the new tariffs, which are scheduled to be implemented on August 1.
India's exports to the US have seen a rise since January, attributed to this exemption, as there are currently no duties levied on these items.
From January to June 2025, the proportion of India's merchandise exports to the US climbed from 17-18% to over 20%.
This increase can be seen as a strategic response from exporters ahead of the impending tariff escalation in August and the exemptions granted for smartphones and pharmaceuticals, which were not subjected to the 10% baseline duty introduced in April, according to industry analysts.
Despite a modest growth of less than 2% in total exports in Q1 FY26 and a decline of over 4% in Q4 FY25, as per data from the Commerce Ministry, exports to the US constituted approximately 23% of India's overall shipments during the June quarter of FY26 and the first quarter of FY25.
Nonetheless, risks persist as Trump has hinted at imposing tariffs as high as 200% on foreign-made drugs, and future decisions by the US could potentially revoke smartphone exemptions.
The US President has yet to specify the penalties concerning India's energy and arms acquisitions from Russia, but India's $4.09 billion petroleum exports to the US remain unaffected since energy is exempt from tariffs.
In Q1 FY26, India's exports to the US reached $25.52 billion, marking an increase of nearly 23% from the preceding year. The total trade for the quarter was $32.41 billion, and for FY25, it surpassed $86 billion, according to the commerce ministry.
Trump has linked these tariffs partially to India's association with BRICS and its relationship with Russia.
Point of View
Our commitment is to provide an unbiased perspective. The current trade tensions highlight significant concerns for the Indian economy; however, the exemption of key exports from tariffs presents a silver lining. We encourage stakeholders to monitor these developments closely, promoting informed discussions on the impact of international trade policies.
NationPress
01/08/2025
Frequently Asked Questions
What are the key exports from India to the US?
The primary exports from India to the US include pharmaceuticals and electronics, specifically smartphones, which together account for over $25 billion.
What is the impact of the new tariffs?
The new tariffs could potentially impact various sectors; however, key industries such as pharmaceuticals and smartphones are currently exempt from these tariffs.
What percentage of India's exports are to the US?
As of June 2025, exports to the US constituted approximately 23% of India’s total shipments.
Will the exemptions on exports be removed?
There is uncertainty regarding future tariffs; however, as of now, the exemptions on pharmaceuticals and smartphones remain intact.
What are the implications of US tariffs on India's economy?
The tariffs could have significant repercussions, particularly for the pharmaceutical and electronics sectors, affecting trade dynamics and export revenues.
