US tariff law raises export concerns as Indian industry warns of disruption

Indian exporters have raised concerns over a new US law that gives President Donald Trump the authority to impose tariffs of up to 100% on goods from countries that continue to purchase Russian oil and gas.

The legislation, signed by Trump on September 20, comes as India remains one of the largest buyers of Russian crude. While the law does not automatically impose a 100% tariff on Indian goods, exporters fear that such duties, if applied, could severely disrupt shipments to the US and create further uncertainty in bilateral trade.

Federation of Indian Export Organisations President SC Ralhan said the impact could be severe if the highest tariffs are imposed.

"If the US imposes high tariffs, it will completely halt our exports to the US. No importer can afford this high level of tariffs," Ralhan said.

Exporters flag uncertainty

Mumbai-based exporter and Technocraft Industries CMD Sharad Saraf said the concern extends beyond the possible tariff itself, with uncertainty surrounding the new law also affecting businesses.

"We are worried about the new law because it is creating a lot of uncertainty in the otherwise healthy trade relations," Saraf said.

The concerns come despite a recent improvement in India's merchandise exports. India's goods exports rose 26.12% year-on-year to $43.81 billion in August, while shipments to the US increased by more than 21% to $8.3 billion.

The potential tariff threat therefore comes at a time when the US remains a significant market for Indian exporters.

Textile industry particularly vulnerable

The textile and apparel industry has flagged particular risks because the US is India's largest market for the sector.

Confederation of Indian Textile Industry chairman Ashwin Chandran said any additional tariffs would be difficult for India's textile and apparel industry to absorb, particularly because the sector is dominated by micro, small and medium enterprises.

"Any additional tariffs under this act will be very difficult to absorb for the MSME-dominated Indian textile and apparel sector already under stress," Chandran said.

Industry bodies have warned that higher duties could make Indian products less competitive in the US and could affect exporters' ability to retain existing orders.

Law linked to Russian energy purchases

The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 gives the US administration additional authority to impose tariffs of up to 100% on countries that continue to purchase Russian energy.

India, the world's third-largest oil importer, has remained a major buyer of Russian crude. The new law therefore creates a potential trade risk for Indian exporters even though it does not itself specify that India will face a 100% tariff.

Reuters reported that India has warned Washington that such tariff action could damage bilateral relations and affect global energy stability. New Delhi has maintained that its energy sourcing decisions are driven by national energy security and diversified supplies.

Trade ties face another test

The latest development adds another layer of uncertainty to India-US trade relations, which have already gone through several rounds of tariff changes and negotiations.

In February, the two countries announced an interim trade framework under which the US agreed to apply an 18% reciprocal tariff on Indian goods, with provisions for further tariff reductions on a range of products subject to the conclusion of a broader bilateral trade agreement.

The Indian government has continued to engage with Washington on trade issues. Earlier in July, the US imposed an additional 10% Section 301 duty on certain Indian imports, while around 45% of India's exports to the US remained outside the scope of that additional duty because of exemptions.

The possibility of further tariffs has consequently raised fresh concerns among exporters about market access, order flows and the competitiveness of Indian goods in the US.