India Reroutes Exports After 50% US Tariffs Hit Trade

India’s exports are feeling the pressure from the recent 50 percent US tariffs that took effect on August 27. However, new data indicates that several product categories have quickly adjusted by redirecting shipments to Asia, the Middle East, and Europe, mitigating the initial impact. According to Commerce Ministry data analyzed by The Indian Express, exports of gems and jewelry to the US plummeted 76 percent in September compared to the previous year. Despite this, overall exports in the sector only declined by 1.5 percent, as exporters shifted volumes to the UAE (+79 percent), Hong Kong (+11 percent), and Belgium (+8 percent). 

A similar pattern appeared in auto components, with US-bound shipments decreasing 12 percent in September, while total exports increased 8 percent due to higher demand from Germany, the UAE, and Thailand. Marine products saw a 25 percent growth in September and 11 percent in October, driven by robust orders from China (+60 percent), Japan (+37 percent), Thailand (+70 percent), and the European Union.

After tariffs, US-India trade disruptions emerged, prompting exporters to diversify markets amid declining exports like sports goods, cotton garments, and leather footwear. The government advises against aggressive discounting, as countries like Indonesia and Ecuador gain market share and prices. Marine exports, especially seafood, are diversifying rapidly, with India exploring Russia as a new market.

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Officials estimate India can redirect about $2 billion of exports to new markets, far less than the $8 billion shipped annually before tariffs. Seafood, mainly shrimp, worth $4.88 billion in FY25 (65% of India’s seafood exports), remains vulnerable due to thin margins. To assist exporters, the government has launched Rs 45,060 crore in aid, including Rs 20,000 crore in credit guarantees. Evidence of indirect US reach includes increased shares of pearls and precious stones from Australia and Hong Kong in US imports. Container data shows that as Indian shipments fell, imports from Indonesia, Thailand, and Vietnam increased, indicating that some Indian goods reach the US through third countries.