India Diversifies Exports Amid US Tariff Woes

India's merchandise exports are demonstrating significant diversification, with a notable decline in the share directed towards the United States since July 2025. This strategic shift sees other countries, including the UAE, China, and Hong Kong, capturing a larger portion of India's exports across various product categories. This trend is occurring despite an overall increase in India's total merchandise exports in the first half of FY26.

The increasing US import tariffs, reaching as high as 50 percent on certain Indian goods, are a primary driver for this diversification. These tariffs have particularly impacted labor-intensive sectors like textiles and jewelry. In response, the Indian government has sanctioned ₹45,060 crore to support exporters, including ₹20,000 crore in credit guarantees, to enhance global competitiveness and explore new markets.

This economic maneuver is expected to strengthen liquidity for exporters by enabling collateral-free credit access. The move aims to mitigate the impact of reduced container volumes to the US and foster smoother business operations, signaling India's proactive approach to navigating international trade adjustments and securing new avenues for growth.