India may lose up to $5 billion in exports to Vietnam amid a lack of a preferential trade deal with the United States. Key export sectors including frozen shrimp, textiles, and jewellery are at risk as Vietnam secures lower tariffs under a new US trade agreement.
India could face an export loss of up to $5 billion to Vietnam if it fails to secure a trade deal with the United States, according to an analysis by Moneycontrol. The warning comes just days after the US signed a bilateral trade agreement with Vietnam, slashing tariffs on key goods.
India, which exported nearly $76 billion in goods to the US in 2023, shares 161 high-volume product categories with Vietnam. These include frozen shrimp, textiles, and jewellery. While total US trade in these categories is valued at $22 billion, direct competition exists in only $5.4 billion worth of trade.
Of this, India’s high-risk segment is dominated by frozen shrimp exports, where it shipped $1.81 billion worth to the US in 2023. In comparison, Vietnam exported $290 million. However, following the new tariff relief, Vietnam’s share could rise sharply, potentially reducing India’s earnings in this category to $224 million—a loss of $1.6 billion.
Other sectors at risk include kitchen and toilet linen, with a potential loss of $280 million, and jewellery, with a projected $231 million hit. These categories have high price sensitivity and overlap with Vietnam’s competitive pricing.
The trade pressure increased after former US President Donald Trump announced a new bilateral agreement with Vietnam on July 2, reducing export tariffs to 20% just ahead of the July 9 policy enforcement deadline under the US’s new trade regime. Trans-shipped goods will now face a 40% levy, while Vietnam—originally set to face a 46% tariff—has secured relief due to the agreement.
India, however, remains exposed to a 26% tariff unless it signs a preferential trade deal with the United States. At the time of publishing, no new agreement had been confirmed.
It is my Great Honor to announce that I have just made a Trade Deal with the Socialist Republic of Vietnam.”
President Donald Trump
The delay in India’s trade negotiations could affect major export sectors and reduce competitiveness in the US market. Despite limited overlap in overall goods, analysts say that even marginal shifts in tariff structures can significantly impact export volume in high-value sectors.
Unless India expedites its trade talks with Washington, exporters could find themselves at a growing disadvantage, especially in sectors where Vietnam is fast gaining favor with US buyers.