45% of India’s US Exports Exempt From New Tariff

India’s Commerce Ministry said on July 26, 2026, that roughly 45% of India’s $87.2 billion in merchandise exports to the United States will remain outside the newly imposed 10% Section 301 tariff, since key categories are already taxed separately under existing US trade law. The clarification was issued to calm exporter concerns after Washington’s fresh tariff wave took effect a day earlier.

The ministry explained that steel, aluminium, copper, automobiles, auto components and certain derivative products fall under Section 232 of the US Trade Expansion Act of 1962, which already imposes duties ranging from 25% to 50% above the applicable most-favoured-nation rate. Because these products are governed under a separate legal provision, they are not subject to the additional 10% Section 301 duty that applies to India’s other exports from July 25, 2026.

Which Indian Export Sectors Are Affected by the New Tariff?

The remaining 55% of India’s US-bound exports, including textiles and apparel, gems and jewellery, chemicals, machinery and processed foods, will now face the added 10% duty on top of standard MFN rates. Generic pharmaceuticals and smartphones are separately exempted, meaning India’s large pharmaceutical exports to the US, a politically sensitive category, escape the new levy entirely.

What Do Exporters and Industry Bodies Say?

Export promotion councils have welcomed the ministry’s clarification, saying the sector-wise breakdown gives exporters clarity on actual cost exposure rather than the headline tariff figure, which had earlier fuelled concern of a blanket 10% hit across all exports. Industry bodies are now pressing for continued negotiation on the remaining 55% of exposed goods, particularly textiles and engineering products where margins are thinner.

Market and Trade Reaction

The ministry’s statement helped steady sentiment among exporter groups who had priced in a broader impact based on the headline 10% figure. Currency and equity markets showed limited additional reaction to the clarification itself, having largely absorbed the tariff news when the final rate was confirmed at 10%, below the 12.5% initially proposed in June.

What Happens Next?

Exporters in the affected 55% of categories will need to reassess pricing and competitiveness against countries such as Vietnam and Bangladesh, which face lower or preferential tariff rates in the US market. The Commerce Ministry has indicated it will continue to monitor sector-wise impact data and use it in ongoing bilateral trade talks with Washington.

Frequently Asked Questions

Why are some Indian exports exempt from the new US tariff?

Products like steel, aluminium and autos are already taxed under Section 232 of US trade law at rates of 25-50%, so they are not additionally subject to the new 10% Section 301 duty.

What percentage of India’s US exports face the new 10% tariff?

About 55% of India’s $87.2 billion in US-bound merchandise exports are subject to the new duty, while 45% remain outside it due to existing separate tariff coverage or specific exemptions.

Are Indian pharmaceutical exports affected by the new tariff?

No, generic pharmaceuticals are specifically exempted from the new Section 301 tariff, along with smartphones, steel, aluminium and auto components.