The United States has imposed additional tariffs on Indian goods under Section 301 of the Trade Act, citing concerns over forced-labour enforcement. As of 24 July 2026, most Indian exports face a 10% additional duty on top of regular most-favoured-nation (MFN) rates. India secured the lower 10% rate — instead of the initially proposed 12.5% — after amending its foreign trade policy to prohibit imports of goods produced using forced labour.
Roughly 45% of India's exports to the US remain exempt, while the remainder carries the new levy. Section 232 national-security tariffs on steel, aluminium, copper and certain auto parts continue to apply separately. Bilateral talks for a broader India–US agreement remain ongoing. This guide covers the current tariff structure, key exemptions, sectoral impact, and what it means for Indian exporters and US-linked businesses.
US tariffs on India 2026: quick facts
| Measure | Detail (as of August 2026) |
|---|---|
| Section 301 additional tariff | 10% ad valorem on applicable Indian goods |
| Effective from | 24 July 2026 |
| Coverage | ~55% of India's exports to the US attract the extra duty |
| Exempt / outside scope | ~45% of exports (incl. many pharma, smartphones, Section 232 goods) |
| Section 232 (national security) | Steel, aluminium, copper, autos — separate, ~25–50% |
| India's rate vs peers | 10% (lower bracket) vs 12.5% for many economies |
| Bilateral trade deal | Negotiations ongoing |
Background: how US tariffs on India evolved
US–India trade relations have fluctuated sharply in recent years. In 2025, tariffs on many Indian goods rose significantly, at one point reaching effective rates near 50% in some categories, including reciprocal tariffs and an additional 25% linked to India's purchases of Russian oil.
In early 2026, following high-level engagement between the two governments, the Russia-oil-related additional duty was removed. Temporary measures under Section 122 of the Trade Act of 1974 applied a 10% surcharge on most goods for a limited period. That surcharge expired on 24 July 2026 and was replaced by the current Section 301 action targeting forced-labour import bans across roughly 60 economies. India's proactive policy change on forced labour helped place it in the lower 10% bracket alongside countries such as Canada, the UK, Bangladesh and Pakistan; many other economies face 12.5%.
Current US tariff structure on Indian goods
- Section 301 additional tariff: 10% ad valorem on applicable Indian goods, effective 24 July 2026.
- Coverage: Commerce Ministry estimates indicate about 55% of India's exports to the US attract this additional duty, while ~45% remain outside its scope.
- Base MFN rates: continue to apply on top of (or instead of) the additional duty, depending on the product.
- Section 232 tariffs: separate national-security duties remain in force on steel, aluminium, copper products, automobiles and certain auto components (commonly 25–50% depending on the item). These are generally not subject to the extra Section 301 layer.
Key exempt or lower-impact categories under the Section 301 measures typically include generic pharmaceuticals and certain related products; smartphones and some electronics; specified energy and critical items; and goods already covered under Section 232. Textiles, garments, footwear, certain chemicals, engineering goods, plastics, leather products, gems and jewellery, and furniture are among the categories more likely to face the full additional 10%. Exact duty depends on the Harmonized Tariff Schedule (HTS) classification of each product — verify current rates using official USTR or CBP resources.
Impact on Indian exports and key sectors
India's merchandise exports to the US form a significant share of overall trade. The additional 10% raises landed costs for affected products, pressuring margins in competitive or price-sensitive categories.
Sectors facing higher pressure
- Textiles, apparel and home furnishings
- Footwear and leather goods
- Certain chemicals, plastics and rubber products
- Engineering goods and machinery
- Gems, jewellery and some manufactured consumer items
Relatively protected or exempt areas
- Pharmaceuticals (generics remain important)
- Smartphones and select electronics
- Products under Section 232 (though they carry their own higher duties)
The lower 10% rate (versus 12.5% for many peers) gives India a relative advantage against some competitors, though countries with more favourable exemption lists can still hold an edge in specific product lines. For exporters, practical effects include higher compliance costs, renegotiation of contracts with US buyers, and pressure to improve productivity or shift product mix. Small and medium enterprises in labour-intensive sectors may feel the impact more sharply.
Implications for NRIs, investors and businesses
Many Non-Resident Indians and India-linked businesses have supply-chain, investment or export interests tied to the US market. Higher tariffs can affect:
- Profitability of export-oriented units in India
- Pricing competitiveness of Indian-origin products in the US
- Investment decisions in manufacturing capacity aimed at the US market
- Supply-chain planning for companies sourcing from India
Businesses should review product classifications, explore available exclusions or tariff-rate quotas where they exist, and monitor progress on the bilateral trade agreement. Market diversification and value addition remain important risk-mitigation strategies.
Ongoing negotiations and future outlook
India and the United States continue discussions toward a bilateral trade agreement. Earlier interim understandings in 2026 contemplated reductions in reciprocal rates and certain sectoral relief (including on some steel/aluminium derivatives and other items), though final outcomes depend on further negotiations. A second Section 301 investigation related to manufacturing capacity remains open and includes India among the economies under review; outcomes there could introduce additional measures. Tariff policy can change with new executive actions, court rulings or negotiated deals, so exporters and importers should track official USTR announcements and Federal Register notices for the latest status.
Practical steps for exporters
- Confirm the exact HTS code and current duty rate for each product line.
- Check whether the goods qualify for any listed exemptions under the Section 301 measures or Section 232 rules.
- Factor the additional 10% (where applicable) into pricing and contracts with US buyers.
- Maintain documentation supporting origin and compliance with forced-labour prohibitions.
- Explore opportunities under any emerging bilateral framework or preferential arrangements.
- Consider market diversification and product upgrading to reduce dependence on tariff-sensitive categories.
US tariffs on India remain a dynamic area of trade policy. Staying informed through official sources and adapting commercial strategies accordingly will help Indian exporters and related businesses navigate the current environment. For the latest product-specific guidance, consult the USTR, US Customs and Border Protection, or qualified trade professionals.