How is India Diversifying Its Exports to Mitigate US Tariff Hikes?
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Synopsis
India is successfully diversifying its export markets to cushion the impact of increasing US tariffs. With significant growth in exports to countries across various regions, India’s economy shows resilience and potential for future expansion.
Key Takeaways
- India is diversifying its export markets beyond the US.
- Significant growth in exports to countries like the UAE, Australia, and Brazil.
- Domestic market size reduces vulnerability to external shocks.
- GDP growth accelerated to 7.8 percent in Q1 2025-26.
- Strong performance in agriculture, manufacturing, and services sectors.
New Delhi, Sep 8 (NationPress) India has effectively diversified its export markets to nations across the Middle East, Europe, Latin America, and Australia in recent years. This strategy is anticipated to help the nation cushion the impact of the US tariff increases.
While the United States remains the largest destination for Indian exports, significant quantities of major products are now being shipped to over 15 additional key markets worldwide over the last three financial years, as highlighted in an article from the European Times.
“India’s export narrative is clearly at a pivotal moment. Although the US will continue to be an essential partner, the remarkable surge in exports to countries like the Netherlands, UAE, Australia, Saudi Arabia, South Africa, Brazil, and Mexico signifies that India is no longer reliant on a single market. These countries are not only embracing India’s diverse product range but also providing opportunities for growth in advanced technologies and sustainable goods,” the article notes.
In total, exports to these significant markets reached $162 billion in 2024-25. The average growth rate of 19 percent in Indian exports to these regions over the past three years surpasses the 15 percent growth rate seen in exports to the US. This underscores the potential of India’s diversified trade portfolio.
The vast size of India’s domestic market, which lessens reliance on external demand, also shields the nation from the extent of damage the US tariff hike could inflict on the economy, which is currently experiencing the fastest growth in the world, as per global ratings agency Fitch.
Fitch has maintained India’s FY26 growth forecast at 6.5 percent, while projecting a rise to 6.3 percent for FY27, up from 6.2 percent in its December analysis.
A recent report by Morgan Stanley stated that India is the “best positioned country in Asia” amid the global uncertainty stirred by US President Donald Trump's threats to raise tariffs. This is attributed to India’s low goods exports to GDP ratio and robust internal market.
“While India faces direct tariff risks, we believe that, overall, it is less vulnerable to a global goods trade slowdown, given its lowest goods exports to GDP ratio in the region,” the report asserts.
India’s GDP growth accelerated to an impressive 7.8 percent in the first quarter (April-June) of the current financial year, compared to 6.5 percent during the same period of FY 2024-25.
The agricultural sector made a notable recovery with a growth rate of 3.7 percent in the first quarter of 2025-26, up from 1.5 percent in the first quarter of the previous financial year, when agricultural output was adversely affected by erratic monsoon patterns.
The manufacturing sector exhibited a growth rate of 7.7 percent, and the construction sector expanded by 7.6 percent.
The tertiary sector, encompassing services, saw its growth rate soar to 9.3 percent during the first quarter of 2025-26, compared to 6.8 percent in Q1 of FY 2024-25.
Gross Fixed Capital Formation, indicative of investment in the economy, rose to 7.8 percent during the quarter, up from 6.7 percent in the same quarter of the previous financial year.
Point of View
It is crucial to recognize India's proactive approach in diversifying its export markets. This strategy not only mitigates risks associated with dependence on the US market but also positions India as a resilient player in the global trade arena. The focus on sustainable and advanced products will further enhance India’s standing in international trade.
NationPress
08/09/2025
Frequently Asked Questions
How is India diversifying its exports?
India is expanding its export markets to include countries in the Middle East, Europe, Latin America, and Australia, reducing reliance on the US.
What was the growth rate of Indian exports to other countries?
The average growth rate of Indian exports to diverse markets was 19 percent over the past three years, compared to 15 percent for the US.
What is the significance of India's domestic market?
India's large domestic market lessens reliance on external demand, providing insulation from potential impacts of US tariff hikes.
What sectors are contributing to India's GDP growth?
The agriculture, manufacturing, and tertiary sectors are showing strong growth, contributing significantly to India's GDP increase.
How does India’s export strategy impact its economy?
By diversifying exports, India strengthens its economic resilience and opens new avenues for growth in advanced technologies and sustainable products.
