India exports jump to US despite 50% tariffs

Exports to India's largest foreign market fell sharply last month when 50% US tariffs on India—including a 25% penalty on purchasing Russian oil—came into effect on August 27.

These improved figures come at a time when Indian state-owned oil companies have agreed to import more liquefied petroleum gas (LPG) from the United States annually, and Trump has exempted several agricultural products from reciprocal tariffs, which could benefit India.

Negotiations for a trade deal between the two countries are underway, and an Indian official said key aspects of the agreement are nearing completion.

This surge in exports to the US comes at a time when India's overall merchandise exports fell 11.8% year-on-year in October, and bilateral trade declined with 15 of its top 20 markets.

"Tariff-exempt sectors such as smartphones and pharmaceuticals may have performed better - though this remains a tentative assumption," said Ajay Srivastava of Global Trade Research Initiative (GTRI), a Delhi-based think tank, commenting on the latest trade numbers.

"Despite the October rebound, India's shipments to the US have dropped nearly 28.4% between May and October, erasing more than $2.5bn in monthly export value," Mr Srivastava added.

But after months of uncertainty, trade tensions between the two countries appear to be gradually easing.

On Monday, India announced its first major agreement to date, under which its state-owned oil companies will source about 10% of the country's annual LPG needs from the United States.

Petroleum Minister Hardeep Singh Puri described the decision as a "historic development" and said the world's largest and fastest-growing LPG market is now open to the United States.

The Trump administration is urging India to increase purchases of American petroleum products and reduce its dependence on Russian oil.

India has become one of the largest markets for Russian oil since Western sanctions on Moscow began in 2022 following the outbreak of the Ukraine war.

Last year, India purchased $52.7 billion worth of Russian crude oil—37% of its oil bill—but Trump has repeatedly stated that India has agreed to reduce its purchases, a fact India has not officially confirmed.

According to local reports, India is facing a diplomatic crunch over energy imports as Russian President Vladimir Putin is scheduled to visit Delhi early next month to finalize several agreements and projects.

Despite this, trade talks between India and the US – which had been stalled for months due to India's refusal to cut Russian oil imports – now appear to be progressing rapidly.

On Monday, a senior government official told The Hindu newspaper that the first phase of the trade agreement is "near completion."

India is also expected to benefit from the US decision to lift reciprocal tariffs on certain agricultural products such as tea, coffee, and spices – analysts say this move will exempt the US from tariffs on approximately $1 billion worth of Indian agricultural exports.