Experts had many worries when the US placed high tariffs on imports. Because of this, India started looking for new markets. Even though the US tariffs created problems for Indian exporters, India also found new chances to grow in other regions. The positive news is that while India’s exports to the US went down, countries in Asia, West Asia, Germany, and some parts of the European Union opened up new opportunities. Government data shows that India’s gems and jewelry exports to the US fell by 76% in September last year. However, overall gems and jewelry exports dropped only slightly by just 1.5%. At the same time, exports to the UAE rose by 79%, to Hong Kong by 11%, and to Belgium by 8%. So, despite the challenges, India was able to successfully export many products such as gems and jewelry, shrimp, auto parts, and electrical machines to Asian and European markets.
Auto components followed a similar trend, with exports to the US falling 12 percent in September. However, exports to Germany, the UAE, and Thailand contributed to an 8 percent increase in total auto component exports. Marine products grew 25 percent in September and 11 percent in October, primarily due to increases in exports to China (nearly 60 percent), Japan (37 percent), Thailand (nearly 70 percent), and the European Union. This reinforces the belief that leveraging India’s trade relationships with other parts of the world, including various parts of the Asian region, could help cushion the blow if a trade agreement with Washington, DC, fails to materialize soon. However, low-margin, labor-intensive product segments such as cotton textiles, sports goods, carpets, and leather footwear, which face stiff competition from China and Association of Southeast Asian Nations (ASEAN) countries, are struggling to diversify their shipments, indicating that the long-term impact of US tariffs could be uneven, with smaller units operating across the country being more affected. Low-margin products are typically more vulnerable to trade-related shocks due to working capital stress and the inability to set up units overseas.
However, India faces stiff competition in the export of sports goods, cotton textiles, and leather shoes. Following the US tariff war, Prime Minister Narendra Modi’s government implemented next-generation GST reforms at sunrise on the first day of Navratri, giving the economy a boost. Real gross domestic product (GDP) grew by 8.2 percent in the second quarter of FY2025, compared to 5.6 percent a year earlier, significantly exceeding RBI and consensus estimates. The economy remained strong due to rising private consumption, investment, and a pick-up in production and exports in the face of US tariffs. Rural demand increased. Higher agricultural production, stable farm incomes, and improved labor market conditions in rural districts strengthened private consumption. The data confirms that India’s growth journey is back on track. The report states, “Interestingly, the share of India’s merchandise exports to other countries has increased significantly during this period, reflecting the diversification of our export basket, with the UAE, China, Vietnam, Japan, and Hong Kong, as well as Bangladesh, Sri Lanka, and Nigeria, among the top destinations across various product categories. So, could it be that some destinations are now exporting more to the US after sourcing from India?” Australia’s share of US imports of pearls and precious and semi-precious stones increased from 2 percent in the same period last year to 9 percent in January-August 2025.
India is continuously negotiating a trade agreement with the US. There is hope that a respectable agreement will be reached in the coming days. Despite the challenges, India has retained its tag of being the fastest-growing economy. For now, the data is reassuring that India’s growth engines are now more broad-based, with a revival in consumption, investment, and manufacturing. The biggest challenge is that global headwinds could dim growth expectations. For now, we need to There is a long way to go. Global geopolitical conflicts and financial market volatility may slow capital flows and investment, but India’s emerging markets are giving wings to hope.
