India broadens export reach as US-bound shipments weaken: SBI Research

By Admin

25 Nov, 2025

India’s export landscape is undergoing a strategic transformation as the country increasingly broadens its overseas market reach amid softening demand from the United States. According to a recent analysis by SBI Research, this shift signals a gradual diversification of India’s merchandise export basket an important step toward building long-term resilience in global trade.

Export Growth Shows a Mild Uptick

SBI Research notes that India’s merchandise exports for April–September 2025 stood at $220 billion, marking a 2.9% rise compared with $214 billion during the same period last year. This moderate growth highlights steady performance despite global uncertainties and evolving trade dynamics.

US Shipments Slow After Initial Surge

During the first half of FY 2025–26, exports to the United States showed 13% growth, reaching $45 billion. However, analysts suggest this surge may have been driven by front-loaded orders placed before potential tariff changes.
By September 2025, India’s exports to the US fell sharply by 12% year-on-year, indicating a visible slowdown. The US share of India’s total exports has also been declining since July, dropping to 15% in September.

Sectors facing the most pressure include:
• Marine products
• Precious and semi-precious stones
• Ready-made cotton garments
• Cotton textiles

These labour-intensive industries continue to remain vulnerable to US tariff hikes and weakening demand conditions.

India Expands Footprint in New Global Markets

While US-bound shipments have eased, India has significantly increased exports to a wider set of destinations. SBI Research highlights strong growth across diverse markets such as:
• UAE
• China
• Vietnam
• Japan
• Hong Kong
• Bangladesh
• Sri Lanka
• Nigeria

These countries are witnessing notable increases in imports of Indian goods across multiple product categories, signalling a broader and healthier export spread.

Are Some Nations Re-exporting Indian Goods?

The report raises an important question: Are certain countries re-routing Indian products to the US?

A key indicator comes from the gems and jewellery sector:
• Australia’s share of US imports of pearls and precious stones rose from 2% to 9% between January–August 2025.
• Hong Kong’s share doubled from 1% to 2% in the same period.

Such shifts hint at possible re-exporting of Indian-origin goods, as trade flows realign to navigate evolving tariff regimes.

Active Trade Diplomacy Strengthens India’s Position

The evolving export environment aligns closely with India’s strengthened trade diplomacy efforts. Recent LPG supply agreements and strategic defence partnerships have improved India’s negotiating leverage. At the same time, the country is pushing to recalibrate its relatively high tariff regime among Asian economies while building sectoral capabilities.

This diplomatic momentum supports India’s aim of reducing market concentration risks and expanding its global trade footprint.

High US Tariffs Hurt Labour-Intensive Sectors

High tariffs imposed by the United States continue to burden several key Indian export segments, especially:
• Textiles
• Jewellery
• Seafood (including shrimp, where margins are narrow)

These tariffs have contributed to a noticeable decline in containerised cargo volumes heading toward the American market.

Government Support Measures Worth ₹45,060 Crore

To cushion exporters from the impact of weak US demand and rising tariffs, the Indian government has rolled out a comprehensive support package worth ₹45,060 crore.
A major element is the ₹20,000 crore credit guarantee support aimed at improving access to bank financing.

Through CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises), exporters especially small and mid-sized businesses can now access collateral-free loans to maintain liquidity, manage working capital needs, and ensure uninterrupted operations.

A More Diversified Export Future

India’s export profile is clearly shifting. While the US remains a major market, the country’s increasing presence across Asia, the Middle East, and Africa points to a more balanced and resilient trade strategy.

As global conditions continue to evolve, India’s push for market diversification, supportive trade policies, and strengthened diplomatic ties will play a pivotal role in shaping the next phase of the nation’s export growth.