India must widen, and deepen, its export pool to offset US tariffs, Pg19

Key Highlights:

• India's exports in December 2025 reached $38.5 billion, a 1.8% increase from December 2024's $37.8 billion.
• December 2025 imports totaled $63.55 billion, resulting in a trade deficit of $25 billion.
• Following the 50% tariffs imposed by the US in August 2025, India's export momentum has weakened.
• Exports to the US have decreased, while exports to China have seen a marginal increase of around $2 billion a month.

Detailed Insights:

• India's export momentum weakened from 0.7% month-on-month between January-July 2025 to 0.1% between August-December 2025, after seasonal adjustments.
• The decline in export growth is broad-based, affecting sectors like electronics, engineering goods, petroleum, and textiles.
• The average sequential momentum of export growth to the US fell from 1.9% during January-July 2025 to -1.4% during August-December 2025 due to tariffs.
• Policymakers need to explore new markets and strengthen existing ones outside the US to mitigate the impact of high tariffs on exports.
• Lower exports can negatively impact the rupee due to decreased demand for the currency, putting pressure on the exchange rate.

Key Concepts Involved:

• Trade Deficit: The difference between a country's imports and exports.
• Tariffs: Taxes imposed on imported goods, increasing their cost.
• Exchange Rate: The value of one currency in relation to another.