Planned trade restrictions by incoming U.S. President Donald Trump could prompt China to increase exports to other Asian markets, including India, as reported by Crisil. This shift is expected to intensify competition for Indian exporters in regional and global markets, potentially slowing the growth of India’s exports.
The report noted that “the proposed steep tariff hikes on Chinese goods by the incoming U.S. President, combined with the anticipated slowdown in the Chinese economy, are likely to drive aggressive exports from China to Asian markets, including India.”
Geopolitical uncertainties, particularly U.S.-China trade tensions, continue to pose risks to global trade. Additionally, India’s trade and exporters deficit has widened this fiscal year as imports have consistently outpaced exports.
The report also highlighted that India’s export performance has been erratic this fiscal year and even the official data has revealed. Merchandise exports grew steadily in the first quarter but contracted in the second. After a brief recovery in October 2024, exports declined again in November and December.
In December 2024, India’s merchandise exports fell by 1% year-on-year to USD 38.01 billion, following a 4.8% decline in November. This decline was mainly due to significant drops in exports of gems and jewellery (-26.5%) and oil (-28.6%).
However, core export growth of 8.3% helped mitigate the overall decline, though it was lower than the 11.8% growth recorded in November. Key sectors within the core category, such as readymade garments, ores and minerals, handicrafts, and coffee, showed strong growth.
On a positive note, India’s surplus in services trade and strong remittance inflows offer some relief and are expected to keep the current account stable. Nevertheless, the growing merchandise trade deficit remains a concern requiring close monitoring.
The Crisil report stressed that future trade dynamics will depend on how China redirects its exports and how India adjusts to the ensuing challenges.
