Faced with steep 50% tariffs imposed by the United States, Indian exporters are strategically redirecting their shipments towards alternative markets in Asia and Europe. The US tariffs, effective since August 27, 2025, have significantly impacted various sectors, prompting a shift in export destinations.

Data released by the Commerce and Industry Ministry reveals a noticeable decline in exports to the US in certain sectors. For instance, gems and jewellery exports to the US plummeted by 76% in September compared to the previous year. However, the overall impact on total gems and jewellery exports was mitigated by increased shipments to the United Arab Emirates (UAE), Hong Kong, and Belgium. Similarly, while auto component exports to the US experienced a 12% drop in September, growth in shipments to Germany, the UAE, and Thailand contributed to an 8% growth in total auto component exports.

Marine products have also seen a positive turn, with exports growing by 25% in September and 11% in October, largely due to increased demand from China, Japan, Thailand, and the European Union. The total number of marine product units that have secured approvals from the European Union has risen 25 per cent, with 102 additional units getting clearance to supply to the bloc, India's second-largest seafood export destination.

This diversification strategy has allowed India to leverage its trade relationships in other regions, cushioning the blow from reduced exports to the US. Several other sectors have also seen a shift. Cotton apparel shipments to Italy jumped 15% over August and more than doubled compared with September 2024. Exports to the UAE rose 24 percent, to Spain 151 percent, to China 34 percent, to Bangladesh 23 percent, and to Egypt 67 percent year-on-year in September. Indian exporters of rice, gems, jewellery, and tractors had already begun diversifying into markets like the UAE, Bangladesh, and Italy.

However, the long-term impact of the US tariffs is expected to be uneven. Low-margin, labor-intensive product segments like cotton garments, sports goods, carpets, and leather footwear face stiff competition from China and ASEAN countries, making it challenging to diversify their shipments. These sectors are particularly vulnerable to trade-related shocks due to working capital constraints.

Officials estimate that only around $2 billion worth of exports can be redirected to newer markets, compared to the over $8 billion in shipments to the US before the tariffs. In FY25, India's exports to the US stood at $86.51 billion, with the top five product categories accounting for nearly $60 billion of that total.

Despite the limitations, these diversification efforts provide a crucial impetus for exploring new markets. The government has also encouraged exporters to explore Russia as an alternative market, with the possibility of 25 fishery units in India being cleared to supply to that country.

India's solar module exports fell sharply in September after U.S. trade measures curbed shipments, forcing manufacturers to redirect supplies to the domestic market. The U.S., which accounted for more than 90% of India's module exports earlier this year, imposed a 50% tariff on Indian goods. India's September solar module exports slumped to about $80 million from $134 million in August.

While diversification offers a buffer, there are concerns it might not fully compensate for the US tariff impact, with $48.2 billion of Indian exports now subject to the 50% duty.