India's telecom, agriculture most affected by US tariffs; telecom has competitive edge: Report

According to the report, the telecom sector has been hit with a sharp rise in tariffs -- from 0 per cent earlier to 26 per cent from April 9, 2025. India's telecom exports to the US stand at USD 6 billion. However, despite the increased tariff, India remains more competitive than China and Vietnam, which are facing even steeper duties.

The report suggested that initiatives like Mission 500 and fast-tracking the Bilateral Trade Agreement (BTA) with the US could help the sector overcome these challenges. It also recommends that the Indian government extend the Production Linked Incentive (PLI) scheme beyond 2026 to support growth.

In the agriculture sector, the tariffs have seen a steep jump from 4 per cent to 31 per cent, impacting USD 5.5 billion worth of Indian agricultural exports to the US. This hike poses a serious challenge to the sector's competitiveness and growth.

The report also highlighted that India still has a competitive edge in the global trade, as compared to countries like China, Vietnam, and others.

While India fares better than some of its peers, it still lags behind countries like Canada, Mexico, and others in Latin America that enjoy lower tariffs and higher market shares.

EY suggests that the Indian government should prioritise finalising the US-India BTA, given agriculture's importance to the economy.

The auto components sector is also under pressure. Exports worth USD 2.1 billion to the US will now face 25 per cent tariffs, up from earlier 2.5 per cent.

The hike affects crucial components such as engines, transmissions, and powertrains. Since the 25 per cent duty applies uniformly to all countries, India is not given any special advantage over others like China. The report called for the government to push for concessional tariffs in trade negotiations.

The textile sector, which has exports of USD 9.5 billion to the US, will now be subject to tariffs ranging between 33 per cent and 36 per cent. Although these rates are a significant increase, by about 27 per cent -- India still enjoys a relative advantage, as rival exporters like China, Vietnam, and Bangladesh are facing even higher tariffs.

The report concluded that while the higher US tariffs pose a serious challenge to India's export-driven sectors, India's manufacturing strength and strategic policies can help retain a competitive edge. Swift progress on bilateral trade agreements and policy support will be key to ensure continued growth.