As the United States imposes a 25 percent tariff plus penalty on Indian imports starting August 1, a Moneycontrol analysis shows that more than one-third of India’s trade with the US is already shielded, and recent Free Trade Agreements (FTAs) with the UK, UAE, and Australia could help absorb much of the remaining exposure.
Of the over $80 billion worth of exports that India sent to the US in 2024, nearly 30 percent was in categories likely to remain unaffected by the new tariff regime. These include segments where the US has offered exemptions—notably smartphones and pharmaceuticals—or where tariff parity with other major trading partners is expected, such as metals like steel, aluminium, and copper.
In addition, India held a dominant market share (60% or more) in about $5 billion worth of US imports, making substitution difficult for American buyers. These products further reduce India's exposure to sudden trade shocks.
What about the remaining $50 billion?
While around $50 billion of India’s exports to the US are theoretically vulnerable to tariff hikes, the actual risk is more nuanced.
Leaving out the $10 billion of categories where the US is a dominant importer, India could find alternative markets through newer trade partners.
India's recently signed FTAs with the United Kingdom, United Arab Emirates, and Australia present significant opportunities to redirect trade in case of continued tariff pressure from Washington.
For example, nearly $4.4 billion worth of trade—currently directed to the US—is in categories where just the UK alone has the capacity to absorb Indian exports.
Take knitted T-shirts, where India's exports to the US stood at $495 million in 2024. In comparison, the UK imported $767 million worth of the same item from other countries, indicating ample room for redirection. Notably, the US accounted for 30 percent of India’s global T-shirt exports.
In routers, modems, and switches, where US demand made up only 19 percent of India’s total exports ($172 million), Australia’s imports from other countries stood at $2.7 billion, and the UAE’s at $2.5 billion, offering room for realignment.
India’s FTA partners collectively have significant headroom to absorb a portion of the trade currently routed through the US, reducing overall vulnerability. The UK alone had higher import capacity across a range of items than India’s total exports to the US in those categories.
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