Even as the share of the US in India’s merchandise exports has been declining since July 2025, the share of other countries has increased significantly, indicating diversification of the country’s export basket, according to a report by SBI’s Economic Research Department.
The Bank’s economic researchers observed that UAE, China, Vietnam, Japan, Hong Kong, Bangladesh, Sri Lanka and Nigeria are among the top destinations (over FY25) across different product categories.
“So, could it be that some destinations are now exporting more to the USA after procuring from India? Australia’s share in USA’s imports of pearls, precious, semi-precious stones has increased to 9 per cent YTD (year-to-date) in January-August 2025 from 2 per cent during the same period in the previous year.
“Similarly, Hong Kong too registered an increase in share from 1 per cent to 2 per cent to USA during the same period. Meanwhile, when we look at the imports of these commodities by the USA, August shows declining growth,” the researchers said.
The diversification of the export basket comes in the backdrop of the US slapping steep 50 per cent import tariff on Indian goods entering the country.
India’s total merchandise exports in the first half of FY26, inched up 2.9 per cent to $220 billion ($214 billion in H1 FY25).
“Cumulative exports to the US also registered growth of 13 per cent to $45 billion in H1FY26 (there could be some front loading effect in the run up to the steep tariff implementation) from $40 billion in HIFY25….Furthermore, if we look at the share of the US in our exports, it has been declining since July 2025,” the report said.
A break-up of India’s country-wise exports shows that there is a decline in the share of the US in India’s total exports to 15 per cent in September 2025 from 19.8 per cent in FY25.
During the aforementioned period, the share of other countries in India’s total exports increased – UAE (to 9.8 per cent in September 2025 from 8.4 per cent in FY25), China (to 4 per cent from 3.3 per cent) and Hong Kong (to 3.1 per cent from 1.4 per cent).
The SBI economists noted that the buoyancy in trade talks with the US reaffirms India’s desire to come out of the highest (among Asian peers) tariff structure while enhancing capability building across several loops, with the recently concluded LPG deals and strategic defence deals last month bolstering the fair probability of a mutually amicable, fruitful negotiation.
They emphasised that the tariff has impacted India’s labour-intensive sectors such as textiles, jewellery and seafood, particularly shrimp – which operates with a lower margin.
To support the exporters, Government has approved ₹45,060 crore, including ₹20,000 crore in credit guarantees on bank loans. This is aimed at enhancing the global competitiveness of Indian exporters and support diversification into new and emerging markets.
“By enabling collateral-free credit access under CGTMSE, it will be strengthening liquidity, and it also ensures smooth business operations since the tariffs have led to a steep drop in container volume of shipments to US,” the economists said.
