Indian Exporters Diversifying to Other Markets to Offset US Tariffs
Following the Liberation Day (US tariffs announcement on April 2, 2025), exports to the US surged by $ 6 billion during the April-August period compared to the previous year.
Mumbai: India’s export profile is showing a structural shift towards market diversification following higher tariff rates imposed by the US and with no formal trade deal yet in sight. According to a Bank of Baroda report, this transition follows a period of rapid frontloading of shipments earlier in 2025 as businesses sought to secure cost advantages before new trade barriers took effect. The study shows that during Apr-Aug’25 period, the frontloading of exports to the US happened at a faster pace to get a cost advantage. The next period Sep-Nov’25 shows some degree of diversification with exports to the rest of the world excluding US picking up and some trimming down of exports to the US.
Following the Liberation Day (US tariffs announcement on April 2, 2025), exports to the US surged by $ 6 billion during the April-August period compared to the previous year. This spike occurred while older tariff rates of 0.5 per cent to 10 per cent remained in place. Most of the re-routing has been towards exports to the US as exports to the rest of the world softened during the same period to US$ 143bn from US$ 145bn in the same period of previous year.
However, the environment changed on August 7 when a 25 per cent tariff rate was implemented, followed by an increase to 50 per cent on August 27. The latter included a 25 per cent penalty linked to India's status as a major buyer of Russian oil. During this period, exports to the US showed slight moderation while exports to the rest of the world have picked up to $ 89.9 billion during Sep-Nov’25 compared to $ 86.2billion during the same period of previous year. “Thus, the beginning of substitution effect has already started taking shape,” said the report.
Sector-specific data reveal that marine products, electronic goods, and gems and jewellery are leading this diversification. For marine products, the US market share fell by 13b.6 per cent in the September-October period, while the share of exports to China and Thailand rose to 20.6 per cent and 7.3 per cent, respectively. Similarly, electronic goods saw a sharp increase in shipments to the UAE, with its share rising to 15.3 per cent from 8.8 per cent. The report also highlights that Hong Kong has become a significant destination for gems and jewellery, with its export share reaching 11 per cent.
