How the UAE is Becoming the Smart Pivot for Indian Exporters Facing 50% U.S. Tariffs

A major shift is reshaping global trade flows — and the UAE is right at the centre of it.

On 27 August 2025, the United States doubled tariffs on a wide range of Indian exports to 50%, citing India’s continued purchase of Russian oil. The move has sent shockwaves through Indian industry, with sectors like textiles, gems and jewellery, food processing, furniture, and chemicals among the hardest hit. Pharmaceuticals and technology exports remain exempt — but for many other businesses, the U.S. has suddenly become a far more expensive market.

Analysts warn that these tariffs could wipe out $55–60 billion in Indian exports, while the Indian rupee has already weakened to record lows. For exporters dependent on the U.S. market, the challenge is stark: absorb the losses, or rethink their global strategy.

Why Indian Businesses Are Looking to the UAE

The appeal of the UAE is simple — and compelling.

The Tariff Math

• Direct exports from India to U.S. = 50% tariff
• Exports from UAE to U.S. = 10% tariff
• 40% tariff savings

However, there is a crucial condition: to qualify for the lower U.S. tariff, goods must undergo at least 35–40% local value addition in the UAE. In other words, businesses cannot simply re-route shipments through Dubai — they must invest in manufacturing, assembly, or processing operations within the Emirates.

This requirement is already shaping business decisions. Jewellery, textiles, and food processing companies — the sectors most exposed to the new tariffs — are moving quickly to explore UAE setup options. Consultancy firms confirm a surge in enquiries from Indian businesses, many of whom already maintain trading offices in Dubai and now see value in expanding into production.

The UAE Advantage

For Indian exporters, the UAE offers more than just tariff relief:

• Global Connectivity: World-class logistics and ports make the UAE one of the most connected trade hubs globally.
• Business-Friendly Policies: Free zones, tax incentives, and regulatory clarity provide a smooth landing for foreign investors.
• Established Indian Business Community: A large, trusted diaspora already operates across the Emirates, offering familiarity and networks.
• Infrastructure Ready for Value-Add: From light manufacturing to advanced processing, the UAE has facilities to support businesses needing that crucial 35–40% local input.

For many exporters, this is not just a temporary fix — it is the start of a strategic repositioning of their supply chains, with the UAE emerging as a permanent bridge between South Asia and the U.S. market.

How We Help Businesses Make the Move

At Prism 7 Corporate, we specialise in helping businesses seize opportunities out of disruption. With deep UK roots and decades of UAE expertise, we guide clients through every stage of this transition:

• Company Formation & Licensing – Selecting the right jurisdiction and business model for tariff compliance and long-term growth.
• Operational Structuring – Ensuring businesses meet the 35–40% local value-add requirement efficiently and sustainably.
• Regulatory & Compliance Advisory – Navigating UAE trade rules, customs, and U.S. market eligibility.
• Relocation & Expansion Support – From visas to facilities, we make the move smooth and strategic.

Turning Tariffs Into Opportunity

While the sudden tariff hike poses real challenges, it also creates a unique opening. By establishing value-add operations in the UAE, Indian businesses can not only retain U.S. market access at competitive rates but also gain a foothold in one of the world’s most dynamic global trade hubs.

The UAE is not just a safe harbour — it is a launchpad.

Contact us today to explore how we can help your business pivot strategically.