Destination next: India's search for new markets to save exports

The 26% additional tariff on Indian exports announced by the US took effect on Wednesday. Gems & jewellery and marine products are heavily reliant on the US market due to better price realisations and high volumes, even though exports from India in both categories have been falling over the past three years. 

“We are working on a diversification strategy to expand trade ties in Europe, the Middle East, and East Asia," said the first person cited above on condition of anonymity. “This is being done in close consultation with industry stakeholders."

The second person said that Indian missions overseas are being engaged to explore export opportunities. “They have been asked to hold roundtables with industry leaders in different countries to build connections and identify potential markets," the second person said.

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Queries emailed to the ministries of commerce and external affairs remained unanswered till press time.

Diversification not so easy

However, industry leaders see it as a challenge. “Developing new markets takes time and requires significant effort," said Vipul Shah, former chairman of the Gem & Jewellery Export Promotion Council (GJEPC). “With reciprocal tariffs being imposed across the globe, the ripple effect could be serious—it may even trigger a global recession."

Potential alternative markets include countries in the Asia-Pacific region such as Vietnam, Indonesia, Thailand, and Malaysia as well as the Middle East. Industry players are also looking at strengthening their presence in the domestic market to offset external risks.

“The move is good, but there are several challenges associated with it. Exploring different markets will definitely help in the growth of the sector," Shah said, suggesting that suspending the tariffs until the finalisation of the Bilateral Trade Agreement (BTA) with US would help in protecting the industry.

The first round of face-to-face discussions to finalise the contours of the Bilateral Trade Agreement (BTA) concluded on 29 March, after beginning on 26 March, with the US delegation led by Brendan Lynch, assistant US trade representative for South and Central Asia. The next round of talks will be held virtually.

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In contrast, Uttar Pradesh’s trade minister Nand Gopal Gupta 'Nandi' asserted that the current global scenario presents an opportunity. “Along with increasing Uttar Pradesh's share in the country’s exports, we are working towards the swift implementation of the new export promotion policy 2025–30 to make Uttar Pradesh a one-trillion-dollar economy," the UP minister told Mint.

Worries for exporters

Indian shrimps, a key component of the country’s marine exports, have a significant buyer base in the American market, making the sector particularly vulnerable to the sudden tariff escalation. The US alone accounts for 33% of India’s overall shrimp exports worldwide.

“Material that is packed and kept at various stages of preparation is a big concern for us," said K.N. Raghavan, secretary general of the Seafood Exporters Association of India, adding that the association is negotiating with buyers to manage the situation.

“This is the peak farming season. Sowing happens in January and February, while harvesting takes place from April to June. With this uncertainty, exporters may not be able to buy seafood from farmers, which could disrupt the entire supply chain," Raghavan said.

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He added that Vietnam, which imports raw material from India to process and re-export to the US, has now put shipments on hold due to uncertainty. “Vietnam faces an even higher duty of around 46%, making things more difficult."

While India exports to over 120 countries including China, Japan, the European Union (EU) and other Southeast Asian markets, Raghavan said, “the US remains the most important in terms of pricing".

Falling exports

India’s exports of gems and jewellery to the US have been on a consistent downward trajectory, dropping from $14.56 billion in FY22 to $12.54 billion in FY23, and further to $9.91 billion in FY24. In the current fiscal, shipments stood at $8.99 billion till February 2025, reflecting continued pressure on one of the country's most valuable export segments.

A similar trend is visible in marine product exports to the US, which declined from $3.32 billion in FY22 to $2.58 billion in FY23 and $2.50 billion in FY24. In the current financial year, exports were valued at $2.44 billion till February 2025.

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Gold jewellery and polished diamond exports—worth $11.9 billion last year—are expected to drop by $1.82 billion due to the new 30.2% tariff, significantly reducing the attractiveness of Indian gems in the US market, as per a GTRI report released on Monday.

On the impact of the steep hike in tariffs, Global Trade Research Initiative's (GTRI) co-founder Ajay Srivastava said, “We’re likely to see sharp declines in some sectors while others may benefit from trade diversion, especially where Chinese goods have been penalised even more heavily."