US-India tariff war: FIEO warns MSMEs could take major hit; 50% tariffs to affect 55% of shipments
India’s exporters are reeling from a major blow after the US imposed a steep 50% tariff on most Indian goods, a move the Federation of Indian Export Organisations (FIEO) has called “extremely shocking.”The fresh 25% hike, signed into order by US President Donald Trump on Wednesday, is in response to New Delhi’s continued purchase of Russian oil. It adds to an existing 25% duty, bringing the total tariff to 50% on nearly all Indian exports to the US.
Sectors like textiles, marine products, and leather are expected to be hit the hardest.“This move is a severe setback for Indian exports, with nearly 55% of our shipments to the US market directly affected. The 50 per cent reciprocal tariff effectively imposes a cost burden, placing our exporters at a 30–35 per cent competitive disadvantage compared to peers from countries with lesser reciprocal tariff,” FIEO director general Ajay Sahai told PTI.He further added that several export orders have already been put on hold as international buyers reassess sourcing plans as costs continue to soar.“For a large number of MSME-led sectors, absorbing this sudden cost escalation is simply not viable. Margins are already thin, and this additional blow could force exporters to lose long-standing clients,” Sahai said.With the new tariff structure, Indian goods now face the highest import duty level into the US, on par with Brazil. Competitor countries face significantly lower duties: Myanmar – 40%Thailand – 36%Cambodia – 36%Bangladesh – 35 %Indonesia – 32%China and Sri Lanka – both 30%Malaysia – 25 per centPhilippines – 20%Vietnam – 20%“With this high tariff, the domestic exporters will have to look for alternative markets,” Sahai added.In the financial year 2024–25, India-US bilateral trade stood at $131.8 billion, including $86.5 billion in exports and $45.3 billion in imports.
