Indian Startups’ Trump Tariff Strategy: How to Turn Crisis into Opportunity

It’s been nearly a week since August 6, 2025, when U.S. President Donald Trump delivered a seismic jolt to Indian exporters by doubling tariffs on a wide range of goods to a punishing 50%. The trigger? India’s continued purchase of Russian oil—despite the U.S. and Europe continuing to import Russian enriched uranium, fertilizers, minerals, gas, and more. The first 25% tariff hike took effect on August 7, with a second wave set for August 27, pushing total duties to 50%. Setting geopolitical debates aside, Indian SMEs and startups must brace for impact and act fast.

The immediate fallout could be severe. Textiles, gems, leather, chemicals, and seafood—the very sectors where startups and MSMEs form the backbone—will face heavy blows. Major U.S. retailers like Amazon and Walmart have reportedly paused fresh orders. Exporters now confront a 30–35% cost disadvantage compared to competitors in Vietnam and Bangladesh.

For thousands of Indian startups in textiles, personal care, and electronics, this is not just a trade disruption—it’s an existential crisis.

According to the Federation of Indian Export Organisations (FIEO), 55% of India’s exports to the U.S. are now subject to these tariffs, slicing deeply into margins for more than 70,000 export-oriented MSMEs and startups.

Anand Mahindra, chairman of the Mahindra Group, captured this moment with poetic precision, calling it a modern-day Manthan—a churning that could yield Amrit if India responds with vision and resolve.

“Let the unintended consequences we create be the most intentional and transformative ones of all. We cannot fault others for putting their nations first. But we should be moved to make our own nation greater than ever.”

Mahindra’s prescription is bold: radically improve ease of doing business, unleash tourism as a foreign exchange engine, and empower MSMEs through infrastructure and policy support. His call is not just economic—it is existential. India must not merely react; it must reinvent itself.

How Can Startup Entrepreneurs Beat the Trump Tariff Heat?

History rewards those who act decisively in crisis. True entrepreneurs innovate under fire. This tariff shock could become a strategic inflection point—if startups move fast.

1️⃣ Diversify Export Markets to Reduce Dependency

With over half of India’s U.S. exports now facing punitive tariffs, reliance on a single buyer country is no longer viable. Forward-looking brands are already shifting focus. Raymond and Zivame, for instance, are scaling into tariff-neutral regions such as the UAE and Indonesia, leveraging e-commerce platforms and wholesale partnerships to offset U.S. losses.

2️⃣ Adopt “India+1” Manufacturing Strategy

Tariff exposure links directly to the manufacturing base. Adopting an “India+1” strategy—establishing satellite manufacturing in Gulf or ASEAN nations—can help retain global market access without triggering U.S. duties. Titan has relocated select operations to the Gulf, ensuring uninterrupted access to American customers.

3️⃣ Build Direct-to-Consumer Channels

Bypassing middlemen through direct-to-consumer (D2C) sales and brand localization reduces markups and softens tariff impact. FabIndia and Tanishq are leading this approach, investing in region-specific websites, targeting diaspora communities, and offering competitive global delivery options.

4️⃣ Leverage Licensing and Joint Ventures for Local Production

Producing tariff-sensitive goods within the U.S. sidesteps import duties while maintaining brand visibility. Apparel Group’s licensing arrangements with BCBG and Ben Sherman prove this model’s viability, allowing international brands to thrive in protected markets.

5️⃣ Invest in R&D and Product Innovation

High-value, differentiated products better withstand tariff shocks by commanding stronger margins. Tata Motors, for example, customizes its electric vehicle lineup to meet U.S. regulatory standards, sidestepping traditional auto tariffs. By investing in intellectual property, AI, and market-specific design, startups can turn crisis into competitive advantage.

How Will Modi’s Policy Shield Save Startups?

New Delhi is standing firm. Prime Minister Narendra Modi has declared India will not compromise on agriculture or energy security—even at a “personal price.” Bilateral Trade Agreement (BTA) talks are underway, with a possible resolution expected by fall 2025.

Meanwhile, startups should:

• Tap into export diversification schemes.
• Collaborate with FIEO and PHDCCI on bundled pricing and diaspora-focused campaigns.
• Secure venture capital and strengthen supply chain resilience.

Ronnie Screwvala, co-founder of upGrad, offered an unsparing critique:

“Even if the US resets its tariffs, the message is clear—US is a fair-weather country. We need to fix for the long term. On Independence Day 2026, we should send them a thank-you note for accelerating India’s Viksit Bharat plans.”

Screwvala’s message is clear: the tariff shock is a wake-up call. India must reduce foreign dependence, harness its rural consumption story, and unleash entrepreneurship to build domestic resilience. His tone is not bitter—it is catalytic.

Entrepreneurship Is All About Turning Crisis into Catalyst

This tariff war could be to 2025 what the 1991 balance-of-payments crisis was to India—painful but transformative. As Anand Mahindra often notes, moments like these can alter a nation’s economic destiny.

The startups that pivot fast, innovate boldly, and fortify their supply chains will not just survive this storm—they’ll lead India’s next wave of global leadership.