US tariff blitz on Indian exports rocks Punjab industry

The increase in tariffs on Indian exports to 50 per cent by the US government has caused ripples in Punjab’s industry. Auto component manufacturers, basmati exporters, hand tool manufacturers, and leather exporters in the state are now weighing their options. “We have been pushed into an economic war,” say these industrialists who export their products to the US.

Across all sectors, the exporters share a common opinion that the imposition of such high tariffs — while being advantageous for China (auto components and hand tools), Pakistan (basmati), Bangladesh, and Vietnam (textiles and garments) — will make their own exports to the US economically unviable. This is because the tariffs on these countries, barring China, are much less. China has the inherent advantage of much lower production costs because it is the manufacturer/producer of rawest materials.

A leading Ludhiana-based auto components exporter to the USA, who requested not to be identified, said that if the 50 per cent tariff were to be imposed, he and other auto component manufacturers would lose their competitive advantage to China. “Till the time there is a 25 per cent tariff, we remain competitive compared to our Chinese counterparts. If the tariff on our exports is increased, China, where steel is much cheaper, gains an advantage. We are closely watching the situation,” he said, adding that the threat of losing the US market looms large.

Basmati is one of the most prized export items from Punjab. Higher tariffs imposed on India compared to minimal tariffs on Pakistan, the other big basmati producer and exporter, are also expected to hit basmati exports. Bal Krishan Garg of Punjab Basmati Exporters Association said that the Pakistani basmati market would increase and Punjab exporters would suffer because the tariff on Pakistan is around 12 per cent. Exports of basmati from India (mainly Punjab and Haryana) to the USA in 2024-25 were approximately 2.74 lakh metric tonnes. In value terms, this accounted for about Rs 2,849 crore. Non-basmati rice exports to the USA from India were 61,341 metric tonnes, valued at Rs 462.50 crore.

AAP Rajya Sabha MP and Founder-Chancellor of Lovely Professional University, Ashok Kumar Mittal, has penned a sharp and compelling open letter to US President Trump following the imposition of an additional 25 per cent tariff on Indian imports — raising the cumulative tariff hike to 50 per cent. He described the move as “deeply disappointing”, especially given the values-based partnership and mutual strategic interests that India and the US have historically shared. “Should a nation pressure India against trade with Russia when it itself relies on the Kremlin for its domestic interests?” he asked, pointing to ongoing American and European trade with Russia, including US imports of uranium and palladium. He urged the US to choose coordination over coercion.

Punjab has been grappling with the incremental decline in economic activity as industrial investors choose other states with locational advantages in terms of either proximity to ports or where fiscal and tax incentives are higher. As a result, the state’s industrial growth comes from the home-grown industry. Though Punjab’s AAP government is making efforts for the state’s transition to an industrial and services sector economy, mainly through their Udyog Kranti initiatives of bringing ease in doing business and creating a viable ecosystem, it will benefit those who serve the domestic market. To cut costs, exporters say they may have to shift to places near ports. If and when it happens, this move could thwart the state’s growth.