"India" opens new markets to fight tariff war pressure

One of India's key strategies to counter Trump's tariffs is diversifying its export markets alongside securing trade deals with multiple countries, which appears to be starting to pay off.

Recently, Indian Prime Minister Narendra Modi declared that India has become an unstoppable country. Previously classified as a “Fragile 5” country, which is economically fragile and prone to capital outflows, India has transformed into one of the top five economies in the world.

Key factors include inflation below 2%, economic growth exceeding 7%, boosted by investments in technology, such as Google's announcement of an estimated US$15,000 billion investment in AI, and a more than 60% increase in trade with the G7. All of this reinforces the point that India's growth is creating new opportunities for the world.

In the second quarter of 2025, India's economy grew faster than expected at 7.8%, driven by manufacturing, construction and services, with growth in manufacturing and services at 7.7% and 9.3%, respectively.

With the construction sector expanding at 7.6%, economists at Capital Economics say the Indian economy's continued growth in the second quarter suggests it is likely to meet its projected 7% growth target this year, despite the impact of US tariffs. The International Monetary Fund (IMF) projects India's growth at 6.6%, higher than the 6.5% growth projected for 2024.

Tariff impact on Indian exports

India's exports to the US have plummeted after the US imposed a 50% tariff on Indian goods, with shipments falling by $5.5 billion and 20.3% from August, marking the fourth consecutive month of decline, and a loss of over $3.3 billion in trade value per month since May. The hardest-hit industries include textiles, gems and jewelry, engineering products and chemicals.

Slowing exports are also a major factor in India's widening trade deficit, which hit a 13-month high of $32,150 billion in September.

While exports to the US fell, they were partially boosted by improving trade with countries like the United Arab Emirates and China, while India and the US resumed trade talks last month after months of stalling over differences on various issues.

Over the years, the US has been pushing for greater access to India's agriculture sector, seeing it as a huge and untapped market. But India remains a strong defender of the sector, citing its food security, income generation and the benefits to millions of smallholder farmers.

The US is India's largest trading partner, with bilateral trade worth $190 billion in 2024, and the US and Indian leaders aim to more than double this figure to $500 billion.

Make friends, open new markets

One of India's key strategies to counter Trump's tariffs is diversifying its export markets alongside securing trade deals with multiple countries, which appears to be starting to pay off.

Despite India becoming the world's seventh largest agricultural exporter, it still needs to look for new markets to expand its growth. The Agricultural and Processed Food Export Development Authority (APEDA) under the Indian Ministry of Commerce is addressing market access issues by emphasizing the importance of maintaining traceability and accountability standards in the value chain.

India's merchandise exports in 2559-2560 were valued at US$ 276,280 billion, of which agriculture accounted for US$ 33,380 billion or 12.08% of total exports, while food products under APEDA accounted for US$ 16,280 billion or almost half of total agricultural exports. Major destinations include Vietnam, United Arab Emirates, Saudi Arabia, United States, Iran, Iraq and Nepal.

As the shrimp industry in India's Andhra Pradesh state has been severely impacted by President Donald Trump's tariffs, entrepreneurs are turning to Australia as an alternative market. The Australian government is now poised to ease shrimp import restrictions, following close collaboration between the Indian and Australian governments, resulting in the first approval for shrimp imports from India. This marks a significant achievement for India as it continues to expand into new markets to mitigate the risk of over-reliance on a single market.

India is also placing increasing emphasis on trade and economic agreements. For example, the India-UAE Comprehensive Economic Partnership Agreement (India-UAE CEPA), which came into effect on May 1, 2565, has created one of Asia's most important trade corridors. It expands non-oil trade and opens up new opportunities in services and investment. The two countries aim to reach US$100,000 billion in trade by 2573, while expanding their logistics networks through the Bharat Mart and the India-Middle East Economic Corridor (IMEC) initiatives.

Meanwhile, India is exploring alternative markets for its gems and jewellery. The Gulf countries are seen as having high potential, given their low trade barriers, cultural proximity, proximity and free trade agreements with India under the India-UAE Comprehensive Economic Partnership Agreement (CEPA). Jewellery exports have grown significantly over the past three years, with gold increasing by 60% and diamond jewellery by 17%, making the UAE a key market and gateway for Indian exports to the wider Gulf region.

Looking at the future economy

In the future, if India and the US can reach a major trade deal, it could lower tariffs on Indian exports from a high of around 50% to just 15-16%, while India could agree to a gradual reduction in Russian oil imports and allow the US to export more non-GMO corn and soybean meal.

However, analysts believe that the US tariffs on India will not significantly impact economic growth, as India is not a primarily trade-dependent economy, with exports to the US contributing only about 2% to GDP. S&P forecasts continued growth of 6.5% for the current fiscal year, similar to last year.

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