India’s U.S. exports plunged 22.2% between May and August 2025, falling from $8.8 billion to $6.9 billion, an analysis by Delhi-based Global Trade Research Institute (GTRI) shows. The decline in exports was the most with smartphones, which dipped 58% to $ 965 million despite facing zero duty in the US.

Overall, tariff-exempt exports took a bigger hit with a 41.9% decline during the period, despite tariffs on other goods climbing from 10% to 50%. September will be the first full month with 50% tariffs on all products except the tariff-exempt ones, and steeper decline in export of textiles, gems & jewellery, shrimp, chemicals, solar panels are expected in the coming months.

According to GTRI, tariff-free products, which account for 28.5% of India’s August exports, posted the sharpest contraction of 41.9%, falling from $3.37 billion in May to $1.96 billion in August. Smartphone exports — India’s largest export to the U.S. — plunged 58%, dropping from $ 2.29 billion in May 2025 to $ 964.8 million in August. The fall was steady month by month: June $2.0 billion, July $1.52 billion, and then the sharpest drop in August, GTRI study points out. It should be noted that in FY2025, the U.S. remained India’s top smartphone market with $10.6 billion imports (44% of India’s global $24.1 billion exports), followed by the EU at $7.1 billion (29.5%).

Pharmaceuticals exports to the US also weakened, with exports dropping 13.3%, from $ 745 million in May to $ 646.6 million in August 2025.

“Tariff-exempt exports collapse is a puzzle. It is alarming and counterintuitive — these products face zero U.S. tariffs, yet they have seen the steepest decline”, Ajay Srivastava, founder, GTRI says. “We need to find out reasons for falling smartphone exports to US. Is production shifting back to China or Vietnam for newer models or component shortages has hit Indian assembly plants?” he asks.

Petroleum oil exports bucked the trend and rose 0.6% to $ 292.6 million, supported by firm crude prices and steady energy demand, the analysis reveals.

In the case of labour intensive sectors like textiles and gems and jewellery, which together accounts for 62.7% of India’s exports to the U.S. exports fell 10.8%, from $ 4.82 billion in May to $ 4.30 billion in August 2025. These sectors had suffered most due to the high tariffs imposed by the US.