Indian exports to the US have plunged sharply by 37.5 per cent following imposition of tariffs on most Indian items, in keeping with a report by the World Commerce Analysis Initiative (GTRI). The report confirmed that shipments to the U.S. fell 37.5 per cent over 4 months, from USD 8.8 billion in Could 2025 to USD 5.5 billion in September 2025, marking the sharpest and most sustained decline of the 12 months.
Regardless of the inevitability of tariff affect on India's economic system, the blow might not be too damaging. India nonetheless stays one of many few vivid spots in an in any other case slowing world economic system. The IMF's October 2025 World Financial Outlook (WEO) tasks India's development at 6.6% in FY26, up from 6.5% in FY25, earlier than moderating barely to six.2% in FY27, signalling continued home momentum regardless of rising commerce obstacles.
A key technique India is counting on to sort out Trump tariffs is to diversify its export market together with hanging commerce offers with varied nations. This appears to have proven some outcome.
Commerce diversification is exhibiting outcomes
As per a latest report by brokerage agency Elara Capital, India's exports efficiency stays resilient regardless of the latest 50% US tariff, with exports rising 6.7% YoY, led by sustained momentum in electronics, engineering items, and marine merchandise. In Q2FY26, exports recorded 9% YoY development vs a 7% decline up to now 12 months. Imports too rose 4% QoQ, marking good development in Q2FY26 regardless of sluggish world demand. Total, in H1FY26, merchandise commerce deficit stood at USD 155bn vs USD 145bn throughout the identical interval final 12 months, with exports up 3% YoY to USD 220bn and imports rising 4.5% to USD 375bn.
Continued diversification of exports, particularly labor-intensive, helped restrict the affect of Trump tariffs as exports grew 6.7% in September 2025 vs -1.0% in September 2024. Advance purchases together with regular diversification of export vacation spot helped clock in exports development of 9% in Q2FY26 vs 7% decline in Q2FY25. Exports to Spain, the UAE, China, and Bangladesh have registered regular sequential features, signaling a partial redirection of commerce channels amid tariff-induced disruptions.Amongst key gadgets that noticed sharp development in exports in September have been digital exports up 50.5% YoY, which stays buoyant whereas rice shipments grew 33.2% to USD 924.8mn. Notably, marine product exports, initially anticipated to be among the many most affected by the tariff hike, expanded 23.4% YoY to USD 781mn, reflecting sturdy diversification of export locations. Equally, exports of gems and jewellery rose 0.4% YoY in September 2025, resulting in April-September development of 1.8%.Nevertheless, some labor-intensive sectors bore the brunt of tariff-related pressures. Readymade garment exports declined 10.1% YoY to USD 997mn, whereas cotton and handloom exports contracted 11.7% YoY to USD 930mn, indicating persistent challenges for the textiles sector amid shifting world sourcing dynamics.
Alternative in adversity
Nevertheless, the trail ahead just isn't with out obstacles. One key threat is that the excessive US tariffs might change into everlasting or be expanded to further product traces. If India fails to successfully diversify, the cumulative long-term losses could possibly be substantial.
Furthermore, whereas Gulf and UK markets provide promise, they arrive with their very own tariff and non-tariff obstacles. Logistical, certification, and cultural adaptation challenges stay. There may be additionally the danger of over-reliance on just a few sectors—reminiscent of electronics—the place export efficiency is concentrated in a restricted variety of giant companies.
To maintain momentum, India should double down on enhancing home logistics, decreasing enter prices, and constructing sturdy commerce infrastructure. Extra funding is required in commerce facilitation, warehousing, chilly chains, and last-mile supply techniques. The federal government can even must be agile in responding to commerce shocks, renegotiating phrases the place wanted, and providing direct help to MSMEs which might be bearing the brunt of the transition.
In a method, Trump traiffs have emerged as a chance for India. If India can give you a extra balanced, diversified export portfolio, it can have turned adversity into long-term achieve.
