Tariffs take toll on New York's Indian food

Indian restaurants have been on a well-documented tear in New York City, outshining London’s, garnering chef awards and becoming a destination for Wall Street executives. Even butter chicken, a culinary cliché, has become one of the Big Apple’s most notable dishes. The South Asian wave has seemed unstoppable.

But on July 31, President Donald Trump imposed additional tariffs on India, which went into effect on Aug. 27, doubling the rate on most exports from the country to 50%.

Even as the legality of those tariffs is being debated before the Supreme Court, the impact has been tough on New York’s Indian food community. The price of products that define the cuisine, from spices and rice to pulses and tea, has risen, cutting into tight margins for restaurants as well as retailers. (And it’s a problem not everyone want to discuss because of the highly charged politics around the conversation.)

Chef and restaurant operator Salil Mehta — founder of Fungi Hospitality Group, which includes grilled-meat specialists Kebab aur Sharab on the Upper West Side of Manhattan — has seen the wholesale price of a 40-pound bag of basmati rice climb to $45 from $30. Likewise, a 500-gram pack of chili powder that was $7 now costs him $10.50.

Indian and Asian restaurants more broadly are particularly vulnerable to these cost increases, says Mehta, in part because they suffer from the stigma of being a “cheap” cuisine. “People don’t mind paying $35 for a cacio e pepe, for five ounces of pasta. But there’s a different perception that [Indian] food should be cheap already,” he says.

As a result, Mehta has had to raise prices at his restaurants. Entrees are about $5 more than they were pre-tariffs, and appetizers are “a couple of dollars more here and there.” But he says “it still doesn’t cover us, it means the margins are even lower than they were.” Mehta is putting all his food costs under a microscope, he says. “Now if the server drops the food at the wrong table, it’s a problem.”

At Lungi, a South Indian and Sri Lankan dining room on the Upper East Side, chef-owner Albin Vincent is likewise feeling the pinch from the higher outlays for imported ingredients such as rice, lentils, and spices like ginger and garam masala. “These increased costs make it difficult for us to maintain profitability while keeping the menu prices low,” he says.

So far, he’s maintained the price of dosas at $20 to $26 and assorted biryanis at under $28, but it’s getting hard. “If we raise prices to offset these costs, we also risk driving away customers who may already be sensitive to price increases,” he says. “This creates a challenging situation where maintaining quality and authenticity becomes financially difficult.” Vincent estimates that his costs on ingredients from India have gone up about 25%: “Coconut milk, we were ordering for $38 per case and now are paying $48 per case.”

Maneesh Goyal, owner of the elegant, year-old Passerine in the Flatiron district — one of the few Indian tasting menu restaurants in the city — is also trying to absorb the higher costs of imported ingredients. A bag of Arhar brand daal that was $62 pre-tariff is now $82, and a case of ghee costs $220, up from $150, a more than 46% rise. “As a new restaurant and an Indian restaurant, [we] haven’t felt that we have the wherewithal to raise prices,” he says. “We know the impact that it can have on covers.”

Not every operator says they’re being affected. Pavan Pardasani, the new chief executive officer of JKS Indian restaurants, is overseeing the opening of the group’s first two US-based restaurants, Ambassadors Clubhouse in New York and Gymkhana in Las Vegas. “Right now, we haven’t been directly impacted,” he says. But the tariff-related cost increases “do create disruption, and that’s unfortunate for small business owners. It’s a real thing.”

Chef Mohammad Tarique Khan of Hyderabadi Zaiqa, which has two locations in Manhattan, is watching prices rise. A 25-lb bag of basmati rice is $69, up from $45 , he says. “Rice is an important ingredient for us, because we’re known for our biryani, but we don’t have a lot of storage space to buy it in bulk.” His menu features six varieties of lentils, which have risen in price to $4.50 per pound from $3. Still, he’s resisted hiking prices. “Most of our guests are students, office workers, and neighbors from the community, so we haven’t raised our prices.” To cut costs, he says, he’s working late hours and “not hiring.”

The tariffs are also hurting the booming Indian snack market. Kartik Das is the founder of Queens, New York-based manufacturer Doosra is the founder of the Queens, NY-based brand that features which makes an addictive mix of boondi, or spiced chickpea puffs, and caramelized white or dark chocolate and nuts. Das, a veteran of UBS, says that beyond price, tariffs are affecting supplies: “The knock-on effect is of importers and exporters not wanting to bring in as much because of uncertainty around pricing.”

Das was sourcing boondi from India, but because the inventory was unpredictable, he’s recently switched to a US-based supplier. The same problem applied to a key Doosra spice, the dried mango powder amchur. Because importers are afraid of getting stuck with overpriced products if the tariff rates change, “there was a downstream inventory shortage,” he says. He’s also looking for alternatives to his packaging manufacturer from India as well. So far, he hasn’t raised prices.

The repercussions reach beyond New York City. Keya Wingfield, the founder of the Richmond, Virginia-based Keya’s Snacks — potato chips come in two bright flavors, Bombay Spice and Black Salt — is likewise challenged by supply and pricing. “We bring in single-origin spices from India, the tariffs have been astronomical,” she says. “The spice company we work with in India has experienced a big loss of business, because their customers have put orders on hold.” A month ago, “we had a 200 pound delivery of spices by air that had a $1,700 tariff freight fee. Before that those costs were negligible.” The launch of a new flavor has also been complicated by the increase in costs. “Money we could have used for advertising, for delivery, has had to go to tariffs,” she says, “and there’s no substitute for spices from India.”

All these compound the pressure on small businesses. “On top of that, the margins are getting slimmer,” says Mehta. The market will always adjust, he says, but it’s going to be the “survival of the fittest.”