India’s 12% export decline to the US may accelerate its pivot to EU, ASEAN, and Africa.
India’s exports to the US fell 12% in FY25, with shrimp, textiles, and steel bearing the brunt of tariff escalations. For businesses, the shock highlights both risk and opportunity: while concentrated dependence on the US market exposes vulnerabilities, diversification into the EU, ASEAN, Africa, and the Middle East is opening new corridors for growth. The tariff toll may well become the catalyst for India’s next big export pivot.
Marine products, particularly shrimp, have been the hardest hit. The US, which absorbs nearly 60% of India’s shrimp exports, imposed higher anti-dumping duties in early 2025, leading to a 15% fall in volumes. Similarly, Indian textile and apparel shipments contracted by 10%, as tariff hikes combined with rising competition from Vietnam and Bangladesh. In the case of steel and engineering goods, the decline was sharper—nearly 18%—as US trade policy sought to protect domestic manufacturers.
This downturn is not just a statistical dip; it is a structural signal. The US market, long considered a stable anchor for Indian exporters, is becoming more volatile under tariff pressures. For India, the challenge is twofold: cushioning the immediate impact on sectors like marine and textiles, while simultaneously diversifying into new geographies.
Table 1: Sectoral Impact of US Tariffs on Indian Exports (FY25); Source: DGCI&S, Ministry of Commerce (FY25 provisional data)
The 12% decline in India’s exports to the US in FY25 was not evenly distributed—it was concentrated in three critical sectors: marine products, textiles & apparel, and steel/engineering goods. Each sector reveals both the vulnerabilities of India’s export basket and the opportunities for diversification.
Marine products: Shrimp under pressure
Shrimp has long been India’s flagship export to the US, accounting for nearly 60% of total marine shipments. In FY25, however, anti-dumping duties imposed by the US Department of Commerce raised costs for Indian exporters, leading to a 15% fall in volumes. States like Andhra Pradesh and Kerala, which dominate shrimp farming, saw immediate impacts on farmer incomes and processing units. The challenge is compounded by rising competition from Ecuador and Vietnam, which enjoy preferential trade terms.
Textiles & Apparel: Losing Ground to ASEAN
India’s textile and apparel exports to the US contracted by 10% in FY25, as tariff hikes coincided with supply chain shifts toward Vietnam and Bangladesh. The US fashion industry, under pressure to diversify sourcing, increasingly favored ASEAN suppliers with lower tariffs and faster turnaround times. For India, the setback is significant: textiles employ over 45 million workers, making this not just a trade issue but a socio-economic one.
Steel & Engineering Goods: Safeguard Tariffs Bite
The sharpest decline came in steel and engineering goods, which fell by 18%. US safeguard tariffs, aimed at protecting domestic manufacturers, eroded India’s competitiveness in categories like stainless steel and auto components. Exporters in Gujarat and Maharashtra reported shrinking orders, with many turning to the EU and Middle East to offset losses.
Table 2: Sectoral Breakdown of US Tariff Impact (FY25); Source: DGCI&S, Ministry of Commerce (FY25 provisional data)
The sectoral picture underscores a broader truth: India’s export dependence on the US is vulnerable to policy shocks. While marine, textiles, and steel bore the brunt, the ripple effects extend to employment, regional economies, and foreign exchange earnings.
The tariff shock has underscored India’s vulnerability to concentrated export markets. With the US accounting for nearly 18% of India’s total exports in FY25 (DGCI&S), a 12% decline translates into billions in lost revenue. The imperative now is diversification—both sectorally and geographically.
EU: Leveraging Trade Corridors
The European Union has emerged as a promising alternative. India’s exports to the EU grew 7% in FY25, driven by demand for pharmaceuticals, engineering goods, and marine products. Negotiations on the India-EU Free Trade Agreement (FTA), revived in 2024, could provide tariff relief and open new corridors for textiles and apparel. Shrimp exporters, in particular, see opportunities in Spain and Italy, where seafood demand is rising.
ASEAN: Textile and Apparel Opportunities
ASEAN markets, especially Vietnam, Indonesia, and Thailand, are becoming attractive destinations for Indian textiles and apparel. According to the Ministry of Commerce, India’s apparel exports to ASEAN grew 9% in FY25, even as US shipments declined. Regional supply chains, supported by the India-ASEAN Trade in Goods Agreement, offer tariff advantages and faster logistics.
Africa: Engineering Goods and Agro-Exports
Africa is increasingly seen as the next frontier. India’s engineering goods exports to Africa rose 12% in FY25, with demand concentrated in Nigeria, Kenya, and South Africa. Agro-exports, including rice and sugar, also found new buyers in West Africa. The India-Africa Growth Corridor (IAGC), backed by Japan, is expected to further strengthen trade infrastructure.
Middle East: Bridging Energy and Manufacturing
The Middle East remains a steady partner, with UAE and Saudi Arabia absorbing Indian gems, jewellery, and engineering goods. The India-UAE CEPA (Comprehensive Economic Partnership Agreement), signed in 2022, has already boosted bilateral trade by 16%, offering a template for future agreements.
Table 3: India’s Export Growth by region – FY ’25; Sources: DGCI&S, Ministry of Commerce, IBEF (FY25)
The 12% decline in India’s exports to the US in FY25 is more than a temporary setback—it is a wake-up call. Tariff escalations on shrimp, textiles, and steel have exposed the fragility of India’s dependence on a single market, reminding policymakers and exporters alike that resilience lies in diversification.
For marine exporters, the challenge is to build new corridors in Europe and East Asia, where seafood demand is rising. For textiles, ASEAN and Africa offer opportunities to offset US losses, especially as supply chains shift regionally. For steel and engineering goods, the Middle East and EU present viable alternatives, supported by frameworks like the India-UAE CEPA and ongoing India-EU FTA negotiations.
At the policy level, India must accelerate trade agreements, strengthen export financing, and invest in branding to ensure its products remain competitive globally. Tariffs, while disruptive, can serve as a catalyst—pushing India to pivot toward new geographies, diversify its export basket, and reduce vulnerability to external shocks.
Athul Nath MS is the State Head – Kerala at the Trade Promotion Council of India (TPCI), with over 15 years of experience in government relations, investment facilitation, and technology-driven development.
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