As the US tariff pause gives India room to rethink its exports, New Delhi is actively diversifying its export markets and seeking concessions as part of a trade deal with the UK, aiming to more than double bilateral trade to $500 billion by 2030.
The 90-day pause of US tariffs on most nations has given India the space it needs to rethink its exports. With the US suspending tariffs, Indian manufacturers are adapting fast, rethinking their export strategies, reducing reliance on the US, and targeting new markets to stay competitive.
Diversifying Export Markets
India’s trade with the US accounts for about 18% of its total exports. To reduce this dependence, New Delhi is actively diversifying its export markets. The country is working on securing a trade deal with the UK, with officials in New Delhi saying that Trump’s trade war has added a sense of urgency to these negotiations.
India and the UK are also exploring ways to boost bilateral trade, with Finance Minister Nirmala Sitharaman stating that both sides realize the value of their discussions. The Indian government is seeking concessions as part of this trade agreement, aiming to more than double bilateral trade to $500 billion by 2030.
Nirmala Sitharaman is an Indian politician and economist who has been serving as the Finance Minister of India since 2019.
She was previously the Defense Minister, making her one of the few women to hold a Cabinet position in India.
Sitharaman has a degree in economics from the Jawaharlal Nehru University and an MBA from the Wharton School.
She began her career in finance with the Boston Consulting Group before moving into politics.
As Finance Minister, she has implemented several key policies, including the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC).
Adapting to Uncertain Times
The threat of higher US tariffs is prompting Indian exporters to rethink their strategies. ‘Mihir Jhaveri, chief revenue officer of AQe Digital, an IT solutions company,’ said that ‘Indian IT firms must move beyond cost advantage to become strategic transformation partners.’ The anticipated US policy shift is forcing many Indian IT companies to de-risk their revenue streams by investing in IP-led platforms and verticalized solutions.
Reducing Reliance on the US
India’s largest trading partner is the US, with annual bilateral goods trade totaling $129.2 billion in 2024. However, American exports to India totaled only $41.8 billion, resulting in a $45.7 billion trade surplus in India’s favor. To reduce this reliance, Indian exporters are turning to value addition and innovation.
The US-India trade relationship has experienced significant growth in recent years.
In 2020, bilateral trade reached $88 billion, with the US being India's third-largest trading partner.
The United States is a major export market for Indian goods such as textiles, leather, and jewelry.
Conversely, India imports significant amounts of American goods like aircraft, pharmaceuticals, and agricultural products.
The two countries have also agreed to increase cooperation in areas like trade facilitation, intellectual property rights, and standards.
This partnership aims to enhance economic growth, create jobs, and promote mutual understanding between the nations.
Many exporters are eyeing markets in the UAE, Latin America, and Saudi Arabia to offset potential losses in US sales. ‘Kushal Patel, managing director of Axita Cotton,’ said that manufacturers are changing their export strategies instead of holding out for a delayed resolution to trade.
A New Era for India’s Trade
The 90-day pause of US tariffs has presented opportunities for India to bolster neighborhood ties and reduce its dependence on distant markets. According to ‘Lekha Chakraborty, a professor at the National Institute of Public Finance and Policy,’ regional trade agreements offer a viable solution to mitigate the effects of the Trump administration’s trade actions.
India has emerged as a significant player in global trade, with its GDP contribution from exports reaching 20% in recent years.
The country's strategic location and large consumer market make it an attractive destination for foreign investors.
Key sectors driving Indian trade include textiles, pharmaceuticals, and IT services.
According to the World Trade Organization (WTO), India's trade has grown by over 10% annually since 2010, with bilateral trade agreements in place with several countries, including the US, China, and EU.
‘Nikul Shah, co-founder and CEO of IndieSemic,’ said that Indian manufacturers are not sitting quietly. Many global companies looking for alternatives to China are turning to India, and the country is grabbing this chance.
