By Shruti Srivastava
India’s share of exports to the US remained largely unchanged despite a year of President Donald Trump’s punitive tariffs and New Delhi’s efforts to diversify its trade with a raft of new deals with other countries.
An analysis of trade ministry data for the 12 months through July shows the US continues to account for about 20 per cent of India’s exports. Over that period, Trump slapped tariffs as high as 50 per cent on Indian goods at one point, before dropping it to 18 per cent in February this year. The goods now carry a 10 per cent tariff rate.
While that diversification push has continued, with exporters scouting newer markets to reduce risk, the US share has remained resilient, underscoring the difficulty of replacing the world’s largest economy.
It will take at least two to three years for market diversification to show meaningful results, said Ajay Sahai, director general of the Federation of Indian Export Organizations, adding that the US continues to be the most attractive market. The share of exports to the US has grown to nearly 20 per cent from 17.4 per cent in 2022-23, official data show.
All the same, “the industry has become extremely cautious of the fact that they have to diversify as a strategy to de-risk,” Sahai said. “And from that perspective, I think it’s a very good lesson the US tariff war taught us.”
India has also broadly maintained its share of exports to other major markets, data for the 12 months through July showed.
Trade Talks
The sheer scale and appetite of the US for a broad range of Indian goods make it a uniquely important market, particularly for electronics, engineering goods, pharmaceuticals, gems and jewelry and textiles. The two countries have yet to sign a trade deal, despite months of high-level talks.
Indian officials are working to shift the balance by expanding the number of markets where exporters can compete on favorable terms. The government has also sought to broaden the range of goods sold overseas, adding about 500 new product lines, mainly in electronics, engineering and marine products.
“The focus is on engaging with economies that collectively account for over two-thirds of global GDP,” Commerce Secretary Rajesh Agrawal told Bloomberg News last week when asked about the government’s trade diversification strategy.
“In an environment of global uncertainty and shifting trade patterns, FTAs also serve as institutional anchors for trusted economic partnerships,” Agrawal said referring to Free Trade Agreements. He said the deals aim to reduce reliance on any single market and strengthen trade ties.
Trade agreements already in force have meanwhile begun to show evidence of a potential payoff.
Several smaller destinations are growing rapidly, though from bases that remain a fraction of the US market. In the 12 months through July, nations including Tanzania, Vietnam, South Korea, Sri Lanka, and Kenya were among the markets showing solid growth.
Exports to China have also accelerated, surging 42 per cent in the 12 months through July, according to Bloomberg calculations based on the official figures. India shipped goods worth $21.5 billion to the Asian giant in the period, compared with $88.5 billion to the US.
Pritam Banerjee, a trade analyst and former head of think tank Centre for WTO Studies, said free trade pacts can become a catalyst for shifting manufacturing away from China but warned that India’s window of opportunity is narrow.
Deeper integration with Group of 20 nations, which represent 85 per cent of global GDP, along with countries in Latin America, the West Asia and Africa, would help India immensely in that shift, he said.
