Imagine the shock of a 50% tariff wall slamming down on your exports overnight—it's exactly what's happening to Indian goods heading to the US, forcing businesses to scramble for survival. But here's the silver lining that could redefine India's trade future: sectors like seafood, cars parts, and sparkling jewels are pivoting to fresh opportunities abroad, proving resilience in the face of adversity.
As those steep 50% US tariffs kicked in on August 27, they've started biting hard into India's shipments to America. Yet, savvy exporters in categories like shrimp and other marine products, precious gems and jewelry, automotive parts, and even electrical equipment have cleverly rerouted their goods to booming markets in Asia and Europe. For beginners, tariffs are essentially taxes imposed by one country on imports from another, making products more expensive and less competitive—think of it as a trade barrier designed to protect domestic industries, but it often disrupts global supply chains.
Take gems and jewelry, for instance: while exports to the US nosedived by a whopping 76% in September compared to the previous year, the overall figures for this sector only slipped by a modest 1.5%. That's because shipments surged to the United Arab Emirates by 79%, Hong Kong by 11%, and Belgium by 8%, according to fresh data from India's Commerce and Industry Ministry. It's a classic example of how diversification—spreading your eggs across multiple baskets—can soften the blow. Similarly, auto components saw a 12% drop to the US, but gains in Germany, the UAE, and Thailand pushed total exports up by 8%. And marine products? They soared 25% in September and 11% in October, fueled by massive jumps to China (nearly 60%), Japan (37%), Thailand (around 70%), and the European Union as a whole. This trend underscores a key strategy: by tapping into India's existing trade ties across Asia and beyond, exporters can cushion the impact if negotiations for a US-India deal drag on.
But here's where it gets controversial—not every sector is bouncing back so effortlessly. Low-profit, labor-heavy industries like cotton clothing, sports equipment, rugs, and leather shoes are facing fierce rivalry from powerhouses such as China and Southeast Asian nations in ASEAN. These areas are struggling to find new homes for their goods, suggesting the tariffs' long-term effects might be patchy, disproportionately hurting small-scale operations scattered across India. Why? These products often run on razor-thin margins, meaning even small disruptions in cash flow can cripple them, especially since setting up factories overseas isn't feasible for many. And this is the part most people miss: while big players adapt quickly, the little guys bear the brunt, raising questions about fairness in global trade.
Let's zoom in on how marine exports flipped the script. Sports goods, which send 40% of their output to the US, haven't nailed alternative markets yet, leading to a 6% overall export slump in October. Cotton garments, battling giants like Vietnam and Bangladesh, saw a 25% plunge to the US, with some upticks to the UAE, Spain, Italy, and Saudi Arabia—but total shipments still fell 6% in September. Leather footwear mirrored this with a 10% decline after a sharp US drop. In response, the Indian government has ramped up efforts to diversify, especially for labor-intensive sectors like seafood. Since the tariffs hit, EU approvals for marine export units have spiked 25%, adding 102 more facilities to the list—bringing the total to 604 eligible Indian units for Europe's market, which ranks as our second-biggest seafood buyer. Many of these green lights had been stalled for over five years, so this is a game-changer, opening doors to high-standard markets that value quality and safety.
Diving deeper into the why and how of diversification: the US tariff hike has compelled Indian sellers to hustle for new territories with renewed vigor. Over the past couple of months, initial indicators show that strengthening bonds with Asian neighbors and other global spots has helped blunt the US export pain. Still, this market-spreading journey is ongoing and far from complete—exporters are even eyeing Russia, where up to 25 Indian fishery units might soon get the nod to ship there, per a government insider.
That said, officials caution that these shifts have boundaries: only about $2 billion in exports might redirect to these emerging markets, compared to the $8 billion-plus that flowed to the US pre-tariffs. Yet, even these baby steps inject vital momentum into broadening our trade horizons. Shrimp exports, hit hardest at $4.88 billion in FY25 (over 65% of total seafood), exemplify the vulnerability of these slim-margin goods to trade jolts.
On a practical note, the Department of Commerce has urged exporters to resist slashing prices too aggressively when chasing new buyers, as that could undermine India's reputation for quality in those markets. Some US-bound shipments persist for restocking needs, but Central American and East Asian rivals like Indonesia and Ecuador are stepping in, benefiting from lower tariffs of 19% and 15%, respectively. Interestingly, those countries have hiked their prices, keeping Indian offerings viable in niches. Looking ahead, EU tariffs—currently around 12%—could ease post-free trade agreement talks, boosting shipments there. In FY24, India sent $1.1 billion in seafood to the EU, and these new approvals might lift exports by 20-25%. Gaining EU clearance isn't just a win; it's a golden ticket for credibility elsewhere, given the bloc's stringent safety protocols. To back this, the government has rolled out Rs 45,060 crore in aid, including Rs 20,000 crore in bank loan guarantees, plus a Budget-launched scheme to ease exporters' burdens.
Overall, diversification is proving to be a lifeline for Indian goods. A recent SBI Ecowrap report highlights how exports are carving out alternatives, potentially shielding India from prolonged US tariff woes. From April to September this year, total merchandise exports rose 2.9%, and US-bound ones grew 13% cumulatively—though September saw a 12% year-on-year dip, possibly due to early stockpiling. The report notes a surge in shares to non-US destinations like the UAE, China, Vietnam, Japan, Hong Kong, Bangladesh, Sri Lanka, and Nigeria across various categories. It provocatively asks: "Could some of these countries be reselling Indian goods to the US?" For example, Australia's slice of US pearl, precious, and semi-precious stone imports jumped to 9% year-to-date through August 2025 from 2% last year, while Hong Kong's rose from 1% to 2%. US imports of these items slowed in August. Meanwhile, falling container volumes from India and China have been offset by rises from Indonesia, Thailand, and Vietnam, signaling rerouting. The report details a 9.4% drop in US imports from its top 10 sources in October 2025 versus 2024, with India's at -18.4% and China's at -16.3%, but positives for Indonesia (10.1%), Thailand, and Vietnam (both 3.6%).
But let's stir the pot a bit: is this diversification truly sustainable, or just a band-aid on deeper trade imbalances? What if rerouting through third countries skirts tariffs in ways that invite retaliation? And are small exporters getting left behind in this race? Share your thoughts in the comments—do you think India should double down on Asia or push harder for a US deal? I'd love to hear if you're optimistic or worried about the road ahead.
Ravi Dutta Mishra, Principal Correspondent at The Indian Express, specializes in trade, commerce, and banking policies with over five years of experience from outlets like Mint and CNBC-TV18.
Anil Sasi, National Business Editor at The Indian Express, covers business and finance, with past roles at The Hindu Business Line and Business Standard; he's a Delhi University alumnus.
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Tags: US-India Trade
