Further tariff hike by US on India may hit exports, spur diversification: Experts

New Delhi, Jan 5 (PTI) Any move by the US to further increase tariffs or import duties on Indian goods could severely impact the country's exports to Washington, experts said.

However, they said, it may also push exporters to accelerate diversification and de-risk their overseas markets.

US President Donald Trump, speaking to reporters on Sunday, said that Prime Minister Narendra Modi knew he was unhappy with India's purchases of Russian oil and that Washington could raise tariffs on New Delhi "very quickly." The experts added that as the tariff threat hardens, India must take a 'clean call' on Russian oil.

"Indian exports to the US have already fallen 20.7 per cent between May and November 2025, and further tariff escalation could trigger a steeper decline," economic think tank GTRI said on Monday.

It said that Indian goods are already facing a steep 50 per cent tariff, with 25 per cent tied directly to Russian crude purchases.

"India, unlike China, does not have strategic leverage over the US. China is the biggest buyer of Russian Crude, but the US has ignored it, fearing consequences. India has doubled imports of petroleum crude and products from the US, but the US will ignore this," Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said.

Apex exporters' body FIEO too said that beyond the existing 50 per cent tariff, a further hike by the US "will badly hit Indian exports, particularly in traditional sectors of exports".

"But they can also act as a catalyst for faster diversification and de-risking. While some price-sensitive trade may shrink, such pressures encourage exporters to reduce over-dependence on a single market, explore alternative destinations, and upgrade products and processes," Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said.

He added that the transition may be challenging for some sectors, but in sectors like marine products, where exporters have diversified markets within a short span, it shows that the Indian industry can adapt quickly.

"Similar adjustments are likely across other sectors, ultimately leading to a more balanced, resilient, and globally diversified export portfolio," Sahai said.

After recording negative growth for two consecutive months, India's merchandise exports to the US rose 22.61 per cent to USD 6.98 billion in November despite the steep tariffs on domestic goods.

During the April-November period of this fiscal year, the country's exports to the US increased 11.38 per cent to USD 59.04 billion, while imports rose 13.49 per cent to USD 35.4 billion.

The threat by the US President came at a time when the two countries were negotiating a bilateral trade agreement. So far, six rounds of negotiations have been held for that. The pact includes a framework deal to resolve the 50 per cent tariffs on Indian goods entering America.

On December 23 last year, Commerce Secretary Rajesh Agrawal said India is actively engaged in trade discussions with the US, and hopes to conclude the talks "sooner than later" in a manner that restores deeper market access for domestic exporters.

US Deputy Trade Representative Rick Switzer was recently here with his team to take stock of these talks. The latest round of two-day talks concluded on December 11, 2025.

The Indian industry and exporters are eagerly awaiting the conclusion of negotiations and the announcement of a deal, as high import duties are hurting their shipments to America.

Though they are exploring other markets to maintain their export profits, the US remains a key destination for them, accounting for about 18 per cent of their exports.

As part of the pact, the US is seeking duty concessions on agricultural products such as almonds, corn, and apples, as well as on industrial goods. India has strongly opposed any concessions in the agri and dairy sectors. India has stated that it will not compromise the interests of farmers and MSMEs.

In February 2025, leaders of the two countries directed officials to negotiate an agreement. It was planned to conclude the first tranche of the pact by the fall of 2025. The agreement aims to more than double bilateral trade to USD 500 billion by 2030, from the current USD 191 billion.

The US remained India's largest trading partner for the fourth consecutive year in 2024-25, with bilateral trade valued at USD 131.84 billion, including USD 86.5 billion in exports. PTI RR DRR