Indian Exports to US Slowing Down, Exporters Seek To Diversify: Commerce Ministry Source

Indian exports to the USA have slowed down in the last couple of months and the exporters are likely to diversify their market reach and plan to tap on other countries amidst global trade uncertainties arising due to Trump's threat of reciprocal tariff, confirmed a source from the Ministry of Trade and Commerce on Tuesday.

Donald Trump’s ongoing threats of reciprocal tariff impositions have left policymakers on high alert, with recent reports indicating that India’s export sector is already experiencing certain level of repercussions. "The momentum of exports from India to the USA has comparatively slowed down in the last two months. Indian exporters are also looking to diversify their market," as per the source from the Ministry of Commerce.

The US president has announced plans to introduce reciprocal tariffs starting April 2, a move to raise import taxes to align with the tariffs levied by trading partners. According to a Bloomberg report, economists have already cautioned that India could face severe repercussions, given the significant disparity in import duty rates between the two nations, which average a 10 percentage point difference.

There has been a growing fear that the shift in tariff policy by the USA could have a considerable impact on India’s export sector, as the US remains a key destination for Indian goods. However, Federation of Indian Export Organisations (FIEO) assured that sales from the Indian exporters won't stop, even if there is a temporary slow down.

"The only impact that you're seeing is that the buying has been a little more cautious. So, if a customer was to place 100,000 units, they might place 30,000, 50,000, holding back to see, " said Israr Ahmed, Vice President, FIEO.

However, according to FIEO, India is unlikely to face any major headwinds because even if the tariffs are imposed, the Indian exporters will pass on the extra cost to the product and the prices of the products will go up in the USA market. But the export will continue as US consumers are willing to buy the same.

"Even if the tariff is 10% duty or 5% duty, even America is imposing on any product, the sales will not stop. The person or the companies who are involved in this, they are not going to stop their business. They will increase the price. That's what the inflation risks that they are talking about, " said Ashwani Kumar, President, FIEO. He explained that if Indian companies are selling a product at $100, they will have to sell it at $110 or $120. And people will absorb and customers will keep on buying.

India's Commerce and Industry Minister, Piyush Goyal, was in the United States last week for the Bilateral Trade Agreement (BTA) talks with American officials including US Trade Representative (USTR) Jamieson Greer and US Commerce Secretary Howard Lutnick.