From Fields to Fishing Nets, Rural India’s Global Link Is Fraying

A new wave of U.S. trade protectionism is poised to deal a direct blow to India's rural and agricultural economy, with fresh tariffs threatening nearly $26 billion worth of labour- and farm-linked exports, a trade think tank has warned. The 25% country-specific tariff, recently imposed by Washington, could trigger a 30% plunge in India’s overall exports to the U.S. this fiscal year, according to the Global Trade Research Initiative (GTRI).

The impact will be most acute in India’s agrarian states and rural manufacturing hubs, where jobs, income, and livelihoods are heavily tied to exports of shrimp, spices, textiles, garments, and jewellery—sectors now targeted by punitive U.S. duties.

India’s exports to the U.S., its largest trading partner, are expected to fall from $86.5 billion in FY25 to just $60.6 billion in FY26, a collapse GTRI attributes largely to Washington’s aggressive tariff move, coupled with additional, undefined penalties.

Rural Shock: Fisheries, Apparel, and Agro-Linked Exports in the Firing Line

The fallout from the tariffs is not limited to urban exporters or large manufacturers—it cuts deep into coastal fishing economies, village textile clusters, and MSME belts across India: 

    Seafood (Shrimp): India’s $2 billion shrimp industry, which supports lakhs of coastal livelihoods in Andhra Pradesh, Odisha, West Bengal, and Kerala, now faces a 25% tariff. The move severely weakens India's pricing edge over Chile and Canada—nations with free trade access to the U.S. “We may lose our single largest buyer overnight,” the report notes grimly. 

    Textiles & Garments: Rural apparel hubs in Tirupur, Ludhiana, and Surat could see orders dry up. Knitted and woven garments—each with $2.7 billion in U.S. exports—now face tariffs of 38.9% and 35.3%, far higher than rates for Bangladesh and Vietnam. The export of made-up textiles like towels and bedsheets, often stitched by home-based women workers, faces a 34% tariff, reducing demand for India's handloom and power loom output. 

    Jewellery (Rural Craftsmanship): India’s $10 billion jewellery exports—many of them crafted by rural artisans in Rajasthan, Gujarat, and Tamil Nadu—now attract 27.1% tariffs. The mechanical gold jewellery segment (valued at $3.6 billion) is especially vulnerable, given its tight margins and heavy reliance on the U.S. market. 

    Engineering & Agro-linked Machinery: Exports of machinery and components used in irrigation, food processing, and farm logistics—often manufactured in Tier-2 towns like Rajkot, Coimbatore, and Pune—are now costlier than similar products from Mexico and Japan due to new 26%+ tariffs. 

No Easy Off-Ramp: EU Barriers, Limited Diversification 

The report underscores the narrow export dependency India has developed—and the limited room to maneuver. While policy planners may consider redirecting trade to the EU or Asia, GTRI warns that non-tariff barriers are also rising elsewhere. The EU’s upcoming carbon tax and deforestation law, for instance, will hit India’s exports of tea, coffee, and wood-based goods—many of which originate from tribal and forest-based communities.

What Can Be Done: A Five-Point Rural-Sensitive Trade Strategy 

To stem the damage and support rural and agrarian-linked exports, GTRI has proposed a targeted five-step policy shift: 

•     Revive the Interest Equalization Scheme: Reintroduce subsidized export credit (₹15,000 crore annually) for MSMEs, especially in rural and semi-urban sectors. 
•     Deploy Real-Time Export Helpdesks: Create an easy-access digital and call-in platform to inform exporters—including rural cooperative societies—about evolving tariffs, regulatory changes, and destination market rules. 
•     Negotiate FTAs Judiciously: Push for completion of UK and EU free trade deals, but avoid overpromising gains. Even marginal tariff reductions must be tied to concrete support for small producers. 
•     Reform Inbound Tourism: Treat rural tourism and cultural exports as economic assets by fixing infrastructure gaps and ensuring tourists are not driven away by overcharging, red tape, or poor connectivity. 
•     Onboard New Rural Exporters: Launch a National Trade Network aimed at digitally onboarding 200,000+ new exporters, many from hinterland districts. Simplified compliance, customs training, and cooperative onboarding are key. 

More Trouble Ahead? 

Although sectors like pharmaceuticals and smartphones have escaped tariffs for now, GTRI cautions that these exemptions are fragile. With U.S. authorities threatening to scrutinize Indian medicines and electronics containing Chinese components, even high-tech exports from India could soon come under fire. 

The report concludes that unless India undertakes a rural-sensitive trade recalibration, the current tariff shock could widen regional income gaps, damage job creation, and roll back years of rural export gains.