India needs to look beyond US for wider export play

With the US imposing 25 per cent tariffs on most Indian products and an additional 25 per cent that kicked in from 27 August, India’s export competitiveness, or lack thereof, has come sharply into focus. The US accounts for about 20 per cent of India’s total merchandise exports and some 55% of this could get affected by the new tariffs, mostly labour-intensive products

India is tweaking its export strategy by diversifying its markets to 50 countries, focusing on specific sectors like electronics and services, and implementing targeted domestic policy changes.

These adjustments include simplifying procedures, reducing costs for MSMEs, strengthening trade partnerships, and addressing tariff impacts, such as recent US tariffs, to foster a more resilient and competitive export economy.

With the US imposing 25 per cent tariffs on most Indian products and an additional 25 per cent that kicked in from 27 August, India’s export competitiveness, or lack thereof, has come sharply into focus.

The US accounts for about 20 per cent of India’s total merchandise exports and some 55% of this could get affected by the new tariffs, mostly labour-intensive products.

Since the turn of the millennium in 1999-2000 till 2011-12, the average pace of India’s export growth registered just over 19 per cent per year, with double-digit rates for all years except the two crisis years of 2000-01 and 2009-10.

Exports doubled in value in just five years to 2004-05 and then doubled again just in the following three years. Much of this derived from global GDP and trade growth in that period.

However, from 2012-13 to 2024-25, the average pace of export growth has fallen to just 3.6 per cent per annum. Six of the 13 years witnessed negative growth rates, with the data for 2024-25 coming in at $437.5 billion, up from $300 billion in 2012-13.

India’s share in global exports has also barely inched up in this period: it ranks 18th in the world in export value, well behind its position as the 4th largest global economy.

Even before exports to the biggest export market, the United States, became tougher due to hefty 50 per cent tariffs, India exporters turned attention to other countries recording smart gains in shipment products.

Diversification of export markets have seen a higher share of a few Asian markets in India’s export basket, including for items that are expected to be hit by the additional US tariffs the hardest.

Exports of textiles, gems and jewellery, and marine products to UAE, Vietnam, Belgium, and Saudi Arabia recorded sharp increases, driven by rising demand across Asia and Europe. The signs of escalating tariffs by the US were visible since before the election of US President Donald Trump in November last year. Indian exporters seem to have promptly hedged the risks with diversification.

Data showed that India’s marine exports during January-September rose 15.6 per cent year-on-year to $4.83 billion, driven primarily by surging demand in several non-US destinations.

This was the sector that was expected to be among the hardest hit by US tariffs. While the US continues to remain the top individual destination ($1.44 billion), the sharpest expansions have been recorded in Vietnam (100.4%), Belgium (73%), and Thailand (54.4%).

“A clear trend of export diversification is visible, with emerging destinations such as Vietnam and Belgium gaining market share, while established Asian partners like Thailand, Malaysia, and China have deepened their import volumes,” an official said.

Similarly, the country’s textiles exports are making inroads into new and emerging markets such as Peru and Nigeria. India’s textile exports recorded a modest but positive growth of 1.23 per cent during January-September 2025, reaching $28.05 billion.

The United Arab Emirates led the growth with exports rising 8.6%t ($136.5 million) in January-September, reaffirming its position as a key regional hub for Indian textiles. Gains were also recorded in the Netherlands (11.8%), Poland (24.1%), Spain (9.1%), and Egypt (24.5%), signalling growing traction across Europe, North Africa, and the Middle East.

The country’s gems and jewellery exports too witnessed a modest rise of 1.24 per cent during the first half of this calendar year to $ 22.73 billion.

The UAE remained the largest destination, with exports increasing by 37.7 per cent to $ 1.93 billion.

Strong gains were also recorded in South Korea (134 %), Saudi Arabia ( 68 %), and Canada ( 41 %), reflecting growing demand for Indian jewellery and cut-and-polished diamonds in emerging luxury and investment-driven markets.

Notably, Mexico and China emerged as new high-growth destinations, signalling the sector’s widening reach into Latin America and East Asia.

The new export plan highlights sectors with strong global demand sensitive to regulation. This includes specialized machinery, transportation equipment, IT servers with ior export controls, and critical healthcare devices outside pharmaceuticals.

Navigating DAP Incoterms in numerous markets is vital, supported by digital systems linked to importer of record numbers. India’s manufacturing capabilities and technical strengths position it well in fast-growing economies where infrastructure and tech upgrades are accelerating.