Indian exporters of chemicals, textiles, carpets and leather goods are reporting a surge in enquiries from US clients but these are not translating into firm orders, according to The Economic Times. The uncertainty stems from impending changes in US tariff policies, including the July 24 expiry of 10% tariffs and potential Section 301 duties.
Policy Uncertainty Dampens Order Conversion
The United States was India's second-largest trading partner in 2025-26, with goods exports increasing 0.92% year-on-year to $87.3 billion, according to The Economic Times. However, exporters report that while enquiries are rising, conversion into orders remains low.
"There is uncertainty on what will happen as the US may impose Section 301 tariffs. That challenge is there," said Ajay Sahai, director general of the Federation of Indian Export Organisations, as quoted by The Economic Times.
The US Supreme Court had invalidated the International Economic Emergency Powers Act (IEEPA) tariffs in February, after which the Trump administration imposed 10% tariffs that will expire on July 24. Under IEEPA, the US imposed 50% tariffs on India, half of which were a penalty for buying Russian oil.
Sharad Kumar Saraf, chairman of Technocraft Industries, noted an improvement: "The situation is not too bad and has improved since last month. Business is reviving and enquiries are rising."
Trade Negotiations and Additional Tariff Threats
The two sides have been engaged in negotiating a trade deal, even though parallelly the US has proposed an additional 12.5% duty on 54 countries, including India, over alleged failure to restrict imports of goods produced with forced labour in third countries. The US has proposed new tariffs on most Indian goods under Section 301 of the US Trade Act of 1974, concerning forced labour, and is conducting another probe on excess industrial capacity. The hearing for the second probe is on July 7.
| Tariff Measure | Details | Effective Date / Status |
|---|---|---|
| IEEPA tariffs (original) | 50% on India, half for Russian oil | Invalidated by SC in February |
| Post-IEEPA 10% tariffs | Imposed by Trump administration | Expires July 24 |
| Proposed Section 301 tariffs | On most Indian goods (forced labour) | Under consideration |
| Proposed 12.5% duty | On 54 countries (forced labour imports) | Proposed |
Sectoral Perspectives
Handicraft exporters said new enquiries have started coming in but are yet to convert into orders. Mahavir Pratap Sharma, founder of Jaipur-based hand-knotted woollen carpet exporter Oscar Expo Design, stated: "While globally there are signs of optimism, unpredictability of the US is a challenge and matter of concern. Enough demand is coming and if the war stops and the US starts looking in, business will grow."
Engineering exports are subject to the US' Section 232 tariffs, and the July 24 deadline will not make any difference to the sector, according to Pankaj Chadha, chairman of the Engineering Export Promotion Council.
The combined effect of these measures keeps Indian exporters cautious. While enquiries signal demand, the lack of conversion underscores the need for clarity in US trade policy before orders can flow.
Sources:
