How Did India Manage a 6.7% Export Growth Despite US Tariff Shock?

India’s merchandise exports grew 6.7% year-on-year in September 2025, reaching $36.38 billion, even as the country faced the full impact of 50% US tariffs. This resilience came from strategic export diversification and stellar performance by electronics and marine products. The growth occurred despite exports to the US falling 12% to $5.43 billion in September, marking a sharp sequential decline of 21% from August. The US imposed a 25% reciprocal tariff on 7 August 2025, followed by an additional 25% penalty tariff on 27 August, bringing the total to 50%. This affected around 55% of India’s export basket to the US, including textiles, gems, leather, and engineering goods.

What cushioned the blow was India’s deliberate shift towards alternative markets. Exports to Spain, the UAE, China, and Bangladesh registered steady sequential gains. Electronic goods exports surged 50.5% to $3.11 billion, driven by mobile phone shipments that rose 95% in September alone. Marine product exports, initially expected to be the worst hit, defied expectations and grew 23.4%, reflecting robust market diversification. Engineering goods posted 2.9% growth, and rice exports rose 33.2%. Hong Kong saw 26.19% growth, China registered 19.65% growth, and Germany recorded 11.73% growth in exports.

India’s export strategy focused on expanding into 50 countries instead of relying on a few key markets. The government accelerated free trade agreement negotiations with the EU, UK, and EFTA to secure preferential access, while strengthening integration with ASEAN and Indo-Pacific blocs. The IMF upgraded India’s growth forecast for FY26 to 6.6%, up from 6.4%, citing strong domestic momentum that offset the tariff impact. Continued diversification and support for labor-intensive sectors remain critical as India navigates this challenging trade environment.