Indian Exports Pivot to Asia and Europe Amidst Rising US Trade Barriers
Indian exporters are currently navigating a challenging landscape following the imposition of steep 50 percent tariffs by the United States, which came into effect on August 27. While these duties have created a significant hurdle in traditional trade routes, Indian businesses are displaying remarkable resilience by finding alternative buyers. Recent data indicates a strategic shift where Indian exports are increasingly moving toward markets in West Asia, Europe, and neighboring Asian countries to offset losses in the American market.
Sectors Turning the Tide
The gems and jewellery sector provides the clearest example of this pivot. Shipments of these precious items to the US plummeted by a staggering 76 percent in September. However, the industry managed to keep its head above water, recording only a minor overall dip of 1.5 percent. This stability was achieved because exporters redirected their goods to the United Arab Emirates (UAE), which saw a 79 percent surge in demand, alongside increased orders from Hong Kong and Belgium.
Similarly, the auto component industry is adapting quickly. Despite a 12 percent drop in sales to the US, the sector witnessed an overall growth of 8 percent. This success is largely driven by fresh demand from Germany, Thailand, and the UAE.
Marine Sector Leads the Way
For regions heavily invested in aquaculture, such as Odisha, the news regarding marine products is encouraging. Seafood shipments grew by 25 percent in September, fueled by massive demand from China and Japan. The European Union (EU) is also emerging as a vital partner. Since the US tariffs were announced, the EU has granted approval to 102 new Indian fishery units, significantly expanding India’s access to the bloc.
Challenges Remain for Small Units
However, the transition isn't smooth for everyone. Labor-intensive sectors like cotton garments, leather footwear, and sports goods are struggling to diversify. These industries operate on thin profit margins and face fierce competition from nations like Vietnam and Bangladesh. Unlike the marine products export sector, these smaller units often lack the capital to pivot quickly to new geographies.
The Road Ahead
The Department of Commerce has advised exporters to maintain their pricing standards rather than slashing rates to enter new markets. Meanwhile, a recent SBI report suggests that this forced diversification is actually strengthening India's export basket, making the economy less dependent on a single trading partner in the long run.
