-Khwaish Hingad (cbedit@imaws.org)
With President Trump proposing a sweeping 50% import duty, the Indian restaurant owners had found their situation a pantry caught in a political pressure cooker. Indian restaurants are unable to import quality Indian raw materials including spices from India. Besides the turmoil of 50% tax, food manufacturers from Pakistan and even Nepal are trying to enter the market with attractive discounts. Indian restaurants across owners find it difficult about pricing, staffing, and even survival. The tariffs, which took effect on August 27, 2025, represent one of the steepest trade restrictions imposed on any U.S. trading partner.
“Wait and Manage Mode”: Industry Struggles with Skyrocketing Costs
Dhruv Sarin, President, Indian Restaurant Association of America describes the current atmosphere among restaurant owners as one of cautious uncertainty. “Most Indian restaurant owners right now are in a wait-and-manage mode, just seeing how things will play out,” he explains. “Essentials like lentils, spices, and rice are hard to substitute, so prices go up without changing the product.”
The impact is immediate and severe. Basic ingredients that were previously $2.50 are now priced at $3.50 or $4, and when multiplied across entire inventory orders, the financial burden becomes overwhelming. “When you’re ordering in bulk, let’s say it’s a $50,000 order of inventory for the quarter or month as a distributor it’s a lot of money that can be added on,” Dhruv notes.
The Human Cost: Staff Cuts and Menu Reductions
The tariff increase has forced restaurant owners to implement cost-cutting measures that directly affect their operations and workforce. Many establishments are reducing shifts, trimming marketing budgets, and cutting menu offerings by 10-15%, which can eliminate five to ten dishes and translate into real savings.
“Labor is definitely affected. When tariffs suddenly rise from 25% to 50%, restaurants have no choice but to cut down shifts or staff. Owners never expected such a sharp increase,” Dhruv explains.
Chef Kiran Verma, who owns Kiran’s Restaurant in Houston echoes these concerns, highlighting the unique challenges facing high-end Indian establishments. “We already do not get our market share, even if we are the best of the best,” she states. “It has taken me years to train people’s palate to eat Indian food. Indian restaurants have a reputation of being buffet restaurants and inexpensive, so you have to be mindful of pricing.”
The Pricing Paradox: Caught Between Quality and Affordability
Indian restaurants face a particular challenge in the American market as they must purchase the same expensive local produce and proteins as other establishments but price their dishes lower than the average American restaurant. The tariffs have eliminated one of their key competitive advantages.
“Where we were able to sustain were lentils, rice, and spices, however now adding the tariffs, it will change the whole scenario.” She emphasizes that small, family-owned businesses like hers operate differently from large chains: “We are not chains. We hope small high-end family owned businesses run with consciousness.”
Customer Response: Understanding vs. Price Sensitivity
The impact on customers varies significantly based on their familiarity with Indian cuisine and current economic pressures. According to Dhruv, Indian consumers are generally more understanding of the situation and want to support the businesses, while non-Indian customers are more sensitive to price changes.
“Regular customers notice the price change, of course,” he explains, citing an example of an American family that used to visit a restaurant almost daily for the buffet. “If there’s a family of four, then it becomes like a hundred-dollar bill instead of 60 or 70 dollars.”
Pakistan and Nepal Enter the Picture
Faced with unsustainable costs from Indian imports, many restaurants are exploring alternative suppliers. Pakistani and Nepalese distributors are becoming increasingly attractive options, particularly for establishments on the West Coast.
“There are a lot of products that come from Pakistan that are almost the same or even a little bit different,” Dhruv notes. “A lot of restaurants are exploring this. I know that restaurants in the Bay Area or the West Coast are already working with Nepalese distributors and suppliers and trying to adjust to the prices there.”
Industry Support: Association Efforts and Negotiations
The Indian Restaurant Association is working to provide education and negotiating support to its members. With about 40 paid members and 100 restaurants on their public page, the organization is attempting to negotiate with large distributors like Haldiram to secure better rates through guaranteed demand.
“As an association, we’re trying to negotiate with distributors, if we can help them find those customers already and maintain those customers so they don’t lose them, then it’s better for them as well.”
The Distributor Dilemma: Passing Costs Down the Chain
From the supply chain perspective, distributors have little choice but to pass increased costs down to restaurant owners. While some specialty distributors that focus on single-origin products are absorbing costs to maintain customer relationships, mainstream importers cannot afford this approach.
“From the distributors’ point of view, they add the prices onto the tariff, so they also have to push it down to the operator or the restaurant owner; they cannot lower that in that sense,” explains Dhruv.
Besides this, many restaurants and caterers refused to comment on the current scenario fearing stringent laws. Kitchen Herald reached out to Patel Brothers, one of the largest Indian grocery chains in the U.S., but the company declined to comment on the tariff issue.
Economic Projections: A Challenging Road Ahead
Industry experts warn that the rest of the quarter will be particularly difficult, with potential restaurant closures becoming a real possibility. The timing is especially problematic for new restaurants that must now account for significantly higher cost structures from the outset.
“I’m not too sure how many restaurant closures we might have, it’s a pretty probable possibility because just not a lot of restaurant owners are able to, especially new restaurants that are going to be opening, they definitely have to keep in mind the price structures.” admits Dhruv.
The tariffs affect approximately 55% of India’s $87 billion in exports to the United States, with the restaurant industry representing just one segment of the broader economic impact that could reduce India’s GDP by 0.3-0.5%.
Innovation and Elevation Is the Solution
Despite the challenging landscape, some industry leaders see opportunity within the crisis. Suhas Naik who is the co-owner of Indian restaurant Sarva has a different view and solution. “Tariffs may raise costs, but they do not diminish the potential; if anything, they push us to innovate, localize, and elevate the guest experience”, a sentiment that may define how Indian restaurants navigate these economic headwinds.”
The crisis has highlighted both the vulnerabilities and resilience of Indian restaurants in America. While the immediate future remains uncertain, the industry’s response from seeking alternative suppliers to elevating the dining experience demonstrates the adaptability that may be crucial for survival in this new economic reality.
