India’s Export Stability Amid Donald Trump Tariffs: New Markets Counter US Slowdown
India’s export sector has shown resilience amid global market fluctuations, according to a recent report by SBI Research. The analysis reveals that merchandise exports from April to September in the fiscal year 2026 reached $220 billion, marking a 2.9% increase compared to $214 billion during the same period last year. Notably, exports to the United States rose by 13% to $45 billion, although there was a significant year-on-year decline of nearly 12% in shipments for September. Despite these fluctuations, the report highlights a diversification in India’s export markets.
Mixed Trends in Key Markets
The report from SBI Research indicates a complex landscape for India’s exports, particularly concerning its relationship with the United States. While the US remains a crucial market, its share of India’s total exports has decreased since July 2025, dropping to 15% in September. This decline is particularly evident in specific sectors. For instance, the share of US imports of Indian marine products fell from 20% in fiscal year 2025 to 15% in September. Similarly, the share of precious stones exported to the US plummeted from 37% to just 6%. Despite these declines, certain sectors, including marine products and ready-made cotton garments, have experienced growth during the April to September period.
Diversification of Export Markets
SBI Research also points to a growing geographical diversity in India’s export basket. Countries such as the UAE, China, Vietnam, Japan, Hong Kong, Bangladesh, Sri Lanka, and Nigeria have increased their shares across various product categories. This shift may suggest a trend of indirect routing of Indian goods, as seen in the rising shares of Australia and Hong Kong in US imports of precious stones. Australia’s share grew from 2% to 9%, while Hong Kong’s share increased from 1% to 2%. This diversification could help mitigate risks associated with reliance on a single market, particularly amid changing trade policies and tariffs.
Government Support and Economic Indicators
In response to challenges faced by exporters, the Indian government has approved a substantial assistance package totaling Rs 45,060 crore. This includes Rs 20,000 crore in credit guarantees aimed at bolstering the export sector. However, the Indian rupee has faced pressure, recently slipping to 89.49 against the dollar amid global financial instability. The Reserve Bank of India has reiterated its stance of not defending any fixed exchange rate, suggesting that the recent decline in the rupee may be a temporary adjustment. Additionally, India’s current account deficit has narrowed to 0.2% of GDP in the first quarter of fiscal year 2026, down from 0.9% a year earlier, supported by strong services exports and remittances.
Future Projections
Looking ahead, SBI Research anticipates a slight widening of the current account deficit in the next two quarters, projecting a full-year deficit of 1.0% to 1.3% of GDP. The report also estimates a balance-of-payments gap of up to $10 billion. These projections underscore the ongoing challenges and opportunities within India’s export landscape as it navigates a complex global economic environment. The government’s proactive measures and the diversification of export markets may play a crucial role in shaping the future of India’s trade performance.
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