NEW DELHI: India is stepping up efforts to secure new trade agreements to open alternative markets for its exporters, as negotiations with the United States remain stalled following steep tariff hikes imposed by Washington.
Relations between New Delhi and Washington deteriorated sharply in August after U.S. President Donald Trump raised tariffs on Indian goods to 50%, a move aimed at curbing India’s purchases of Russian oil.
The tariffs have raised concerns over potential job losses and threatened India’s ambition to emerge as a global manufacturing and export hub.
The pressure has prompted India to diversify its export destinations beyond its largest market, experts say.
India signed or operationalized four trade agreements last year, including a landmark pact with Britain, marking its fastest pace of trade dealmaking in years. Negotiations are now underway with the European Union, the Eurasian Economic Union (EAEU), Mexico, Chile and the South American Mercosur bloc, either to forge new agreements or expand existing ones.
“If successful, India would have trade arrangements with almost every major economy,” said
Ajay Srivastava of the New Delhi-based Global Trade Research Initiative (GTRI). He described 2025 as “one of the most active years” for trade negotiations, driven by a desire to spread risk rather than pivot away from the United States.
Economists say Washington’s punitive tariffs have become a key catalyst for India’s push to expand export destinations. “This has now become an imperative for India,” trade economist Biswajit Dhar told AFP.
Major trade deals could provide relief to labour-intensive sectors hit by tariffs. India’s Apparel Export Promotion Council estimates the U.K. agreement could double garment exports to Britain within three years. Gains from a potential EU deal could be even larger.
European Commission President Ursula von der Leyen, expected to visit India later this month, has described the proposed EU-India pact as potentially the largest of its kind globally, although talks have missed earlier deadlines amid disputes over steel and automobile exports.
Germany’s Chancellor Friedrich Merz is also scheduled to visit India for discussions on expanding trade and investment ties.
Smaller agreements are also seen as strategically important. A December trade deal with Oman, though covering bilateral trade of under $11 billion, offers a gateway to Middle Eastern and African markets, analysts say. Meanwhile,
a free trade agreement with
New Zealand, though modest in export gains, has helped attract $20 billion in foreign investment and improve visa access.
India’s goods exports rose 19% in November, reversing a decline the previous month, driven largely by electronics and marine products. Exporters say diversification has begun to yield results, with the EU and China emerging as major markets alongside the United States.
Still, exporters caution that alternative markets cannot fully replace U.S. demand. “A U.S. deal is paramount,” said KN Raghavan of the Seafood Exporter Association of India.
India’s imports of Russian oil fell sharply in December, but it remains unclear whether this will satisfy Washington’s demands.
“Diversification has become necessary,” said Pankaj Chadha of the Engineering Export Promotion Council. “It’s better not to put all your eggs in one basket.”