India keeps near-20% US export share despite Trump tariff swings

India’s dependence on the US as an export destination has remained largely intact despite a year of tariff uncertainty under President Donald Trump and the government’s efforts to expand access to alternative markets.According to a report by Bloomberg, trade ministry data for the 12 months ended July showed that the US accounted for around 20% of India’s total exports. This share has remained resilient despite tariffs on Indian goods reaching as high as 50% at one point before being reduced. The current tariff rate on Indian goods stands at 10%.India-US Trade Deal Likely To Retain Tariff Safeguard Amid Uncertainty Over Future US Duties US remains India’s biggest export marketThe uncertainty surrounding India-US trade ties has encouraged New Delhi to accelerate negotiations with other major economies. Over the past year, India concluded a trade agreement with the UK, which came into effect in July, while agreements have also been reached with the European Union, Oman and New Zealand.However, exporters have found that shifting trade away from the US is easier said than done. The US remains an exceptionally attractive destination because of its enormous consumer market and demand for a wide range of Indian products.The country is particularly important for Indian exports of electronics, engineering goods, pharmaceuticals, gems and jewellery and textiles. India and the US are yet to conclude a broader trade agreement despite prolonged negotiations.India expands markets and product baseDespite the continued importance of the US, Indian exporters are increasingly seeking new destinations to reduce their exposure to trade shocks. Sahai said the tariff dispute had reinforced the need for diversification as a risk-management strategy.The government is also attempting to broaden India's export basket. Around 500 additional product lines, primarily involving electronics, engineering and marine products, have been identified for overseas markets.Commerce Secretary Rajesh Agrawal said India's strategy is focused on building stronger trade relationships with economies that collectively represent more than two-thirds of global GDP.While India continues to pursue new trade agreements and markets, the persistence of the US share highlights the challenges involved in reducing dependence on a market as large and commercially significant as the United States.

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% of India’s exports. Over that period, Trump slapped tariffs as high as 50% on Indian goods at one point, before dropping it to 18% in February this year. The goods now carry a 10% tariff rate.Also Read| India widens export basket: Amrapali mangoes, premium cherries, frozen French fries find new marketThe uncertainty in US-India trade relations prompted Prime Minister Narendra Modi’s government to expedite free trade negotiations with other major markets. In the past year, India has inked a trade deal with the UK, which took effect in July, as well as agreements with the European Union, Oman and New Zealand.133338340While 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% from 17.4% 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 TalksThe 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, mainlyinelectronics, engineering and marine products.Also Read| India must strengthen shipping capacity, naval protection amid growing chokepoints: GTRI“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.Earlier this month, India signed terms of reference with the Southern African Customs Union to accelerate trade negotiations. New Delhi is seeking to extend that network across Latin America, the Middle East and Africa. 133338353Trade agreements already in force have meanwhile begun to show evidence of a potential payoff.India now counts Australia among its faster-growing markets, while the UAE was its second-biggest export destination in the 12 months through July. Both countries signed trade agreements with India in 2022.133338362Several 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% 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% of global GDP, along with countries in Latin America, the Middle East and Africa, would help India immensely in that shift, he said.