Trump tariffs fail to dent India's export dependence on US; share stays near 20%

Despite President Donald Trump's tariff measures, India's dependence on the United States as its top export market has remained steady, according to an analysis of commerce ministry data. The US accounted for approximately 20% of India's exports over the 12 months ending July, maintaining its share despite tariffs reaching up to 50% during the period. The tariff rate was later reduced to 18% in February and currently stands at 10%.

In the 12 months through July, India exported goods valued at $88.5 billion to the US, compared to $21.5 billion to China, based on official data. The US remained India's largest export destination in 2025-26, with exports totaling $87.31 billion, slightly higher than the previous financial year. The UAE was the second-largest export destination, with shipments worth $37.37 billion, followed by China at $19.48 billion.

India has also broadened the range of products it exports, adding around 500 new product lines, primarily in electronics, engineering, and marine sectors. The US is particularly significant for Indian exports of electronics, engineering goods, pharmaceuticals, gems, jewellery, and textiles. Despite ongoing negotiations, a comprehensive trade agreement between India and the US has not yet been finalized.

Smaller markets like Tanzania, Vietnam, South Korea, Sri Lanka, and Kenya have shown robust growth in Indian exports, although their overall contribution remains limited compared to the US. Trade analyst Pritam Banerjee noted that while free trade agreements could help India attract manufacturing away from China, deeper integration with major economies and markets in Latin America, the Middle East, and Africa could expedite this transition.

India has intensified its efforts to diversify trade by signing trade deals with the UK, which came into effect in July, as well as agreements with the European Union, Oman, and New Zealand, though these are yet to take effect. Additionally, India has resumed or accelerated trade negotiations with the Gulf Cooperation Council, Canada, Israel, Peru, Chile, and the Southern African Customs Union.

Trade experts suggest that the industry is cautious about diversification to mitigate risks stemming from US trade policy. Ajay Sahai, director general of the Federation of Indian Export Organizations, emphasized that the US tariff war served as a valuable lesson in the importance of trade diversification. While meaningful impact from diversification could take two to three years, Sahai highlighted that the US remains the most attractive export market for Indian businesses.

Commerce Secretary Rajesh Agrawal stressed that India is targeting economies accounting for over two-thirds of global GDP, emphasizing that FTAs serve as crucial institutional anchors for trusted economic partnerships, aimed at reducing dependence on a single market.