India Outsmarts Trump: How India Sailed Through US Tariffs By Exporting Goods To Alternative Destinations | Economic Survey

New Delhi: Even as US President Donald Trump slapped high tariffs on India, the Economic Survey of India for 2025-2026 illustrates that our economy weathered the pressure by cutting exports to the US and ramping up shipments to alternative markets.

India currently faces an effective export tariff of nearly 50 per cent on goods sent to the US, among the highest levied on any trading partner.

While these tariffs have impacted certain labour-intensive and small-scale sectors, overall export performance has stayed stable due to growing shipments to regions such as the UAE, Europe and Asia. Here are alternative destinations where India increased its exports:

Gems And Jewellery Sector

In the gems and jewellery sector, the US’ share in India’s total exports decreased to 18.7 per cent from 33.7 per cent. The share of UAE and Hong Kong in India’s total exports of gems and jewellery increased to 53.6 per cent from 41.4 per cent during the period.

The share of UAE and Hong Kong in India’s total exports of gems and jewellery increased to 53.6 per cent from 41.4 per cent during the period. Exports of gold and precious metal jewellery to Bahrain and Saudi Arabia have risen sharply. Meanwhile, exports of pearls, precious and semi-precious stones to Canada, Mexico and China jumped.

Exports from this sector are continuing to benefit from the India-UAE Comprehensive Economic Partnership Agreement (CEPA).

Marine Products

A similar trend is visible in marine products, where exports to the US declined by 5.7% even as global exports grew over 16%. Asian markets such as Vietnam, Malaysia and China emerged as major destinations, alongside sharp increases in exports to Denmark, Russia, Poland and Sri Lanka.

Auto Components/Parts

For auto components and parts, exports to the US fell by 6.8%, while global exports rose 6%. The UAE has emerged as a key growth market, with its share in India’s auto component exports rising to 5.3% from 3%. Strong growth was also recorded in Germany, Belgium, Slovenia, Brazil, Nepal, and Bangladesh, indicating a broad-based diversification.

Textile

The textiles and allied products sector also saw declining exports to the US, down 6.1%, while global exports grew marginally. Cotton fabrics and made-ups found new demand in African nations such as Nigeria, Senegal, Sudan, and Uganda, while yarn and ready-made garments saw rising exports to the UAE, Germany, the Netherlands, Spain, and Poland. In silk carpets, the US share halved over the period, while the UAE’s share jumped sharply, underlining a structural shift in demand.

Pharmaceutical Products

In pharmaceuticals, exports to the US grew modestly overall, but witnessed volatility. The Survey highlights a sharp decline in October 2025 amid tariff-related uncertainty, followed by a rebound in November. Meanwhile, exports of AYUSH and herbal products surged to Vietnam and Nigeria, while formulations, biologics, and bulk drugs saw higher shipments to countries such as Nigeria, Mexico, the Netherlands, and Brazil. Surgical exports recorded strong growth in Sri Lanka, Nigeria, and Saudi Arabia.

Paper & Leather Products

Exports of paper products and leather goods also reflect diversification pressures. Paper exports to the US declined, with alternative markets failing to fully offset the drop. However, leather footwear, garments, and goods saw rising demand in Austria, France, Colombia, Chile, Norway, and the UAE.

The Economic Survey suggests India’s export strategy is becoming more resilient. The report shows a clear divergence in export trends, with shipments to the US declining year-on-year across several sectors, even as India’s total global exports continued to register positive growth.

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