GUWAHATI — India's goods exports to the US, its largest foreign market, dropped sharply by 20% in September and nearly 40% in the last four months, as Trump's steep tariffs took effect, data shows.

September was the first full month of Washington's 50% tariffs on Indian goods, which kicked in on 27 August. This includes a 25% penalty for Delhi's refusal to stop buying oil from Russia.

"US has become India's most severely affected market since the tariff escalation began," said Ajay Srivastava of Global Trade Research Initiative (GTRI), a Delhi-based think tank.

Negotiations for a trade deal between the two countries are under way, with the goal of concluding an agreement by next month.

According to GTRI, the most significant impact of the tariffs has been felt by labour-heavy sectors such as textiles, gems and jewellery, engineering goods, and chemicals, which have suffered the heaviest losses.

Shipments to the US have seen four consecutive months of decline, and are down 37.5% — from $8.8bn (£6.5bn) in May to $5.5bn in September.

The drop in exports have also contributed to India's trade deficit (the gap between what a country imports and exports), which widened to a 13-month high of $32.15 billion in September.

Some of the reduction in exports to the US was cushioned by improved trade with countries like the UAE and China.

Trade negotiations between India and the US resumed last month after months of stalling over a number of differences. An Indian delegation is currently in the US for talks.

On Wednesday, Trump said that Indian Prime Minister Narendra Modi has agreed to stop buying Russian oil, as the US seeks to put economic pressure on the Kremlin as part of efforts to end the war in Ukraine.

A spokesperson of the Indian foreign ministry said discussions were "ongoing" with the US administration which had "shown interest in deepening energy co-operation with India".

But major sticking points over trade still remain, including access to agriculture and dairy.

For years, Washington has pushed for greater access to India's farm sector, seeing it as a major untapped market. But India has fiercely protected it, citing food security, livelihoods and the interests of millions of small farmers.

Until recently, the US was India's largest trading partner, with bilateral trade reaching $190bn in 2024. Trump and Modi have set a target to more than double this figure to $500bn. — BBC