US India tariffs 2025 action plan

US–India Tariffs in 2025: What Changed, What It Hits, and What to Do Now

Updated: August 11, 2025 (IST)

• What happened: The U.S. announced an additional 25% tariff on imports from India on August 6–7, 2025, citing India’s continued purchases of Russian oil. It sits on top of the new “reciprocal tariff” regime.
• Effective dates:
  • Aug 7, 2025: first reciprocal tariff layer begins (per the new U.S. tariff framework).
  • Aug 27, 2025: additional 25% India-specific duty kicks in (with limited in-transit exceptions).
• Sectors in the firing line: textiles & apparel, footwear, gems & jewellery, shrimp/seafood, auto components, chemicals, steel/aluminium, machinery—among others.
• Market impact so far: INR weakened toward record lows; RBI is seen defending; exporters and related stocks dipped. Talks are penciled in for Aug 25.

Who is most exposed?

While line-by-line HS coverage is still being parsed by trade lawyers and customs brokers, early reads and market reaction point to: textiles & apparel, footwear, gems & jewellery, shrimp/seafood, auto parts, chemicals, steel/aluminium, machinery, petroleum by-products. These sectors represent a large chunk of India’s U.S.-bound exports and are labour-intensive at home, hence the employment concern in India coverage.

India’s response & the macro picture

New Delhi called the move “extremely unfortunate” and is considering support measures for exporters; no immediate retaliation was signalled as of the last update. Markets priced in risk: the rupee drifted weaker (with RBI reportedly defending near all-time lows), and a sixth round of U.S.–India trade talks is slotted for Aug 25.

Also unchanged: GSP (the old U.S. duty-free program for certain developing-country goods) is still lapsed, so there’s no GSP cushion for Indian products.

What to do in the next 30 days (practical checklist)

1. Confirm HS codes & landed cost
   Re-model quotes with the +25% layer from Aug 27. Check if any of your SKUs fall in carve-outs or overlapping tariff programs (e.g., Section 232).
2. Leverage the in-transit window (if relevant)
   If cargo loaded before Aug 27 and entered before Sep 17, talk to your broker immediately about documentation to support eligibility.
3. Review Incoterms & contracts
   Clarify who absorbs new duties (seller vs buyer). Renegotiate price or switch terms (e.g., FOB vs DDP) as needed. (General business guidance)

FAQs we’re hearing from clients

Do the new tariffs “stack”?
Yes.  Customs advisories indicate the extra +25% is in addition to other applicable duties and the new reciprocal tariff baseline—hence headlines citing ~50% effective rates on some lines. Your actual rate depends on your precise HS code and any other programs that apply.

Any exemptions?
Limited timing relief for already-loaded cargo and specific carve-outs (e.g., certain 232-covered goods). Check line-by-line with your broker.

Will India retaliate?
As of today, India has not announced immediate tariff retaliation; policy support for exporters is being considered; negotiations continue.

The bottom line

If you sell to the U.S. from India—or import Indian goods into the U.S.—assume material landed-cost inflation from Aug 27. Use the short in-transit window, lock down HS classifications, and get contracts/pricing updated now while watching for any negotiation breakthroughs around Aug 25.

What New Delhi can do (fast + lawful)

1) Max out remission, not subsidy.

• Keep RoDTEP on for all eligible lines and update rates to the actual unrebated incidence (electricity duty, mandi tax, embedded freight, etc.). Today, most RoDTEP rates sit roughly 0.3%–4.3%; you can raise them only to match audited incidence—anything beyond that risks violating SCM rules. Budget headroom has just been restored/raised this year.
• Keep RoSCTL (garments/made-ups) steady and complete the ongoing rate revision quickly. It’s extended till March 31, 2026, again calibrated to actual embedded levies.

2) Make credit cheaper, right now (WTO-safe).

• Interest Equalisation Scheme (IES). Extend and top-up for MSME and a targeted list of tariff-hit HS lines; that’s domestic finance support (not export-contingent per se) and has been routinely extended in short spurts.
• ECGC cover. Temporarily subsidise premiums for small exporters and raise cover to 90% on risky markets  ECGC already runs such variants. Faster claim turnarounds matter more than headline % cover.

3) Lower friction instead of paying cash.

• Refunds on time: 30-day TAT for GST & duty drawbacks; auto-sanction small-ticket cases.
• Logistics: time-bound priority for export containers at major ports; TMA-style support for perishable/agri where legally tenable (design as neutral logistics support, not an export bounty).
• Marketing: Use MAI funds for deep dives in GCC, Africa, and LATAM; co-fund B2B missions for HS codes hit by US tariffs (again, not per-shipment cashbacks).

4) Negotiate carve-outs & diversify markets.

• Seek product-specific exclusions/reliefs in the US (sectoral dialogues, regulatory co-operation, mutual recognition), while fast-tracking non-US market access (e.g., leverage UAE CEPA platform; keep momentum on UK/EU tracks).
• Encourage lawful supply-chain reconfig (finish in India for non-US markets; avoid any rules-of-origin evasion for the US).

5) Currency strategy: expand INR trade where it genuinely reduces risk.

• Scale INR settlement (SRVA) and local-currency settlement with willing partners (UAE framework, UPI links already signed). This helps working-capital/FX risk for non-US markets; it won’t neutralise a US tariff but does improve resilience.

6) Legal & diplomatic track.

• Prepare a WTO consultation (alone or with similarly impacted partners) and a proportionate response list under India’s Customs Tariff Act—focused on US products, not companies—calibrated to avoid boomerangs on Indian consumers/industry.

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