India's Exports Rise 6% Despite US Tariff Challenges

Despite facing significant challenges from steep tariffs imposed by the United States, India's goods exports showed remarkable resilience in September, growing by 6% to reach $36.38 billion. This figure marks an increase from $34.08 billion in the same month the previous year, as reported by the Ministry of Commerce and Industry.

Commerce Secretary Rajesh Agarwal acknowledged the tumultuous year for trade, which has necessitated a recalibration of supply chains. He emphasized that the first half of the current financial year has seen an uptick in both goods and services exports compared to the previous year, alongside a reduction in the trade deficit.

The context of this growth becomes more noteworthy against the backdrop of the tariffs imposed by the US. On July 31, former President Donald Trump enacted 25% reciprocal tariffs on Indian goods under the International Emergency Economic Powers Act. This was followed by an additional 25% penal tariff on August 6, primarily targeting India's imports of Russian oil, with the new tariffs taking effect on August 27.

In the fiscal year 2024-25, India exported goods worth $87 billion to the US, and the Finance Ministry estimates that these tariffs could affect approximately 55% of these exports. This is particularly concerning for the textile industry, which relies heavily on the US market.

A recent survey by the Confederation of Indian Textile Industry (CITI) revealed that nearly one-third of textile businesses reported a significant drop in turnover, with many facing reductions of over 50%. This downturn has been attributed to US buyers either seeking discounts or canceling orders altogether.

Moreover, about 85% of the survey respondents indicated an inventory buildup due to the decline in orders. To remain competitive, many have had to offer discounts averaging around 25%, further squeezing their margins.

As the United States remains the top export destination for India’s textile and apparel products, accounting for approximately 28% of India's global textile and apparel exports, the impact of these tariffs will be crucial to monitor as the industry navigates these challenging waters.