Indian Firms Explore UAE Amid US 50% Tariffs on Exports

Indian businesses are actively exploring opportunities in the UAE following US President Trump’s announcement of higher tariffs on Indian exports. The tariffs, which started today, impose a 50% duty on certain goods, affecting Indian exporters who sell to the US.

Consultancies that assist with business setup in the UAE report a noticeable increase in enquiries from Indian companies. “After the first 25% tariff, many in India thought it might be a negotiating tactic,” said the CEO of a food processing unit based in the UAE. “But when the second 25% tariff was added, with no clear deal between India and the US, several Indian exporters started exploring joint ventures and investments in the UAE.”

Jewellery Sector Seeks Alternatives

The jewellery trade in India has been particularly affected. Indian jewellers exporting to the US could face higher costs, as the 50% tariff would significantly raise the landed price of products in the US. Some businesses are now considering relocating production or design centres to Dubai to reduce tariffs to around 10%, provided the value addition occurs locally in the UAE.

However, Dubai-based jeweller Anail Dhanak of Kanz Jewels urges caution. “On US tariffs, it’s best to wait and watch, as decisions can change quickly,” said Dhanak. “Kanz is not looking for any joint ventures right now. High gold prices are already affecting our costs, and we prefer to wait for clarity.”

Exemptions and Market Reaction

The new US tariffs do not apply to pharma and tech-related products, allowing companies like Apple to continue exporting iPhones from India to the US without additional duties. Meanwhile, the Indian rupee fell, and the Sensex dropped just over 1% on August 26 in response to the tariff announcement.

According to Krishnan Ramachandran, CEO of Barjeel Geojit Financial Services, if Indian jewellers shift production intended for the US to the UAE, they would face only 10% tariffs instead of 50%, provided the production and value addition take place in the UAE.

UAE: A Growing Hub for Indian Businesses

Oksana Sukhar, Senior Business Development Manager at Sovereign Group, said, “Indian companies have always shown interest in the UAE, making up about 5% of our total business setup enquiries this year. With new US tariffs, it is logical for exporters to consider the UAE as an alternative manufacturing and shipping hub to secure lower tariffs.”

Several Indian companies already have operations in the UAE in sectors such as textiles, garments, metals, engineering goods, chemicals, pharmaceuticals, and IT services. Venkatesh Santhanam, Managing Partner at MCA and former convener at IBPC Dubai, explained, “These companies are well-positioned to benefit from the situation and gain a competitive advantage.”

What Indian Businesses Must Do

To meet the US ‘rules of origin’ and avoid high tariffs, Indian companies relocating to the UAE must ensure 35–40% local value addition. This includes manufacturing, assembly, or finishing in the UAE. Many businesses are now recalibrating their supply chains by moving final-stage production, setting up packaging and distribution centres, or forming local joint ventures.

“The current scenario is prompting Indian businesses to rethink their global strategies,” said Venkatesh Santhanam. “The UAE, with its supportive business environment, offers an attractive alternative for companies that want to maintain their presence in the US market while reducing costs.”

Indian exporters are now at a crossroads, balancing market access, cost management, and strategic international expansion. The coming weeks will determine how many firms take the step to relocate production or establish joint ventures in Dubai and other UAE hubs.