Rising demand for India`s exports in other countries to cushion US tariff blow
India has succeeded in diversifying its exports to countries in the Middle East, Europe, Latin America and Australia in recent years, which is expected to help the country cushion the blow from the US tariff hike.
While the United States remains the largest export destination, most of the major items shipped to the US are also exported to more than 15 other key markets across the world in the last three financial years, according to an article in the European Times.
“India’s export story is clearly at a turning point. While the US will continue to be a vital partner, the extraordinary growth of exports to countries such as the Netherlands, UAE, Australia, Saudi Arabia, South Africa, Brazil, and Mexico demonstrates that India is no longer dependent on a single market. These nations are not only absorbing India’s product basket but also offering avenues for expansion into advanced technologies and sustainable products,” the article states.
Collectively, exports to these major destinations amounted to $162 billion in 2024-25. The average growth rate of 19 per cent in Indian exports to these countries over the last three years is higher than 15 per cent in the case of the US. This reflects the potential of India’s diversified trade portfolio.
The large size of India’s domestic market, which reduces reliance on external demand, also insulates the country from the extent of harm that the US tariff hike can cause the economy, which is growing at the fastest pace in the world, according to global ratings agency Fitch.
The ratings agency kept India’s FY26 forecast unchanged at 6.5 per cent while projecting a higher 6.3 per cent growth for FY27, up from 6.2 per cent in its December update.
A recent Morgan Stanley report had also stated that India is the “best placed country in Asia,” amid the global uncertainty triggered by US President Donald Trump’s threat to jack up tariffs, because of the nation’s low goods exports to GDP ratio and strong domestic market.
“While India is exposed to direct tariff risks, we believe on balance India is less exposed to global goods trade slowdown, considering that it has the lowest goods exports to GDP ratio in the region,” the report stated.
India’s GDP growth accelerated to a robust 7.8 per cent in the first quarter (April-June) of the current financial year compared to the growth of 6.5 per cent during the same quarter of FY 2024-25.
The agriculture sector bounced back with a strong growth rate of 3.7 per cent in the first quarter of 2025-26, as compared to the growth rate of 1.5 per cent registered in the first quarter of the last financial year when farm output was hit by an erratic monsoon.
The manufacturing sector posted a growth of 7.7 per cent, and the construction sector grew by 7.6 per cent.
The growth rate of the tertiary sector, which includes services, shot up to 9.3 per cent during the first quarter of 2025-26 compared to the corresponding figure of 6.8 per cent in Q1 of FY 2024-25.
Gross Fixed Capital Formation, which reflects the amount of investment being made in the economy, went up to 7.8 per cent during the quarter from the corresponding figure of 6.7 per cent in the same quarter of the previous financial year.
