Why Most Indian exports to US Will Get Tariff Relief From July 24 and Why This May Not Last Long

Around 92% of India’s $87.2 billion merchandise exports to the US will return to normal most-favoured-nation tariffs from 0931 IST on July 24 as Washington’s temporary 10% Section 122 import surcharge expires.

The change will reduce duties by 10 percentage points on a broad range of Indian manufactured goods, including engineering products, textiles, chemicals, machinery, plastics, leather goods, gems and jewellery, and furniture.

The relief will not apply to steel, aluminium, certain copper products, automobiles and specified auto components covered by US Section 232 national security tariffs. These products account for about 8% of India’s exports to the US.

What changes on July 24?

The 10% surcharge imposed under Section 122 of the US Trade Act of 1974 will expire at 0001 EDT, or 0931 IST, on July 24 after completing its maximum statutory period of 150 days.

The tariff treatment depends on when goods are entered for consumption in the US or withdrawn from a customs warehouse, rather than when they are shipped or arrive at a port.

Most Indian goods currently paying the normal US MFN tariff plus the 10% surcharge will face only the MFN rate after the expiry.

Products already exempt from the Section 122 levy, including smartphones, semiconductors, pharmaceuticals and energy products, will see no change because they have continued to pay only normal MFN tariffs.

Which exports get relief?

About 55% of India’s exports to the US will receive an immediate 10-percentage-point reduction in tariffs.

These goods include most engineering products, textiles and garments, chemicals, machinery, plastics, leather products, gems and jewellery, and furniture.

Another 37% of exports were exempt from the temporary surcharge and will continue under the existing MFN regime.

Together, these two categories account for 92% of India’s exports to the US.

Why did the US impose the surcharge?

Indian exports have faced three US tariff regimes in less than a year.

From August 27, 2025 to February 23, 2026, about 55% of Indian exports faced an additional 50% tariff. This comprised a 25% reciprocal tariff and a further 25% levy linked to India’s purchases of Russian oil.

The normal MFN tariff remained payable on top of these additional duties.

The US Supreme Court struck down the reciprocal tariff regime on February 20, ruling that the administration lacked the authority to impose the measures under the International Emergency Economic Powers Act.

The White House then introduced a temporary 10% surcharge under Section 122. The levy took effect on February 24 and remained in place for 150 days.

Which products remain under high tariffs?

Products covered by Section 232 will receive no relief.

The category includes steel, aluminium, certain copper products, automobiles and specified auto components, representing around 8% of India’s exports to the US.

These products continue to pay the applicable MFN tariff plus the Section 232 duty.

For example, a steel product carrying a 2.5% MFN tariff may continue to face a total duty of 52.5%. Aluminium products may face duties of 55%, while covered auto components may attract 27.5%.

Neither the earlier reciprocal tariff nor the temporary Section 122 surcharge applied to these products.

Why could the relief be temporary?

The Trump administration is pursuing two Section 301 investigations that could result in fresh tariffs on Indian exports.

One investigation covers forced labour in global supply chains, while the other focuses on countries accused of maintaining excess manufacturing capacity.

India is included in both investigations. The US Trade Representative has proposed a 12.5% tariff under the forced-labour investigation, according to the Global Trade Research Initiative.

Washington could also consider country-specific tariffs linked to market access, India’s purchases of Russian oil or wider geopolitical issues.

Pharmaceutical exports face a separate medium-term risk. Indian medicines were exempt from both the reciprocal tariff regime and the Section 122 surcharge, but the US administration has announced plans for tariffs on imported generic medicines from August 2028.

The July 24 expiry will therefore provide immediate relief to Indian exporters, but uncertainty over Section 301 action and sector-specific tariffs will remain.

(Made from a report by thinktank GTRI)