Policy Watch: Growth with Employment – September 2025

This issue is on the theme Growth with Employment. Two extremely significant events happened this month which are relevant for Growth and Employment. The first was the Trump tariff announcement, picking India for a punitive tariff of 50% on most items. The second was the announcement of the much-awaited GST reforms.

The first article in this issue is an analytical report by the Delhi based Global Trade Research Institute (GTRI) published by them in the last week of August. This is a significantly revised version of an earlier GTRI report that we had republished in June 2025. The report made a detailed sector by sector analysis and has shown that unfortunately the sectors most affected by tariffs are the ones that employ a lot of workers – textile and apparel, knitwear and hosiery, leather and shoes, gems and jewellery, carpets and handicrafts.

It is as if Mr Trump picked the sectors to maximise the pain which will be caused by the loss of jobs for lakhs of workers. The GTRI report estimates the negative impact on Growth as well – at least 0.9 percent reduction in GDP growth rate. Despite this the GTRI report ends on a hopeful note saying that India will survive the shock by diversifying exports to other markets and by doing more Services export.

Unfortunately, in the month since the GTRI report, its pessimistic prediction about job losses have come true but the optimistic view of export diversification and increase in Services exports have both not come true.

We carry two articles on the adverse consequences describing the situation in one of the largest export clusters -Tiruppur in Tamil Nadu. The first article on that, reproduced from the Business and Human Rights website and the New Indian Express, describes the plight of the export units as they face order cancellations from the US.

The second article, reproduced from The Print describes the plight of thousands of migrant workers from the eastern states, who have been laid off and have to go back to their home states – Bihar, Jharkhand and Odisha.

Why this has happened is tracked in an article by Rajesh Mahapatra who is an Honorary Senior Visiting Fellow at the RGICS. Citing merchandise export data till end August he shows that exports this FY have fallen in almost all destinations, the main exception being the US but that was because a rush of exports in August to beat the new tariff deadline.