India’s Export Resilience Tested: How Sectors Are Adapting to US Tariff Shocks

India’s export ecosystem is navigating one of its most significant stress tests in recent years. Following the imposition of steep US tariffs on a range of Indian products in late August 2025, sectors such as marine products, auto components, and gems & jewellery have faced immediate disruptions. The tariff hikes, reaching nearly 50 percent on certain categories, were aimed at countering perceived trade imbalances. While this represents a direct challenge to exporters dependent on the US market, it has also accelerated a broader realignment of India’s global trade strategy, forcing companies to diversify their markets and rethink operational resilience.

Redirecting Exports: The Silver Lining

Despite sharp declines in US-bound shipments gems and jewellery, for instance, saw a staggering 76 percent drop in September year-on-year Indian exporters have demonstrated remarkable agility in redirecting goods to alternative markets. Key destinations absorbing this redirected trade include the UAE, Hong Kong, Belgium, Germany, Thailand and China. Gems and jewellery exports to the UAE surged nearly 79 percent, while auto components found new buyers in Germany, UAE and Thailand, offsetting a 12 percent fall in US exports with an overall 8 percent growth in total shipments.

Marine products, in particular, have emerged as a standout success story. Exports rose 25 percent in September and 11 percent in October, with China, Japan, Thailand and the European Union emerging as significant buyers. Strengthened regulatory clearances, including over 100 additional Indian seafood units gaining European Union approvals, have bolstered confidence and market access. Such diversification demonstrates the strategic importance of building multiple trade linkages and not relying solely on traditional markets.

Sectoral Resilience and Vulnerabilities

The ability to redirect exports successfully is not uniform across sectors. High-margin, compliance-intensive industries such as marine products, auto components, and gems & jewellery have exhibited resilience, leveraging quality standards, robust logistics, and existing global networks. Their capacity to absorb market shocks underscores the structural strength of sectors with well-established quality assurance and certification systems.

In contrast, labour-intensive, low-margin sectors textiles, garments, sports goods, carpets and leather footwear face persistent challenges. Their dependence on traditional markets like the US, combined with thin profit margins, limits pricing flexibility. Alternative markets are often saturated or dominated by other Asian exporters, particularly from Vietnam and Bangladesh. As a result, these sectors risk sustained contraction unless proactive measures are taken to enhance competitiveness, quality standards and market diversification.

Policy Interventions and Strategic Support

The Indian government has recognized the imperative of supporting exporters during this transition. Efforts have focused on encouraging exporters to avoid deep discounting while redirecting shipments, preserving India’s pricing integrity and long-term market positioning. Additional policy support includes facilitating EU certifications for marine products, providing export-finance mechanisms and promoting trade diplomacy to secure new markets in Asia, Europe, and West Asia.

These measures highlight the critical role of government interventions in enabling SMEs and labour-intensive manufacturers to withstand tariff shocks. Structured support can mitigate immediate losses while creating the conditions for long-term competitiveness. Without such frameworks, smaller players may struggle to cope with redirected supply chains and the accompanying operational complexities.

The Medium-Term Opportunity

The US tariff imposition, while disruptive, also presents an opportunity for Indian exporters to position themselves strategically in global supply chains. With rising geopolitical tensions, supply-chain relocations from China and ASEAN countries are likely over the next two to three years. Indian marine, auto components and jewellery sectors, by virtue of their established compliance, production quality and logistical capability, are well-placed to capture a significant share of this relocation.

For labour-intensive industries, the path is more challenging but not insurmountable. Investment in quality assurance, operational modernization, digitalization of supply chains, and certifications can open doors to new markets across Europe, the Middle East, Africa, and Latin America. Additionally, collaborative export strategies, regional clustering and skill development initiatives can enhance resilience and competitiveness for these sectors.

Strategic Lessons for Indian Exporters

The recent trade shock underlines several key lessons for Indian exporters:

1. Diversification is critical: Reliance on a single market is risky. Building alternative trade corridors and engaging with emerging and established markets is essential.
2. Quality and compliance are non-negotiable: Sectors that maintain global-standard certifications are better equipped to pivot quickly to new markets.
3. Policy alignment is essential: Exporters need access to supportive credit, trade facilitation and diplomatic channels to overcome market entry barriers.
4. SME resilience matters: smaller manufacturers, often more vulnerable, require structured interventions financial, regulatory and technical to adapt to global market shifts.

India’s exporters are demonstrating adaptability in the face of sudden external shocks, with high-margin sectors like marine products, auto components and gems & jewellery effectively rerouting trade and sustaining growth. However, labour-intensive and low-margin sectors remain exposed, highlighting the need for targeted policy support and strategic modernization.

The US tariff imposition serves as both a warning and an opportunity. It underscores the importance of long-term export strategy, market diversification and operational resilience. Indian exporters who invest in quality, compliance and alternative trade partnerships are likely to emerge stronger, positioning India as a more agile and competitive player in the global trade landscape.

The coming months will test the robustness of these strategic pivots, and the effectiveness of government support mechanisms will be crucial in shaping India’s export trajectory in a rapidly evolving global environment.