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The announcement of a 50% tariff by the United States on key Indian exports—including apparel, footwear, jewelry, shrimp, and textiles—has sent tremors across India’s manufacturing and export hubs. For thousands of workers and entrepreneurs in Tirupur, Chennai, Bengaluru, and Agra, the move is more than a policy change; it is an existential threat.

A Blow to Labor-Intensive Sectors

India’s textile and apparel industry alone employs over 45 million people, largely in small and medium-sized enterprises (SMEs). Hubs like Tirupur in Tamil Nadu—often called the “Knitwear Capital of India”—depend heavily on US orders. With the steep tariff, importers in the US are pulling back, leaving warehouses in India stocked with unsold goods. Similar stories are unfolding in Agra’s footwear cluster and Bengaluru’s garment units, where canceled contracts have forced factories to shut down lines or delay wage payments.

The ripple effect goes beyond factories. Informal workers in logistics, dyeing units, and small-scale suppliers also face sudden income losses. Shrimp farmers in Andhra Pradesh and Odisha, already battling fluctuating global prices, are now staring at export stagnation.

Economic Fallout: A 1% GDP Cut?

Economic analysts warn that India could see a GDP contraction of up to 1% if the tariff shock persists. Exports account for about 20% of India’s GDP, and the US is one of India’s largest trading partners. The timing is especially concerning, as India’s manufacturing push under the “Make in India” initiative is still in its growth stage.

A prolonged export slowdown may also strain India’s current account balance and put downward pressure on the rupee. This could trigger a chain reaction—higher import costs, rising inflation, and tighter household budgets.

Beyond Tariffs: A Question of Dependence

The crisis highlights India’s over-reliance on the US market for certain categories of goods. For example, more than 30% of India’s apparel exports and a significant share of jewelry shipments head to the US. When one market wields such influence, any policy change—whether political or economic—translates into vulnerabilities for millions back home.

This calls for urgent diversification. Countries like Japan and South Korea, with growing demand for mid-range consumer goods, present untapped opportunities. Similarly, trade pacts with the European Union and ASEAN nations could cushion the blow, though negotiations in these regions often move slowly.

The Human Cost of Protectionism

While macroeconomic numbers dominate headlines, the most immediate impact is borne by workers. In Tirupur, for instance, there are reports of factory closures leaving migrant laborers stranded without wages. In Agra’s footwear sector, artisans skilled in handcrafting leather goods—a tradition spanning generations—are suddenly left without buyers. The social cost is high, with families facing food insecurity and children being pulled out of schools.

Policy Imperatives for India

India’s response must be two-fold:

1. Short-term relief: Provide credit support, wage protection schemes, and subsidies to export-oriented units so that factories can retain workers through this downturn.


2. Long-term resilience: Accelerate trade diversification, invest in value addition, and strengthen domestic consumption to reduce dependence on volatile global markets.

Additionally, the crisis should serve as a reminder for India to build stronger trade alliances. Bilateral negotiations with countries like Japan and South Korea, and faster movement on pending trade agreements, could provide Indian exporters with alternatives.

A Test of Resilience

The US tariff shock is not just a trade dispute—it is a stress test for India’s export-driven sectors. While the immediate picture is bleak, this disruption could become an inflection point. If India seizes the moment to reduce over-dependence on single markets and diversify its global trade footprint, the long-term outcome could be stronger and more resilient industries.

For now, however, the livelihoods of millions hang in the balance, waiting for both policy support at home and strategic foresight abroad.