Gems, tractors and rice find new buyers beyond US amid tariff hike: Report

Washington had first imposed 25% tariffs on Indian exports on August 1, later doubling them to 50% from August 27, in response to India’s purchases of Russian crude oil

Indian exporters of rice, tractors and select gems and jewellery products had already begun shifting focus to alternative markets well before US President Donald Trump’s decision to raise tariffs on Indian goods to 50% from August 27, according to an Economic Times report.

Data reviewed by ET show that shipments of specific gems and jewellery articles to the US dropped 20% year-on-year to $642.9 million in the June quarter, while exports to the UAE surged 76% to $1.6 billion. Rice exports to the US dipped 4.8% in the same period but grew in destinations such as Bangladesh, the UAE, Togo and Kenya. Likewise, tractor exports to the US fell 22% in the first quarter of FY26, but rose in markets including Italy, Bangladesh and Belgium.

Officials told ET that over 10 product categories have already seen a diversification trend away from the US. Washington had first imposed 25% tariffs on Indian exports on August 1, later doubling them to 50% from August 27, in response to India’s purchases of Russian crude oil.

In response, the commerce and industry ministry has drawn up a phased diversification strategy, mapping key HS codes, export clusters and potential destination markets, officials told ET. The plan is twofold: in the near term, India will scale up exports to existing partners such as the EU, UK, UAE, Japan, Canada and Australia, while the long-term push will be towards newer geographies across Latin America, Africa, Eastern Europe and East Asia.

An ET analysis highlights that in categories like gems and jewellery and organic chemicals, the tariff gap between the US and the next biggest market is under 10%, while in others it goes up to 15%. These products account for roughly one-third of India’s exports to the US, leaving room for rerouting to other destinations.

Although mineral fuels remain a key export item to the US, ET noted that America makes up only 6.3% of India’s fuel shipments, compared with nearly 20% going to the Netherlands. The UAE is already the second-largest market for Indian plastics, steel products and textile made-ups, while the UK can absorb more pharmaceuticals and apparel. Similarly, Singapore stands as the second-largest buyer of Indian steel boilers and machinery after the US.

“For machinery, gems and jewellery, organic chemicals and minerals, it could be easier for India to divert exports to other markets that already account for a sizable share in our outbound shipments in these sectors,” Sakshi Gupta, principal economist at HDFC Bank, told ET.