Mint Explainer | How India's exports defied steep US tariffs in September
Due to Trump tariffs, India's exports to the US—its largest trading partner—fell nearly 12% to $5.47 billion, down from $6.87 billion in August. But Indian exporters found new markets.
India’s merchandise exports rose 6.7% year-on-year to $36.38 billion in September, even as shipments to the US—its largest market—fell sharply due to steep tariffs. It was the first full month affected by the US duties, which came into effect on 27 August.
Exports also rose sequentially from $35.10 billion in August, highlighting the resilience of Indian exporters as they navigate an increasingly fragmented global trade environment. Mint takes a look at the road ahead amid tightening global demand and rising geopolitical pressures.
How did India’s exports fare in September?
India’s goods exports reached about $36.4 billion, up from $34.1 billion a year ago, according to government data. The increase represents one of the strongest on-year gains in 2025-26. Imports, however, surged nearly 17%, pushing the trade deficit to a 13-month high of $32.15 billion. While the export growth is modest, it is notable given headwinds from US tariffs and slowing global demand. Key growth drivers included electronics, petroleum products, engineering goods, rice, marine products, and drugs and pharmaceuticals.
Overall, India exported goods and services worth $67.20 billion and imported the same worth $83.82 billion, widening the overall trade deficit to $16.61 billion in the month, compared with $8.60 billion a year ago.
How did US tariffs impact India’s shipments?
The US, accounting for roughly 17% of India’s exports, has imposed steep tariffs of up to 50% on many goods, including textiles, jewellery, and machinery. As a result, exports to the US fell nearly 12% to $5.47 billion, down from $6.87 billion in August. Imports from the US rose 11.78% on-year to $3.99 billion, up from $3.6 billion in August.
Labour-intensive sectors such as apparel and handicrafts have been among the hardest hit. In September, readymade garment exports fell 10.1% annually to $997 million, while cotton and handloom exports declined 11.7% to $930 million, reflecting ongoing challenges amid shifting global sourcing patterns. Yet, these losses were partially offset by gains in other markets and product lines.
If exports to the US fell, which markets drove the growth?
India’s exporters appear to be diversifying rapidly. Shipments rose sharply to China, Brazil, Spain, and the United Arab Emirates (UAE), alongside smaller but fast-growing markets in Africa and Southeast Asia, reflecting strategic redirection and emerging opportunities. Electronics, marine products, and rice, sectors less exposed to US duties, recorded robust growth. Exports to Germany, Italy, and the UK also rose, reflecting continued demand for engineering goods, pharmaceuticals, and apparel despite global headwinds.
To be sure, anticipating the impact of the 50% US tariffs, the government and exporters had already started devising mitigation strategies.“Reflecting the impact of the additional US tariffs, merchandise exports to the US grew -11.9% on-year to $5.5 billion in September after growing by 7.1% in August," Crisil Ratings said in a recent report. “Had it not been for the front-loading of shipments, the decline would have been steeper. In contrast, exports to non-US markets grew 10.9% on-year, outpacing the 6.6% growth in August. This suggests that while the tariffs have dampened US-bound exports, India’s exports to other countries are bearing fruit," it added.
Are these gains sustainable?
Some of September’s uptick may reflect front-loaded shipments, as exporters rushed goods out before tariff deadlines took full effect. A recent research report by economist Garima Kapoor of Elara Capital noted that the surge could be transitory, potentially fading once seasonal demand ebbs and crude oil prices decline. “On the policy front, ongoing trade negotiations with the European Union are progressing well and could support export diversification into high-value segments. Additionally, India-US trade discussions, likely to take place in Q3FY26, may provide scope for partial tariff relief and improved bilateral trade dynamics," Kapoor said.
“Key risks to our external outlook include further escalation of tariff barriers, potential curbs on rare-earth exports, and rising global shipping costs stemming from increased US-China port fees," she added.
Meanwhile, imports continue to surge, widening the trade deficit. In September, gold, silver, fertilizers, and electronics imports rose sharply. Gold imports nearly doubled to $9.6 billion from $4.6 billion in August, with import volumes increasing to 102 million tonnes from 61 million tonnes.
What does this mean for India’s trade?
The September data underscores India’s gradual pivot from dependency on select markets toward a more diversified export footprint. Challenges remain: with US tariffs likely to persist and global growth slowing, sustaining high export growth will require productivity gains, competitive pricing, and deeper trade ties across Asia, Africa, and Latin America.
For now, India’s exporters have shown they can weather the tariff storm, at least in the short term. A potential deal with the US could further ease pressures.
At a press briefing after the release of the latest trade data, commerce secretary Rajesh Agarwal said India is open to purchasing more oil and gas from the US, provided prices remain competitive. “Our team is currently in the US, holding discussions with American counterparts on energy trade and related cooperation," he added.
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