Today, on August 28, 2025, the 50% tariffs imposed by the US government on a wide range of Indian exports had a significant impact on the Indian stock market. The Indian stock market has faced a sharp decline as investors reacted to the U.S. decision.
The Nifty 50 slipped nearly 0.85% to around 24,500, while the Sensex fell about 700 points, down 0.9%. Export-oriented sectors like textiles, seafood, and gems, which were worst impacted by tariffs, have triggered broad-based selling.
This month, it has been seen that there are heavy outflows of foreign portfolio investors (FPIs) from the Indian stock market, which is estimated at over $2.6 billion. This is creating huge pressure in the Indian equity market.
Though IT and Pharma stocks have shown resilience amid global trade headwinds but Indian stock market sentiment remains cautious.
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https://investmentgrip.com/us-tariffs-shake-indian-stock-markets-investor/
Why India Feels the Tariff Pinch
The Indian stock markets, especially export-driven sectors, were under pressure today as fresh U.S. tariffs weighed heavily.
The US has imposed 50% on Indian exports due to India’s continued imports of discounted Russian oil. According to economists, these heavy tariffs could slash India’s U.S. exports significantly and dampen GDP growth by up to 1%.
For several Indian industries, the US market is a critical market for as 17% of India’s total exports are accounted for by the US.
The export percentage of various sectors varies, such as textiles and apparel (around 27% of exports go to the U.S.), gems & jewelry (about 20%), and steel and related products (close to 15%). Particularly, these sectors are in vulnerable conditions after the US tariffs.
Now, Indian exporters may be forced to cut prices to stay competitive against rivals like Bangladesh, Vietnam, and Mexico; as a consequence, it will squeeze profit margins and weaken earnings visibility with higher import duties.
The supply chains in automobiles and engineering goods may be disrupted beyond the direct export tariffs with which India is deeply connected with U.S. and European manufacturers.
The Indian stock market’s reaction reflects fears of reduced competitiveness, rising costs, and possible market share loss. After all, in these uncertain conditions, tariffs may introduce short-term volatility and risk aversion in export-heavy sectors, but India’s long-term fundamentals will remain intact.
Sectoral Fallout: Who’s Up, Who’s Sinking
Worst hit
Textiles and garments
The textile and apparel sector contributes nearly 10% of India’s exports, and this is the most sensitive to US tariff hikes. In this sector, tariffs have risen to as high as 62%. Higher duties will affect India’s cost advantage, especially while competing with Bangladesh and Vietnam. As a result, it will shrink export margins and order slowdowns from global retailers and may also generate unemployment in the future.
Seafood
The seafood exporters states of India, such as Maharashtra and Odisha, are facing sharp losses. Due to sharply higher duties, Falcon Marine Export is seeing container volumes drop from 100 to under 25.
Other Vulnerable Sectors
Apart from the textiles and seafood sectors, other export-oriented sectors are also facing tariff pressure, such as jewelry, carpets, auto parts, furniture, and industrial chemicals, particularly those that are exposed to the US trade system.
https://www.theguardian.com/us-news/2025/aug/27/trump-50-percent-tariff-india-explainer
The sum of these categories accounts for a significant share of India’s export basket and relies heavily on US demand. Tariff hikes could impact many ways to the export companies, such as squeezing margins, reducing order inflows, and disrupting supply chains, forcing Indian exporters to either absorb the costs or lose competitiveness in global markets.
Conclusion
Up to 50% tariffs imposed by the US government on Indian exports have impacted Indian GDP in two ways. The Indian export companies have been hit badly, and the broader Indian stock market has experienced a huge loss due to heavy foreign outflows and deteriorating sentiment.
Though there is some light of hope in the strengths of services, domestic demand, and proactive government relief.
For investment, it’s time to rotate from tariff-impacted sectors towards resilient sectors like IT and pharma while closely monitoring policy shifts and export diversification plans.
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