India’s key exports to the US may struggle to secure alternative markets

By Admin

08 Aug, 2025

Heavy dependence on US market
India’s export sector is bracing for significant disruption if the United States moves ahead with a proposed 50% tariff on Indian goods from August 27. Market analysis shows that nearly $8.5 billion worth of India’s major exports defined as categories with annual trade above $150 million are highly dependent on the US market in 2024. Last year, the US imported $91.2 billion worth of goods from India, with the top 50 categories (excluding exempt items like steel, pharmaceuticals, and automobiles) valued at $31.4 billion. Of this, $8.5 billion came from sectors where the US absorbed more than half of India’s outbound shipments, making the search for alternative markets challenging.

Solar modules and construction materials most exposed
Solar modules are the most vulnerable, with 98% or $1.6 billion of exports going to the US. Cement and artificial stone follow closely, with over 88% worth more than $500 million headed to American buyers. Other at-risk categories include printed cotton linen and plastic-coated textiles (over 80% US share), prepared shrimps and prawns ($420 million, 80% US share), and wool carpets and bed linen (about $1 billion, heavily reliant on the US market). Exporters warn that small and medium enterprises in these segments could face severe stress, with some already reporting layoffs after Washington announced an additional 25% duty on August 6, on top of a similar hike on July 30.

Limited relief from new trade partners
India’s recently signed trade agreements with the UK, UAE, and Australia may offer only limited relief. While these partners can absorb some additional shipments, they cannot match the scale of US demand, leaving exporters scrambling to diversify their customer base.

Low-dependence categories still strategically important
In contrast, about 11% of India’s US-bound exports worth $10 billion come from sectors where the US accounts for less than 30% of sales. These include rubies, sapphires, and pneumatic tyres, which could be redirected more easily. However, several goods in this “low-dependence” group are difficult for the US to replace India supplies 92% of its synthetic diamonds, 63% of bulk bags, 60% of knotted carpets, and 54% of tyres for agricultural and forestry machinery. Cotton linen worth nearly $1 billion also falls into this category.

Potential supply chain strain for the US
Around 3% or $3 billion of US imports from India come from sectors where India holds over 50% of the American market, pointing to possible supply chain challenges for US buyers. At the same time, $17 billion worth of goods 18.9% of major export items could be replaced more easily, given India’s smaller share.

Competitive disadvantage in Asia-Pacific
If the 50% tariff takes effect, India’s effective tariff rate would rise to 31.2%, significantly higher than competitors such as Thailand (10.7%), the Philippines (12%), and Vietnam (15.2%). This gap could further erode India’s competitiveness in the US market.

Countdown to August 27
With just weeks left until the deadline, policymakers and exporters are under pressure to protect market share and quickly recalibrate trade strategies. While the new trade agreements and low-dependence categories provide some breathing space, the heavy reliance on the US for key export sectors means the coming months could test India’s resilience in global trade like never before.