India eyeing new markets amid US trade deal vacuum

• Potential 50% US tariffs threaten job losses.
• India increases exports to EU, China: exporter.
• Diversification is essential to reduce dependency.

MUMBAI: India is aggressively pursuing trade deals to open markets for exporters and soften the blow of steep US tariffs as efforts to secure a deal with Washington remain elusive.

Relations between Washington and New Delhi soured in August after President Donald Trump raised tariffs to 50 percent, a blow that threatens job losses and hurts India’s ambition to become a manufacturing and export powerhouse.

That pressure, experts say, has prompted New Delhi to make a rapid move to diversify beyond its largest market.

India signed or launched four trade deals last year, including a major one with Britain – the fastest rate of deal-making it has seen in years – and is now eyeing new deals.

Negotiations are underway with the European Union, the Eurasian Economic Union, Mexico, Chile and South America’s Mercosur trade bloc, either for new agreements or to expand existing agreements.

If successful, India will have trade deals with “almost every major economy,” said Ajay Srivastava, of the New Delhi-based Global Trade Research Initiative (GTRI).

Srivastava said 2025 was “one of the most active years” for trade deals, which he said were aimed at “spreading the risk” rather than turning away from Washington.

Expand destinations

Washington’s punitive tariffs aimed at stopping India’s purchases of Russian oil – which it says is financing Moscow’s invasion of Ukraine – have driven New Delhi’s desire to develop other markets.

“The strategy was a reaction, as I read it, to what Trump was doing,” said trade economist Biswajit Dhar. AFP. “This has now become imperative for India to really expand its destinations.”

Major deals will help labor-intensive sectors hit by tariffs.

India’s Garment Export Promotion Council predicts the UK trade deal could help double Britain’s garment exports over the next three years.

The gains from a possible EU deal could be even greater.

European Commission President Ursula von der Leyen, who is expected to visit New Delhi later in January, said it would be the “biggest deal of its kind in the world”.

Although both sides have missed a deadline to conclude talks by the end of 2025 – reportedly over disagreements related to steel and car exports – Indian negotiators remain optimistic.

German Chancellor Friedrich Merz will visit India and meet Prime Minister Narendra Modi on Monday, holding talks to “intensify cooperation in trade and investment”, Modi’s office said in a statement.

Smaller deals matter too.

Trade between Oman and India totaled less than $11 billion last financial year, but a December deal with Muscat offers “a gateway to the wider Middle East and African markets” and a template for a broader “Gulf engagement strategy”, Nomura analysts suggested.

And while a free trade agreement (FTA) with New Zealand has added little to Indian export growth, it has secured $20 billion in foreign investment, increased visa access and shown Washington that New Delhi is willing to compromise.

“New Zealand’s FTA makes concessions on agricultural products such as apples, even though farmers here may have concerns,” said an Indian commerce ministry official, who declined to be named.

“Who says we can’t be flexible?”

“Eggs in one basket”

India’s goods exports rose a staggering 19% in November 2025, reversing October’s decline. While the increase was helped by shipments of electronics – still exempt from US tariffs – exports of marine products also posted gains.

“Diversification has definitely happened,” said KN Raghavan of the Seafood Exporters Association of India.

“We have increased exports to the EU and China,” he said, adding that they are the top markets after the US.

But exporters warn that alternative markets cannot fully replace the United States, with Raghavan saying a deal with the US is “paramount”.

This remains deadlocked.

India’s imports of Russian oil fell sharply in December to 1.2 million bpd from 1.8 million bpd in November, according to Kpler trade data.

It’s unclear whether that will be enough for Trump.

Pankaj Chadha, chairman of the Engineering Export Promotion Council, said diversification has become a necessity to reduce dependence on the “bigger and more lucrative” market.

“It’s better not to put all your eggs in one basket,” he said.