Business: Due to America’s 50 percent higher tariff, there may be a huge decline in India’s merchandise exports in the December quarter of the current financial year 2025-26. To avoid this loss, India will have to look for alternative markets in the near future.
According to the report of the Center for Monitoring Indian Economy (CMIE), India has been facing pressure on the export front for two years due to global uncertainty and other external challenges. The situation may become more serious due to the shutdown of the Trump government, because America is a major trading partner of India. If India does not explore alternative markets in the near future, its exports could decline by five per cent in the December quarter, which would be equivalent to $103.3 billion.
There was a decline of about three percent in India’s exports in the financial year 2023-24, while it remained almost stable in 2024-25. A slight growth of 2.3 percent was recorded in exports from India in the April-August period of the current financial year 2025-26. During this period, 18 percent more exports were made to America.
Need to increase trade with China
Interestingly, during the April-August period of 2025-26, exports from India to China and Hong Kong registered an annual increase of 19.6 percent and 26.3 percent respectively. The CEO of NITI Aayog had recently said that India needs to increase its exports with China. However, no amount of diversification measures are likely to offset the projected decline in exports to the US. One-fifth of India’s total exports are sent to America, which is much higher than other countries.
Electronics-Pharma can compensate for the loss
Exports of gems, jewellery, textiles and marine products are expected to be most affected. Other sectors including machinery and equipment, transportation equipment, organic/agrochemicals, leather and plastics may also be significantly impacted. Apart from these, petroleum exports may also decline in the December quarter due to fall in prices in the global market.
The overall decline in exports can be partially compensated by two key sectors, electronics and pharmaceuticals. These sectors are expected to perform well on the export front.
Gems and jewelery exports may decline by 20.9 percent
CMIE estimates that exports of gems and jewelery from India may decline by 20.9 per cent year-on-year to $5.9 billion in the December quarter. There is a possibility of a five percent decline in it in the September quarter. It is a serious matter that this sector has been facing decline in exports for the last three years.
