Wednesday 22 / October / 2025
NEW DELHI: While the United States remains India's largest export destination, most of the major items shipped to the US are also exported to more than 15 other key markets; and exports to these destinations have been growing at an average rate of over 19% during FY2022–FY2025.Therfore, India has a diversified export market.
The USA has doubled tariffs beyond 50% on Indian labour-intensive goods like textiles an apparels, agriculture and food processing, gems and jewellery, leather and footwear, electrical machinery, and shrimp products, among others. While sectors such as pharmaceuticals, electronics, and petroleum are spared, nearly 50% of total USD 86 billion merchandise exports to US face steep levies
India’s export performance over the past decade has been impressive, with the country emerging as a key player in global trade. Among all destinations, the United States has consistently remained India’s largest export partner, accounting for shipments worth about USD 86 billion in 2024–25.
This long-standing relationship covers a wide range of goods, including machinery, pharmaceuticals, textiles, and gems and jewellery. However, over-reliance on a single market brings inherent vulnerabilities, as any disruption in trade relations, shifts in domestic regulations, or geopolitical tensions can have a cascading effect on India’s export earnings. It is in this context that India’s recent diversification efforts assume significance, with a growing number of countries showing stronger demand for Indian products and registering export growth rates far exceeding those of the US.
Although exports to the United States are growing at a respectable average of 15 percent between FY2022 and FY2025, the expansion is far less dramatic compared to the pace witnessed in several other countries. For instance, exports to the Netherlands, now valued at USD 22 billion, have recorded a remarkable annual growth rate of 42 percent in the same period. Similarly, India’s trade with the United Arab Emirates has surged, reaching USD 36 billion with average growth of 24 percent, supported by the Comprehensive Economic Partnership Agreement between the two nations. The United Kingdom, Australia, Saudi Arabia, South Africa, Brazil, Mexico, and Turkey have also emerged as robust markets, each demonstrating double-digit growth rates that not only outpace exports to the US but also promise long-term sustainability. Collectively, exports to these major destinations amounted to USD 162 billion in 2024–25, highlighting the potential of a diversified trade portfolio.
The United Arab Emirates is another pillar of India’s diversification strategy. With exports now at USD 36 billion, the UAE stands as India’s second-largest trading partner after the US. Its significance goes beyond bilateral trade, as Dubai and Abu Dhabi act as global re-export hubs, enabling Indian products to reach Africa, Europe, and West Asia. Gems and jewellery, petroleum products, and engineering goods dominate the trade basket, but the CEPA has opened new avenues for sectors such as textiles, agriculture, and food processing. The rapid expansion in this corridor reflects not just strong demand but also policy-driven facilitation that has made market access easier for Indian exporters.
The United Kingdom, too, has shown steady expansion in its trade relationship with India. With exports standing at USD 14 billion and growing at an average of 15 percent annually, the UK presents an attractive alternative. Post-Brexit, London has been actively seeking new economic partnerships, and India has emerged as a priority partner. Pharmaceuticals, apparel, IT services, and engineering goods are the key drivers of exports, and the possibility of a bilateral trade agreement holds the promise of accelerating growth further.
In the Gulf region, Saudi Arabia has emerged as a strategic partner with exports worth USD 11 billion, growing at an average of 20 percent per year. Although traditionally linked to energy trade, the relationship has been evolving. Under Saudi Arabia’s Vision 2030, which emphasizes economic diversification, India’s pharmaceutical, chemical, and manufacturing exports are finding new footholds. Similarly, South Africa, with USD 7 billion in exports and 20 percent annual growth, provides India with not only a large domestic market but also a gateway to the African continent. Vehicles, mineral fuels, and pharmaceuticals dominate this relationship, and with Africa projected to be one of the fastest-growing consumption markets in the coming decades, India is well placed to deepen its trade ties further.
Australia has also emerged as a promising destination, with exports of USD 8 billion and a striking annual growth rate of 27 percent between FY2022 and FY2025. The India-Australia Economic Cooperation and Trade Agreement has provided a strong policy foundation for this surge. Pharmaceuticals, machinery, and textiles dominate exports, but there is growing interest in collaboration in areas such as renewable energy and education services, which may further boost India’s trade footprint. Beyond these traditional partners, emerging markets such as Turkey, Brazil, and Mexico have demonstrated significant potential, with exports to these destinations growing between 17 and 21 percent annually. These economies form an important part of India’s South-South trade expansion strategy, reducing dependence on advanced Western markets and creating more balanced trade dynamics.
What makes this diversification particularly feasible is that India’s top 10 export items to the US, which account for nearly 71 percent of total exports to that country, are also in high demand across these fast-growing alternative destinations. Electrical machinery and equipment worth USD 16 billion in exports to the US, for instance, also find markets in the Netherlands, UAE, Singapore, South Korea, and the UK. Pharmaceuticals, which bring USD 10 billion from the US alone, are equally competitive in Australia, Saudi Arabia, Brazil, and South Africa. Gems and jewellery worth USD 10 billion in the US market dominate in the UAE, Belgium, Italy, and the UK as well. Similarly, nuclear reactors, organic chemicals, textiles, and apparel exported to the US are already gaining traction in Europe, Latin America, and Asia. This diversification in export baskets ensures that Indian businesses do not need to make a drastic shift in production but can leverage existing strengths to expand market access.
To capitalize on these trends, India has adopted a multi-pronged strategy. Strengthening trade agreements with the promising trade partners. The CEPA with the UAE and the ECTA with Australia have already proven to be catalysts, and similar pacts with the UK, the European Union, and Latin America could provide tariff advantages and reduce regulatory barriers. The Netherlands offers access to the wider European Union, the UAE connects India to Africa and West Asia, while South Africa provides a platform for deeper engagement with Africa. These regional entry points will help India maximize its global trade footprint.
Another essential element is diversifying the export basket itself. While gems, machinery, and pharmaceuticals will remain the backbone, India is pushing aggressively into emerging sectors such as renewable energy technologies, digital services, green chemicals, and agricultural products. Global demand is shifting rapidly toward sustainability and innovation, and Indian exporters are also aligning with these trends to stay competitive.
In conclusion, India’s export story is clearly at a turning point. While the US will continue to be a vital partner, the extraordinary growth of exports to countries such as the Netherlands, UAE, Australia, Saudi Arabia, South Africa, Brazil, and Mexico demonstrates that India is no longer dependent on a single market. These nations are not only absorbing India’s product basket but also offering avenues for expansion into advanced technologies and sustainable products. By consolidating existing gains, pursuing strategic trade agreements, and building new sectors of export strength, India can ensure that its future growth is anchored in a diversified, resilient, and globally competitive trade portfolio. The next decade could well mark India’s transformation into a truly balanced exporting nation, less vulnerable to shocks and more confident in its role as a global trading power.
