India’s exports to the United States have remained remarkably resilient after a year of tariff uncertainty, with the US still accounting for about 20% of India’s merchandise exports in the 12 months through July 2026. This is despite Washington imposing tariffs as high as 50% on Indian goods at one point before lowering the rate to 18% in February and subsequently bringing the general tariff rate down to 10%, according to an analysis of Indian trade ministry data.
The resilience underscores the difficulty of quickly reducing dependence on the US, even as India has accelerated trade diversification through new agreements and negotiations with other economies. India signed a trade deal with the UK that took effect in July and has also concluded agreements with the European Union, Oman and New Zealand, while expanding negotiations across Africa, Latin America and West Asia.
US Still Accounts For Nearly 20% Of India’s Exports
The US remains India’s largest export market despite the disruption caused by Trump’s tariff policies.
Trade ministry data for the 12 months through July show that the US accounted for about 20% of India’s exports. That share has actually increased over the longer term, rising from 17.4% in 2022-23 to nearly 20% currently.
India’s Export Dependence On The US
| Indicator | Figure |
|---|---|
| US share of India’s exports | ~20% |
| US share in 2022-23 | 17.4% |
| US goods exports, 12 months through July | $88.5 billion |
| China goods exports, same period | $21.5 billion |
| US export value vs China | ~4.1X |
The figures show why diversification away from the US is difficult. India exported about $88.5 billion of goods to the US in the 12 months through July, compared with $21.5 billion shipped to China during the same period.
US Share Of India’s Exports
The increase is notable because it occurred despite India’s efforts to reduce exposure to individual markets following the tariff shock.
Trump Tariffs Reached 50% Before Easing
The trade relationship went through a series of sharp tariff changes over the past year.
At one point, US tariffs on Indian goods reached as high as 50%. The rate was subsequently reduced to 18% in February 2026, while the goods now carry a 10% tariff rate, according to the Business Standard report.
US Tariff Timeline
HIGHER TARIFFS
│
▼
Up to 50%
│
▼
18% in February 2026
│
▼
10% current rate
The changing tariff structure created uncertainty for exporters and businesses planning investments around the US market.
| Stage | Reported US Tariff Rate |
|---|---|
| Peak during tariff escalation | Up to 50% |
| February 2026 | 18% |
| Current rate | 10% |
The tariff changes have made the cost environment less predictable, even though the current rate is substantially below the peak.
Why India Has Not Quickly Reduced US Dependence
The continued 20% share reflects the sheer size and attractiveness of the US market.
Indian exporters have established supply chains and customer relationships across sectors including electronics, engineering goods, pharmaceuticals, gems and jewellery, and textiles. Replacing that demand with alternative markets requires time, investment and new commercial relationships.
Ajay Sahai, director general of the Federation of Indian Export Organisations, said it could take at least two to three years for market diversification to show meaningful results. He also described the US as the most attractive market for Indian exporters.
Major Indian Export Sectors To The US
| Sector | Why The US Matters |
|---|---|
| Electronics | Growing manufacturing and export base |
| Engineering goods | Large industrial market |
| Pharmaceuticals | Major destination for Indian medicines |
| Gems and jewellery | Important high-value export market |
| Textiles | Significant consumer market |
The breadth of products sold to the US makes diversification more complicated than simply shifting one or two export categories to other destinations.
India Is Accelerating Trade Diversification
The tariff episode has nevertheless pushed India to move faster on trade diversification.
India has signed a trade agreement with the UK that came into effect in July and has also concluded agreements with the European Union, Oman and New Zealand. The government is simultaneously seeking deeper trade relationships across Latin America, West Asia and Africa.
Earlier this month, India also signed terms of reference with the Southern African Customs Union to accelerate trade negotiations.
India’s Trade Diversification Push
| Market/Bloc | Development |
|---|---|
| United Kingdom | Trade deal took effect in July |
| European Union | Agreement concluded |
| Oman | Agreement concluded |
| New Zealand | Agreement concluded |
| Southern African Customs Union | Terms of reference signed |
| Latin America | Wider engagement being pursued |
| West Asia | Wider engagement being pursued |
| Africa | Wider engagement being pursued |
Commerce Secretary Rajesh Agrawal said India’s strategy is focused on engaging economies that collectively account for more than two-thirds of global GDP.
India Has Added 500 Export Product Lines
India’s diversification strategy is not limited to finding new geographical markets.
The government has also sought to broaden the range of goods India sells overseas. Around 500 new product lines have been added, mainly across electronics, engineering and marine products.
This strategy aims to address two risks at the same time: dependence on a small number of markets and dependence on a narrow group of export products.
Export Diversification Strategy
INDIA'S TRADE STRATEGY
MARKET DIVERSIFICATION
│
┌───────────┼───────────┐
▼ ▼ ▼
UK EU Africa
│ │ │
└───────────┼───────────┘
▼
More Markets
+
More Products
│
▼
Lower Concentration Risk
The strategy reflects the government’s broader attempt to make India’s export growth less vulnerable to policy changes in any single major market.
Other Markets Are Beginning To Grow
While the US remains dominant, other markets are showing stronger growth.
Australia has become one of India’s faster-growing destinations, while the UAE was India’s second-largest export destination in the 12 months through July. Both countries signed trade agreements with India in 2022.
Several smaller destinations, including Tanzania, Vietnam, South Korea, Sri Lanka and Kenya, also recorded solid growth during the period.
India’s Export Market Landscape
| Market | Recent Position |
|---|---|
| United States | Largest destination; $88.5B exports |
| UAE | Second-largest destination |
| Australia | Faster-growing market |
| China | $21.5B exports; exports up 42% |
| Tanzania | Strong growth |
| Vietnam | Strong growth |
| South Korea | Strong growth |
| Sri Lanka | Strong growth |
| Kenya | Strong growth |
The growth of smaller destinations is encouraging, but their export bases remain much smaller than the US market.
Exports To China Jump 42%
China provides one of the clearest examples of India’s efforts to diversify its export destinations.
India’s exports to China increased 42% in the 12 months through July, reaching $21.5 billion, according to calculations based on official data.
However, China’s importance as an export destination remains significantly below that of the US.
India-US Vs India-China Exports
12 MONTHS THROUGH JULY 2026
United States
$88.5B ████████████████████████████████████████
China
$21.5B ██████████
US market ≈ 4.1X China's export value
This illustrates the scale of the challenge facing India’s diversification strategy. Even a rapidly growing market like China would need a substantial increase to approach the absolute export value India currently sends to the US.
Trade Deals Could Help India Attract Manufacturing
The government believes free trade agreements can help India capture manufacturing opportunities as global supply chains shift.
The combination of preferential market access and a broader export product base could make India more attractive to companies looking to diversify production away from China.
Pritam Banerjee, a trade analyst and former head of the Centre for WTO Studies, said free trade agreements could become a catalyst for shifting manufacturing away from China, although India’s window of opportunity is narrow.
Potential Benefits Of Diversification
| Policy Goal | Potential Outcome |
|---|---|
| More FTAs | Lower trade barriers |
| More export markets | Lower dependence on one market |
| More product lines | Broader export base |
| Manufacturing expansion | Greater global supply-chain participation |
| Deeper G20 integration | Wider access to major economies |
| Latin America/Africa/West Asia engagement | Additional growth markets |
India’s trade strategy is therefore increasingly tied to its manufacturing ambitions.
US Trade Talks Remain Unresolved
Despite months of negotiations, India and the US have yet to sign a trade agreement, according to the report.
The absence of a comprehensive agreement leaves exporters facing uncertainty over the future tariff structure and market access conditions.
For businesses making long-term investments, predictability can be almost as important as the headline tariff rate. Companies need confidence that their cost structures will remain competitive over the life of a manufacturing or export investment.
This is one reason India has accelerated negotiations with other major economies even while continuing to engage with Washington.
Why The 20% Share Matters
The fact that the US still accounts for about one-fifth of India’s exports after a year of tariff disruptions sends two different signals.
On one hand, it demonstrates the competitiveness and resilience of Indian exporters. Businesses have continued supplying the US despite higher and changing tariffs.
On the other hand, it highlights India’s exposure to US trade policy.
Resilience Vs Dependence
| Positive Signal | Risk |
|---|---|
| Exports remain resilient | US remains a major concentration point |
| Exporters adapt to tariff changes | Future tariffs could change again |
| New markets are expanding | Alternative markets are still smaller |
| New FTAs are being signed | Benefits take time to materialise |
| Product diversification is increasing | US demand remains difficult to replace |
The current situation therefore represents both a success and a warning for Indian trade policy.
The Bigger Picture
India’s export relationship with the US has proved more resilient than many expected after a year of severe tariff uncertainty. The US still accounts for about 20% of India’s exports, and shipments to the country reached $88.5 billion in the 12 months through July, compared with $21.5 billion to China.
At the same time, the tariff episode has reinforced the need for diversification. India is expanding its network of trade agreements, adding new export products and pursuing markets across Europe, Africa, West Asia and Latin America. The objective is not necessarily to reduce US exports, but to ensure that India’s overall export performance is less vulnerable to decisions made by any single trading partner.
Looking Ahead
The immediate focus will remain on India-US trade negotiations and the stability of the current tariff regime. If the two countries reach a broader trade agreement, Indian exporters could gain greater certainty and potentially expand shipments further. If tariff uncertainty returns, India’s newly expanded network of trade partners could provide an alternative source of demand, although replacing the scale of the US market will take years.
For India, the bigger opportunity lies in using the current trade disruption to accelerate structural diversification. The government has already expanded its FTA network and added hundreds of export product lines, while markets such as Australia, the UAE and China are showing stronger growth. The challenge now is turning these agreements and new markets into sustained export volumes quickly enough to reduce concentration risk without sacrificing India’s strong position in the US market.
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