Is India Overexposed to the U.S. Market? A Strategic Look at FY 2024–25 Export Data

Recent escalatory tariffs imposed by the current U.S. administration on Indian merchandise exports have sparked considerable concern within India’s export community. In light of these developments, this note presents an analysis of India’s top 10 export categories to the United States, based on 2-digit HS codes. The data has been sourced from the Ministry of Commerce, Government of India.

Snapshot of India–U.S. Trade (FY 2024–25)

India’s Total Merchandise Exports: US $438 billion

• 5-Year CAGR of Total Exports (FY 2020–2025): 7%

• Exports to the United States: US $87 billion (20% of India’s total merchandise exports)

• 5-Year CAGR of Exports to the U.S.: 10%

• Fastest-Growing Export Category to the U.S.: Chapter 85 – Electrical machinery and equipment (including smartphones and components), CAGR 45%

Strategic Implications:

The United States remains a critical export destination for India, commanding a substantial 20% share of total merchandise exports. The imposition of higher tariffs poses a serious challenge, especially for high-growth sectors like electronics. If trade negotiations between India and the U.S. remain unresolved, exporters may face significant hurdles in identifying alternative markets with comparable demand and profitability.

To understand the depth of this reliance, a closer look at India’s top export categories to the U.S. is essential.

Sectoral Dependence on U.S. Market:

India’s merchandise exports to the U.S. totalled $87 billion in FY 2024–25, accounting for 20% of its global exports. Key sectors show heavy U.S. dependence:

• Electronics (Ch. 85): $16B to U.S., 37% share of total Electronics exports from India.

• Pharmaceuticals (Ch. 30): $10B, 40% share of total Pharma exports from India.

• Apparel & Made-ups (Ch. 61–63): $8B, 37% share of total Apparel & Made-ups exports.

While mineral fuels (Ch. 27) lead in overall value, their U.S. share is just 6%. The data reveals strategic exposure—India’s top export categories rely heavily on the U.S. market. Any prolonged tariff tensions could disrupt these sectors, making market diversification a critical priority.

India’s Export Growth Trajectory (FY 2019–2025):

Over the past five years, India’s total merchandise exports have grown from $313 billion in FY 2019–20 to $438 billion in FY 2024–25, reflecting a healthy 7% CAGR. This steady expansion underscores India’s resilience and competitiveness in global trade.

Notably, high-growth sectors such as electronics (Ch. 85) have surged with a 23% CAGR, signalling a shift toward tech-driven exports. Meanwhile, traditional strongholds like pharmaceuticals (Ch. 30) and apparel (Ch. 61–63) have maintained robust growth, reinforcing their strategic importance. The evolving export mix suggests India is gradually diversifying beyond commodities, positioning itself for deeper integration into global value chains.

U.S. Market: Growth & Strategic Leverage:

India’s exports to the United States have grown significantly—from $53 billion in FY 2019–20 to $87 billion in FY 2024–25, marking a robust 10% CAGR. This growth outpaces India’s overall export expansion, underscoring the U.S. as a vital trade partner.

The surge in Chapter 85 exports (Smartphones & Electrical Equipment), which jumped from $3B to $16B at a staggering 45% CAGR, highlights a strategic pivot toward high-tech goods. Pharmaceuticals, apparel, and machinery also remain strong contributors, though their relative share has slightly declined.

With nearly one-fifth of India’s total exports destined for the U.S., any disruption in bilateral trade could have far-reaching implications. The data reaffirms the need for India to both safeguard its U.S. trade relations and accelerate diversification into other high-potential markets. As global trade dynamics evolve, India must balance its U.S. trade ties with proactive exploration of emerging markets to ensure long-term resilience.

Concluding Thoughts:

As the stalemate in India–U.S. trade negotiations persists, the task of identifying alternative markets for India’s high-value exports becomes increasingly daunting. With sectors like electronics, pharmaceuticals, and apparel deeply reliant on U.S. demand, any prolonged disruption could ripple across India’s export ecosystem. Yet, this challenge may also be a boon in disguise—a catalyst for India to reimagine its global trade strategy. Much like the transformative reforms of 1991, led by then Finance Minister Dr. Manmohan Singh, which redefined India’s economic trajectory, today’s trade headwinds could usher in a second wave of economic recalibration. By prioritizing diversification, investing in trade diplomacy, and strengthening domestic competitiveness, India has the opportunity to turn external pressure into strategic renewal.