The U.S.’s decision to sharply raise tariffs on Indian exports — doubling duties to 50% on a wide range of products—has caused deep concern and disappointment in India. After decades of building a mature, multifaceted relationship, the imposition of such sweeping trade measures feels like a setback. The economic impact is significant. In 2024, India exported goods worth $87.3 billion to the U.S., its single largest trading partner. Of this, nearly $48–55 billion worth of merchandise is directly at risk. The heaviest blows fall on labour-intensive, job-creating sectors:
• Gems and jewellery (about $10 billion annually): The U.S. is India’s largest market, buying more than a quarter of its diamond and jewellery exports.
• Textiles and apparel (about $8 billion): Around 70% of India’s U.S.-bound exports are now caught under the tariff net.
• Agriculture (about $6 billion): Exports of rice, spices, seafood, and niche agri-products may lose ground.
• Leather and footwear (about $3 billion): Traditional export strengths are at risk of losing market share to other low-cost suppliers. Just weeks before the tariffs came into force, exporters rushed to meet orders. In July 2025, gems and jewellery exports surged 16%, with lab-grown diamonds leaping 27.6%. This urgency reflected both adaptability and anxiety about the road ahead.
Balanced trade that endures
Yet, it would be a mistake to view U.S.-India ties solely through the lens of tariffs. A large share of bilateral trade remains unaffected — and continues to thrive:
• Pharmaceuticals (about $50 billion industry; $3.7 billion exports in H1 2025): Exempt from tariffs, India supplies 40% of America’s generic drug demand.
• Services and IT ($387.5 billion in FY 2024–25; $33.2 billion to U.S.): IT services, BFSI, and consulting remain robust, with Indian firms powering Fortune 500 companies and U.S. tech majors expanding in India.
• Energy and clean tech: LNG imports, renewable energy partnerships, and joint work on decarbonisation continue to deepen.
• Aviation and aerospace: Boeing aircraft orders, airport modernisation, and CNS/ATM collaborations are unaffected.
• Defence: Under the 2+2 dialogue, co-production projects, technology transfer, and joint military exercises are strengthening ties.
• Space and innovation: NASA–ISRO cooperation and digital innovation partnerships represent the future of collaboration. This dual reality — tariffs hurting traditional exports, while services and strategic sectors thrive — shows the depth and diversity of the relationship.
Real strength of ties
The most enduring anchor is not trade alone, but people-to-people ties. If trade and diplomacy are the “hardware,” people are the “software” that keeps the partnership running.
• Diaspora: The 4.8 million–strong Indian diaspora in the U.S. excels across medicine, law, business, and politics. Over 150 Indian-origin CEOs now lead global corporations, shaping boardrooms as much as trade flows.
• Students: With more than 2,00,000 Indian students enrolled in U.S. universities, the talent pipeline is shaping innovation ecosystems in both countries.
• Professionals: Indian IT engineers drive Silicon Valley, while U.S. entrepreneurs are investing in Bengaluru’s start-up ecosystem.
• Cultural exchange: Indian Americans serve in Congress, state legislatures, and local leadership, while festivals like Deepavali are celebrated at the White House. They are trust-based bonds cultivated over decades, making the relationship structural and resilient.
Strategic collaborations
Equally important, the U.S.-India partnership extends well beyond trade disputes.
• Defence and security: Joint exercises, intelligence sharing, and technology transfers highlight growing defence convergence.
• Aviation: The U.S. is a key partner in India’s aviation boom, from aircraft fleets to airport modernisation.
• Climate and clean energy: Both nations are collaborating on renewables, green hydrogen, and sustainable fuels.
• Healthcare and pharma: Beyond generics, U.S. companies’ partner with Indian firms in R&D and clinical trials.
• Space: From lunar missions to satellite navigation, NASA-ISRO collaborations extend the partnership beyond Earth itself.
India’s response must be measured and strategic: diversify markets in Africa, Latin America, and the Indo-Pacific; strengthen domestic resilience by innovating supply chains and moving up the value chain; and persist in diplomacy because this often makes the difference between setback and breakthrough.
Tariffs may disrupt markets, unsettle industries, and dominate headlines, but they do not define destiny. The U.S.-India relationship has survived Cold War suspicion, sanctions, and past trade disputes before — and every time, it has emerged stronger. The deeper truth is this: trust defines partnerships, not tariffs. And trust, built by people and strengthened by strategy, ensures that even when trade faces turbulence, the relationship remains steady.
Mehnaz Ansari is a former U.S. Government Official and Global Trade Expert and founder of AeroStratgiX
Published – September 03, 2025 07:00 am IST
