Indian exporters diversify beyond US amid tariff hike.

Indian exporters are diversifying beyond the US market due to 50% tariffs imposed by the US government. Rice, tractor, and certain gems and jewellery items exports have fallen in the US, but risen to other markets like Bangladesh, the UAE, Togo, and Kenya. The government has prepared a phased export diversification plan, targeting existing markets like the EU, UK, UAE, Japan, Canada, and Australia in the short run, and new markets in Latin America, Africa, Eastern Europe and East Asia in the long run.

Indian exporters are actively shifting their focus away from the US market following the imposition of a 50% tariff by the US government. This strategic move aims to mitigate the impact of the tariffs and enhance diversification. According to the Times of India, the government is pursuing trade agreements with Europe, exploring opportunities in Africa and CIS countries, and devising strategies to reduce dependence on China and enhance global value chain participation [1].

Rice, tractor, and certain gems and jewellery items exports to the US have significantly fallen, while exports to markets such as Bangladesh, the UAE, Togo, and Kenya have risen. The government has prepared a phased export diversification plan, targeting existing markets like the EU, UK, UAE, Japan, Canada, and Australia in the short run, and new markets in Latin America, Africa, Eastern Europe, and East Asia in the long run [1].

The Commerce Ministry of India is developing a comprehensive strategy to support Indian exporters against the impact of the steep 50% US tariffs. This plan includes easing liquidity stress, offering greater flexibility to SEZ units, promoting import substitution, and operationalising E-commerce export hubs. The government is also focusing on financial and non-financial support, such as branding initiatives and reducing compliance costs [3].

To soften the impact of the tariffs, the government is working on Goods and Services Tax (GST) reforms aimed at boosting domestic demand. The 50% tariff, effective from Wednesday (August 27), is expected to hit exports of textiles, shrimp, leather, and gems and jewellery the hardest. The US accounts for nearly 40% of India’s seafood exports, making the sector particularly vulnerable [2].

Experts suggest that having a diversified export and import basket is crucial for a large country like India. Over the last decade, China has reduced its share of US markets from around 21% to 12%, while for India, it's been the other way round. Sachin Chaturvedi, who heads think tank RIS, said diversification of the export basket is the only option before India and requires careful analysis and detailed monitoring of the supply chain and sources [1].

India's energy and export sectors are undergoing a transformative phase, driven by a dual imperative: mitigating the fallout from Trump's 50% tariffs on Indian goods and capitalizing on global shifts toward clean energy and high-tech manufacturing. Strategic partnerships with the US, Gulf states, and EAEU/UK FTAs are shifting exports toward high-tech manufacturing (EVs, semiconductors) and reducing U.S. dependency [4].

In conclusion, Indian exporters are actively diversifying their markets to mitigate the impact of US tariffs. The government's phased export diversification plan, combined with strategic investments in energy infrastructure and high-tech manufacturing, positions India as a compelling long-term investment opportunity.

References:
[1] https://timesofindia.indiatimes.com/business/india-business/in-a-strategic-shift-government-eyes-exports-beyond-us/articleshow/123574495.cms
[2] https://www.tradingview.com/news/te_news:480704:0-us-tariffs-impact-usd-48-2-billion-of-indian-trade/
[3] https://timesofindia.indiatimes.com/business/india-business/trump-tariff-ministry-drafts-multi-tier-plan-to-shield-indian-exporters-check-key-measures-outlined/articleshow/123602269.cms
[4] https://www.ainvest.com/news/strategic-diversification-india-energy-export-sectors-navigating-trump-tariffs-global-shifts-2508/