US-India Trade Pact Cuts Tariffs to 18%, Revitalizing Gujarat's Export Economy
A newly announced trade agreement between the United States and India has slashed tariffs on Indian goods from a steep 50% down to 18%, a move poised to significantly reshape the economic outlook for Gujarat's manufacturing sector, which is heavily reliant on exports. The deal, announced from Ahmedabad, restores crucial tariff parity for Indian exporters after months of trade disruption that severely impacted order flows, profit margins, and factory capacity utilization across the state's major industrial clusters.
This tariff rollback delivers immediate and substantial relief to pivotal export sectors including textiles, chemicals, renewable energy components, and engineering goods. These industries collectively represent a dominant share of Gujarat's outbound shipments to the United States. The agreement arrives shortly after India concluded a comprehensive trade pact with the European Union, granting manufacturers in Gujarat unprecedented, rapid access to two of the world's largest and most lucrative consumer markets in quick succession.
Textiles and Apparel: A Major Inflection Point for the Sector
The textiles and apparel industry is projected to be the largest and most immediate beneficiary of this landmark trade deal. "This marks a clear inflection point for the entire Indian textile sector," stated Ronak Chiripal, promoter of the Chiripal Group. "India now possesses a distinct cost and competitiveness advantage over other major textile-exporting nations, a position we haven't held in years. The most significant gains will emerge from value-added segments like garments, home textiles, and technical textiles. This allows Gujarat's manufacturers to shift beyond mere volume-driven exports and compete globally on superior design, compliance standards, and supply chain speed."
Industry leaders also emphasized that the deal will fortify India's reputation as a reliable and strategic sourcing partner, aligning with the global "China + 1" supply chain diversification trend. This renewed confidence is expected to trigger fresh capacity additions and bold capital investment in the near future.
Gems and Jewellery: Certainty Brings Short-Term Price Stability
For Gujarat's prominent gems and jewellery sector, the trade deal is anticipated to alleviate near-term market uncertainty, particularly concerning bullion-linked exports and pricing dynamics. "The agreement reduces immediate trade-related uncertainty, which could temper safe-haven demand and lead to a period of short-term consolidation in gold and silver prices," explained Prithviraj Kothari, President of the India Bullion and Jewellers Association. He added that a potentially stronger Indian Rupee might further soften domestic bullion prices in the coming months.
According to the Gems and Jewellery Export Promotion Council (GJEPC), the United States constitutes India's largest market, accounting for 31% of exports, valued at US$ 9.23 billion in FY 2024-25. "The tariff cuts lower costs for American importers, provide immense relief to diamond jewellery manufacturers, boost the competitiveness of Indian diamond jewellery, help revive demand, and stabilize industry operations," said Kirit Bhansali, Chairman of GJEPC.
He further noted, "Loose diamonds and coloured gemstones exported from India will benefit from zero-duty access to the US market, offering much-needed support for diamond exports. This will enhance trade flows, rebuild business confidence, and deliver a powerful, sector-wide boost."
Chemicals Sector: Lower US Duties Revive Export Economics
Gujarat's extensive chemicals industry, encompassing bulk chemicals, intermediates, and specialty products, stands to gain from significantly improved margin visibility in the US market. Manufacturers reported that the previously elevated 50% tariffs had severely compressed profitability and slowed down contract renewals over the past year.
Ankit Patel, Vice Chairman of CHEMEXCIL, provided insight: "Since the 50% tariffs were implemented in late August 2025, we witnessed an approximate 25-30% decline in chemicals exports. However, with the deal finalized, setting US tariffs for Indian goods at 18%, we are confident that exports to the US will surge significantly. Currently, plants producing dyes, dye intermediates, and organic and inorganic chemicals in Gujarat are operating at around 60% capacity. With reduced tariffs, we expect this to climb to 80% in the coming months."
Solar Industry: Incremental Export Window Reopens
Gujarat's renewable energy manufacturing ecosystem is set for incremental gains as lower US tariffs improve the commercial viability of exporting Indian-made solar modules, inverters, and other balance-of-system components. "Solar panel exports to the US from Gujarat are significant, currently around Rs 3,000 crore from state-based manufacturers. With tariffs reduced to 18%, we anticipate a strong resumption of these exports," stated Kunj Shah, Chairman of the Energy Committee at the Gujarat Chamber of Commerce and Industry (GCCI).
Electronics and Chip Manufacturing: Trade Sentiment Improves
While IT services remain largely unaffected by tariffs, Gujarat's burgeoning electronics and IT hardware manufacturing segment is poised to benefit from improved overall trade sentiment and lower duties on physical products. "The trade deal will bring about a major improvement in business sentiment," said Sudhir Naik, Head (Midwest Region) of the India Electronics and Semiconductor Association. "It could encourage closer collaboration with US technology firms under contract manufacturing and joint-development models. Manufacturers assembling industrial electronics, networking equipment, and specialized hardware confirm that this tariff reset enhances the export viability for their niche product offerings."
The collective impact of this trade agreement signals a robust recovery phase for Ahmedabad and Gujarat's industrial landscape, positioning the state for enhanced global trade integration and economic growth.
