US tariffs failed to derail India’s exports. What is keeping shipments growing?

Higher US tariffs have raised costs and squeezed margins for some Indian exporters, but they have not stopped shipments from growing. India’s exports to the United States rose 11.1 per cent to $50.81 billion in April-September 2026, supported by expanding electronics manufacturing and stronger shipments across several key sectors.

According to data released by the Commerce and Industry Ministry, exports to the US increased from $45.73 billion in the corresponding period last year. Higher shipments of electronic goods, petroleum products, engineering goods, chemicals and agricultural products have helped sustain the growth, even as businesses navigate trade barriers and uncertainty over a proposed India-US trade agreement.

While higher duties can make Indian products more expensive for American buyers, the effect varies across industries depending on the products covered, the availability of exemptions, production costs and the ability of exporters to remain competitive.

Electronics and manufacturing support exports

The expansion of electronics manufacturing, particularly smartphones, has emerged as an important source of support for Indian exports. Petroleum products, engineering goods, chemicals and agricultural products have also contributed to the increase in shipments to the US.

Anand K Rathi, co-founder of MIRA Money, said export performance depended on the competitiveness of individual industries, currency movements and changes in global supply chains.

Global companies seeking to diversify sourcing beyond China have created opportunities for Indian manufacturers. However, the extent to which India benefits depends on its ability to offer competitive prices, reliable delivery and sufficient production capacity.

Demand can also remain resilient when American buyers have limited alternatives or when Indian suppliers can offer competitive prices despite additional trade costs. Stronger performance in some export categories can offset weaker growth in others, allowing overall shipments to increase even when particular industries face pressure.

The expansion of domestic manufacturing is another factor supporting this trend. As Indian manufacturers increase production capacity and deepen their participation in international supply chains, they can serve overseas markets across a wider range of products.

Why tariffs have not affected every sector equally

The impact of US tariffs depends partly on the duties applicable to individual products. Some categories receive exemptions from additional levies, while others face higher costs that can make their products less competitive in the American market.

Hemant Sood, founder and managing director of Findoc, said expanding smartphone manufacturing and tariff exemptions had helped support export resilience.

Sood said around 45 per cent of exports, according to government estimates cited in his comments, fell outside the additional 10 per cent Section 301 duty, including smartphones and generic medicines. The levy applies in addition to normal customs duties on covered products.

The precise scope of these exemptions is important because the tariff treatment of different products can vary. Exemptions from one additional duty do not necessarily mean that a product is free from other applicable tariffs.

For exporters of textiles, leather and seafood, higher costs can lead American buyers to seek discounts or consider alternative suppliers. This leaves businesses with less room to protect their margins, particularly when production costs are already elevated.

“The real test is whether higher shipments translate into stronger profitability and employment,” Sood said.

Subodh Dandawate, associate director of regulatory advisory at Nexdigm, said exemptions from Section 301 duties and a weaker rupee had strengthened export competitiveness.

However, he noted that margin pressures continued in textiles and gems and jewellery, despite the stronger performance of electronics, chemicals and pharmaceuticals.

Piyush Jhunjhunwala, founder and chief executive of Stockify, also cautioned that higher tariffs could make purchases more expensive for American customers and adversely affect the profitability of Indian exporters in textiles and gems and jewellery.

Can a weaker rupee help Indian exporters?

Currency movements offer another potential source of support. When the rupee weakens against the US dollar, Indian goods can become cheaper for overseas buyers in dollar terms, provided exporters do not raise their dollar prices to offset the change.

Exporters receiving dollar revenues may also gain when those earnings are converted into rupees. However, the benefit depends on how much of their production costs are linked to imported components, machinery or raw materials.

A weaker rupee can increase these input costs, limiting the advantage for manufacturers that depend heavily on imports.

Rathi said currency movements, together with differences in sectoral competitiveness and changes in global sourcing, were helping explain why some Indian export categories continued to perform well despite tariff disruptions.

Rising imports narrow India’s trade surplus

India’s exports have continued to grow even as imports from the US have increased at a faster pace.

According to figures cited by Dandawate, imports from the US rose 26 per cent during April-September 2026. The increase narrowed India’s bilateral merchandise trade surplus, even as exports to the American market expanded.

Higher imports do not negate the growth in Indian shipments, but they show why export performance alone does not provide a complete picture of bilateral trade.

What the proposed India-US trade deal could change

The proposed bilateral trade agreement remains an important factor in the outlook for Indian exporters. Predictable market access could help businesses plan production, negotiate contracts and make investment decisions with greater confidence.

Commerce Secretary Rajesh Agrawal said negotiations were moving in the right direction, with both countries working towards concluding the agreement at the earliest.

The eventual impact will depend on the agreement’s final terms, including the treatment of individual products and the tariff concessions available to Indian exporters. Greater clarity could help businesses assess their costs and competitiveness in the American market.

However, a trade agreement alone cannot guarantee stronger exports. Indian manufacturers will also need to improve productivity, diversify their customer base and ensure that their products remain competitive against suppliers from other countries.

Sood said predictable market access, affordable export finance and diversification across buyers and destinations would be important to sustaining growth.

Jhunjhunwala similarly said exporters would need to diversify markets, improve manufacturing efficiency and strengthen trade conditions with the US.

The next test is profitability

India’s exports to the US have continued to rise despite tariff-related disruptions, supported by electronics manufacturing, shipments across several key sectors and changes in global supply chains. The increase underlines the resilience of Indian exporters, but it does not establish that the impact of tariffs has been limited.

Some businesses have been able to benefit from expanding production and favourable tariff treatment, while others are under pressure to reduce prices and absorb additional costs.

The proposed India-US trade agreement could provide greater clarity on market access, but sustained export growth will also depend on manufacturing competitiveness, affordable finance and the ability to diversify markets.