India’s dependence on the US as its biggest export market has remained largely unchanged despite President Donald Trump’s tariff measures and New Delhi’s efforts to diversify trade, according to an analysis of commerce ministry data.The US accounted for around 20 per cent of India’s exports in the 12 months through July, broadly maintaining its share despite tariffs on Indian goods reaching as high as 50 per cent during the period. The tariff rate was later reduced to 18 per cent in February and currently stands at 10 per cent.The US share of India’s exports has also increased from 17.4 per cent in 2022-23, highlighting the difficulty of reducing dependence on the world’s largest economy.India exported goods worth $88.5 billion to the US in the 12 months through July, compared with $21.5 billion to China, according to calculations based on official data.
US remains India’s biggest export destination
The US continued to lead India’s export destinations in 2025-26, with exports worth $87.31 billion, compared with $86.51 billion in the previous financial year.The UAE was the second-largest destination at $37.37 billion, followed by China at $19.48 billion. India’s exports to China, however, rose sharply, increasing 42 per cent in the 12 months through July.Other major markets included the Netherlands at $17.50 billion and the UK at $13.44 billion.India has also expanded the range of products it exports, adding around 500 product lines, mainly in electronics, engineering and marine products.The US remains particularly important for Indian exports of electronics, engineering goods, pharmaceuticals, gems and jewellery and textiles. Despite months of negotiations, India and the US have yet to formally conclude their broader trade agreement.Meanwhile, exports to several smaller markets, including Tanzania, Vietnam, South Korea, Sri Lanka and Kenya, have recorded strong growth, although their overall contribution remains much smaller than that of the US.Pritam Banerjee, a trade analyst and former head of the Centre for WTO Studies, said free trade agreements could help India attract manufacturing away from China, but warned that the opportunity may be limited.He said deeper integration with G20 economies, which account for about 85% of global GDP, as well as markets in Latin America, the Middle East and Africa, could help India accelerate that shift.
India steps up trade diversification
The uncertainty around US trade policy has prompted India to accelerate negotiations with other major markets and seek new export destinations.India signed a trade deal with the UK, which came into effect in July, while agreements with the European Union, Oman and New Zealand were also concluded in 2026 but are yet to take effect.India has also resumed or stepped up trade negotiations with several other markets, including the Gulf Cooperation Council, Canada, Israel, Peru, Chile and the Southern African Customs Union.“The industry has become extremely cautious of the fact that they have to diversify as a strategy to de-risk,” Ajay Sahai, director general of the Federation of Indian Export Organizations, said. “And from that perspective, I think it’s a very good lesson the US tariff war taught us.”Sahai said it could take two to three years for the impact of market diversification to become meaningful, while noting that the US remained the most attractive export market for Indian businesses.Commerce Secretary Rajesh Agrawal said India was focusing on economies that together account for more than two-thirds of global GDP.“In an environment of global uncertainty and shifting trade patterns, FTAs also serve as institutional anchors for trusted economic partnerships,” Agrawal said, adding that the agreements were aimed at reducing reliance on any single market.
