India's export reliance on US grows despite diversification push

The share of the US in India’s total exports continuously declined from a high of 21.7 per cent in 1998-99 to a low of 10.1 per cent in 2010-11. Notwithstanding India’s efforts to diversify its merchandise exports, the country’s dependence on the US for its outbound shipments has increased over the past 13 years by 7.6 percentage point, reaching a 17.7 per cent share in 2023-24 (FY24). The share of the US in India’s total exports continuously declined from a high of 21.7 per cent in 1998-99 to a low of 10.1 per cent in 2010-11.

During the pandemic-impacted year of 2021-22, the export share of the US was even higher than the FY24 levels at 18 per cent. In 2022-23 (FY23), the US share was at 17.4 per cent. The increase in the US share in FY24 from FY23 was despite India’s exports to the US contracting 1.3 per cent, in sync with overall merchandise exports declining 3.1 per cent during the year. The rise in the US share was driven by sunrise sectors like electronic component (50.6 per cent share), telecommunications instrument (33.73 per cent), drug formulation and biologicals (36.91 per cent), and electronic instrument (29.25 per cent.

Exports from FTA nations increased by 14.48 per cent to $122.72 billion in five years from 2018-19 to FY24, while total exports saw 32 per cent growth at $437 billion during the same period. In future engagements, India will engage with regions and countries that are not only promising markets but are also major suppliers of critical inputs and have complementarities with the Indian economy.