Economic Survey 2026 Flags Shift in India’s Export Focus Away From US Amid Tariff Impact
On January 29, Finance Minister Nirmala Sitharaman presented the Economic Survey of India for FY 2025–26 in Parliament, officially setting the stage for the upcoming Union Budget, scheduled to be tabled on February 1.
The survey highlighted a noticeable shift in India’s export strategy, with exporters increasingly reducing their dependence on the United States and expanding into alternative markets such as the Middle East, Europe, Africa, and parts of Asia. This transition comes amid weakening US demand across several key sectors, particularly gems and jewellery.
According to export data for April–November FY26, while the US remains an important trading partner, its share in India’s exports has declined as demand softened. Indian exporters have responded by diversifying shipments to West Asia, Europe, Africa, and select Asian economies to sustain overall export growth.
The gems and jewellery sector recorded the sharpest fall in exports to the US, declining by 44.3% year-on-year, even as global exports from the sector edged up by 0.6%. The US share in India’s gems and jewellery exports dropped significantly to 18.7% from 33.7% a year earlier. In contrast, exports to the UAE and Hong Kong rose sharply, together accounting for 53.6% of total shipments.
The survey noted strong growth in gold jewellery exports to Bahrain and Saudi Arabia, while pearls and precious stones saw increased demand from Canada, Mexico, and China. These gains were supported by the India-UAE Comprehensive Economic Partnership Agreement (CEPA) and positive expectations surrounding the proposed India-UK Free Trade Agreement.
In the marine products segment, exports to the US declined by 5.7%, but overall shipments grew by 16.1%, driven by robust demand from Vietnam, Malaysia, China, and several European countries, including Belgium, Germany, and Poland.
Auto component exports to the US fell by 6.8%, even as global exports from the sector rose by 6%. Growth was supported by higher shipments to the UAE, Germany, Belgium, Slovenia, Myanmar, and Brazil. The UAE’s share in India’s auto component exports increased from 3% to 5.3%, underlining its growing importance as a trade destination.
The textiles and allied products sector also witnessed a 6.1% drop in exports to the US. However, diversification into African, European, and West Asian markets helped stabilize overall export performance.
The pharmaceuticals sector demonstrated resilience, with global exports rising 6.5% despite ongoing tariff-related uncertainties in the US market. Increased demand from Africa, Latin America, and Europe helped offset fluctuations, the survey noted.
Overall, the Economic Survey underscored a strategic realignment in India’s export landscape, as businesses work to reduce over-reliance on the US and build a more balanced global trade presence.
Why the India-US Trade Deal Matters
Experts highlighted that the US remains India’s most significant strategic and economic partner, influencing export growth, technology collaboration, capital inflows, and India’s role in global supply chains. A comprehensive trade agreement with the US—often described as the “father of all deals” due to the size of the American economy—could significantly enhance trade integration and supply chain diversification.
Such a deal would also provide long-term export stability and predictability, key indicators closely tracked by foreign institutional investors when allocating capital to emerging markets, experts believe.
0 Comments