India’s merchandise exports are showing signs of broader market diversification as shipments to the United States have weakened in recent months, according to a new research note by the State Bank of India (SBI).
“Interestingly, the share of India’s merchandise exports to other countries during this period has increased significantly, indicating the diversification of our exports basket with the UAE, China, Vietnam, Japan, and Hong Kong, as also Bangladesh, Sri Lanka, and Nigeria being among the top destinations (over FY25) across different product categories,” the report said.
SBI’s Ecowrap report said total merchandise exports rose 2.9 percent year-on-year to USD 220 billion in April–September 2025, compared with USD 214 billion in the same period last year. Exports to the US also grew 13 percent to USD 45 billion during the six-month period .
However, the report flagged possible front-loading of orders, noting that September exports to the US contracted by about 12 percent year-on-year, reported PTI.
The share of the US in India’s export basket has been declining since July 2025, falling to 15 percent in September.
SBI attributed the trend largely to weaker demand for marine products, precious and semi-precious stones, ready-made cotton garments, and cotton fabrics.
The report also examined shifts in global trade flows, suggesting that some countries may be re-exporting Indian goods to the US.
It highlighted that Australia’s share in US imports of pearls and precious and semi-precious stones climbed to 9 percent in January–August 2025, from 2 percent a year earlier. Hong Kong’s share similarly rose from 1 percent to 2 percent over the same period.
SBI noted that ongoing trade discussions underscore India’s efforts to address its relatively high tariff structure while strengthening domestic capabilities.
Recent LPG and defence agreements were cited as developments that could improve the prospects of favourable bilateral negotiations.
High tariffs, the report said, continue to weigh on India’s labour-intensive sectors, including textiles, jewellery, and seafood—particularly shrimp, where margins are thin.
To support exporters navigating these pressures, the government has cleared a package worth Rs 45,060 crore, including Rs 20,000 crore in credit guarantees on bank loans.
The measures aim to bolster global competitiveness, ease access to collateral-free credit through the CGTMSE framework, and help firms expand into new and emerging markets.
SBI added that improved liquidity will be essential for sustaining operations, especially as tariff-related challenges have contributed to a sharp fall in container shipment volumes to the US.
