Published on: 2025-10-16

Intelligence Report: India’s Exports to US Slump Nearly 12% in September After 50% Tariff Hit; China, UAE Emerge as Gainers – BusinessLine

1. BLUF (Bottom Line Up Front)

India’s exports to the US have declined significantly due to new tariffs, while China and the UAE have benefited from this shift. The most supported hypothesis is that these tariffs are causing a strategic realignment in trade partnerships, with a medium confidence level. It is recommended that India accelerates negotiations for bilateral trade agreements to mitigate losses and explore alternative markets.

2. Competing Hypotheses

1. **Hypothesis A**: The decline in India’s exports to the US is primarily due to the newly imposed tariffs, which have made Indian goods less competitive in the American market. This has led to a shift in trade dynamics, benefiting other countries like China and the UAE.

2. **Hypothesis B**: The decline is part of a broader trend of decreasing global demand for Indian goods, exacerbated by tariffs but not solely caused by them. Other factors, such as global economic slowdown and supply chain disruptions, are also contributing to this decline.

Using ACH 2.0, Hypothesis A is better supported by the data, as the timing of the decline aligns closely with the imposition of tariffs, and specific sectors affected are those most impacted by the tariffs.

3. Key Assumptions and Red Flags

– **Assumptions**: It is assumed that the tariffs are the primary cause of the export decline without considering other potential economic factors. It is also assumed that the data from the commerce ministry is accurate and comprehensive.
– **Red Flags**: The report does not account for potential retaliatory measures by India or changes in domestic policies that could influence export dynamics. Additionally, there is no mention of the impact on smaller sectors or regional variations within India.

4. Implications and Strategic Risks

The decline in exports could lead to economic strain on affected sectors, potentially resulting in job losses and decreased GDP growth. There is a risk of further escalation in trade tensions if retaliatory tariffs are imposed. The shift in trade partnerships might weaken India’s strategic influence in the region.

5. Recommendations and Outlook

• India should expedite negotiations for bilateral trade agreements with the US and other key markets to secure favorable terms and reduce dependency on any single market.
• Explore diversification of export markets, focusing on regions with growing demand for Indian goods.
• Scenario Projections:
  • Best Case: Successful trade negotiations lead to the removal of tariffs, stabilizing export levels.
  • Worst Case: Continued decline in exports leads to significant economic downturn in affected sectors.
  • Most Likely: Partial recovery through diversification and strategic agreements, but with lingering impacts on certain industries.

6. Key Individuals and Entities

– Ajay Srivastava, founder of GTRI, who provided insights into the impact of tariffs on Indian exports.

7. Thematic Tags

trade dynamics, economic policy, international relations, tariff impacts