55% of India’s Exports to US Hit by Tariffs: Urjit Patel Urges Immediate Action

Date: September 4, 2025

On September 4, 2025, former Reserve Bank of India (RBI) Governor Urjit Patel expressed growing concern about the impact of US tariffs on India’s economy. He revealed that 55% of India’s exports to the United States are now being directly impacted by tariffs, creating significant economic strain for businesses across key sectors. Patel’s remarks underline the urgency for corrective measures to mitigate these trade challenges and reduce the burden on Indian exporters. As the global trade landscape continues to evolve, Patel’s comments highlight the crucial need for India to address these economic pressures and ensure the long-term stability of its export-driven industries.

The Magnitude of Tariff Impact:

Urjit Patel’s concerns reflect a broader, increasingly challenging situation for Indian exporters, particularly those who rely on the US market. With 55% of India’s exports to the US now subject to higher tariffs, these measures are severely hindering the ability of Indian businesses to compete effectively. Patel’s comments come amid growing concerns that the prolonged tariff issues could further slow India’s growth in international trade.

The Indian government has long viewed the United States as a key trading partner, and exports to the US have been a significant source of foreign exchange earnings. However, with tariffs imposed on a wide range of goods, from textiles and steel to agricultural products, Indian exports have become more expensive for US consumers. As a result, these goods are less competitive in the US market, contributing to a decline in trade volumes.

Textiles and Garments Under Pressure:

India is one of the world’s largest exporters of textiles, and the US has historically been a crucial market for this sector. However, the imposition of tariffs on Indian textiles has resulted in increased costs for manufacturers. The higher costs of production have made Indian textiles less affordable, creating a substantial disadvantage for Indian businesses that rely heavily on US exports.

The textile industry in India has already seen a notable decline in demand due to these tariffs. As US consumers face higher prices for imported goods, they may look to alternatives from other countries, further eroding India’s market share. Patel emphasized that this sector is one of the hardest-hit by the tariff imposition, and the need for targeted relief is more pressing than ever.

Steel Sector Faces Setbacks:

The steel industry is another key sector that has been greatly affected by the tariff hikes. India is a leading producer of steel, with the United States being one of the largest importers of Indian steel products. However, the US has imposed tariffs on steel imports from countries like India, leading to significant cost increases for Indian manufacturers.

Patel pointed out that the steel sector is particularly vulnerable, as the high tariffs make Indian steel less attractive to US buyers. The economic impact is substantial, as Indian steel companies have struggled to maintain profitability in the face of these rising costs. For many businesses, this trade barrier is proving to be a critical challenge in sustaining growth in the international market.

Agriculture Exports Facing a Downturn:

Agriculture is another crucial sector for India’s economy, with key exports such as spices, tea, and fruits traditionally enjoying strong demand in the US. However, these products are now being impacted by the tariff hike, resulting in reduced profitability for Indian farmers and exporters. According to Patel, the US market has always been a strong destination for Indian agricultural exports, but the imposition of tariffs on these products has made them significantly more expensive for American consumers.

Patel noted that the agriculture sector, already struggling with internal challenges like erratic weather conditions and low productivity, now faces additional hurdles due to these tariff-induced price hikes. As a result, many farmers are experiencing significant financial losses, further compounding the difficulties they face in trying to maintain a stable income.

The Need for Diplomatic and Domestic Solutions:

Patel urged the Indian government to take immediate action to mitigate the effects of these tariffs. He suggested that India should explore diplomatic channels to engage the US in discussions aimed at reducing or eliminating the tariffs on key products. A strategic negotiation could lead to exemptions or more favorable terms for Indian businesses, helping to reverse the negative impact on trade.

Moreover, Patel emphasized the importance of domestic reforms to bolster India’s competitiveness in the global market. He proposed that the government should focus on improving productivity and efficiency across various sectors, from manufacturing to agriculture, to ensure that Indian businesses can weather external shocks, such as tariff hikes, more effectively.

In addition, Patel recommended that the government provide targeted support to the most affected sectors. This could include tax breaks, subsidies, and other financial assistance to ease the burden on Indian exporters. Patel believes that such initiatives could help businesses manage the higher costs and maintain their ability to compete in the global marketplace.

Opportunities Amid Trade Challenges:

Despite the ongoing challenges posed by the US tariffs, Patel remains optimistic about India’s ability to navigate these hurdles. He emphasized that India’s economic growth has historically been driven by a combination of domestic consumption, innovation, and exports. Although current trade tensions are significant, India still holds substantial opportunities for growth in other markets.

Patel pointed to the rising demand for Indian goods in countries such as China, the Middle East, and Southeast Asia. With a focus on diversifying its export base, India could potentially reduce its reliance on the US market and secure new trade partnerships that offer better opportunities. India’s strong manufacturing base and large, youthful workforce also provide a competitive edge that could be leveraged to bolster exports in the long term.

Global Trade Context and the Bigger Picture:

Patel’s warnings come in the context of broader global trade tensions. The US has adopted more protectionist measures under its current administration, seeking to safeguard domestic industries and reduce trade imbalances. This has led to higher tariffs on imports from a range of countries, including China, the European Union, and India.

For India, the long-standing trade relationship with the US is being tested, and the current tariff situation represents a significant challenge. However, Patel believes that with a clear and focused strategy, India can overcome these difficulties and continue to thrive as a global economic power.