US President Donald Trump's decision to back down on his tariffs on most nations for 90 days has given India space to explore other markets.

As it negotiates a trade agreement with Washington, New Delhi is also actively diversifying its export markets to reduce reliance on the US, which accounts for about 18% of India's total exports.

Last week, Indian Commerce and Industry Minister Piyush Goyal said, "We do not negotiate at gunpoint."

"Timely restrictions are good as they encourage us to talk swiftly, but until we can protect the interests of the country and people, it is never good to be hasty," Goyal told reporters.

India and the UK are also working on securing a trade deal, with officials in New Delhi saying that Trump's trade war has added a sense of urgency.

"I think both sides realize that we've had quite a lot of discussions, which was well worth it, but now it's the time to conclude [the trade agreement with London]," India's Finance Minister Nirmala Sitharaman said during her recent visit to the UK.

Adapting during uncertain times

The threat of higher US tariffs is prompting Indian exporters of textiles, engineering goods, electronics, gems and jewelry to rethink their strategies to stay competitive.

Mihir Jhaveri, chief revenue officer of AQe Digital, an IT solutions company, told DW that Indian IT firms must move beyond cost advantage to become strategic transformation partners.

"Tariffs, in this sense, are forcing the sector to fast-track this shift. We are embracing this challenge by investing in IP-led platforms, verticalized solutions, and AI-native service models that go far beyond traditional IT delivery," said Jhaveri.

He pointed out that the anticipated US policy shift is prompting many Indian IT companies to de-risk their revenue streams.

"We have taken a more deliberate approach by not just shifting geographies but deepening client relevance in key emerging markets such as the UAE, Saudi Arabia, Singapore, Germany and South Africa."

Trying to blunt the tariff hit

The US is India's largest trading partner, and according to the US Trade Representative Office, annual bilateral goods trade totaled $129.2 billion (€113.8 billion) in 2024.

While India exported over $87 billion worth of goods to the US, American exports to India totaled $41.8 billion, resulting in a $45.7 billion trade surplus in India's favor.

US and India want to finalize an agreement by September or October to more than double bilateral trade to $500 billion by 2030.

Lekha Chakraborty, a professor at the National Institute of Public Finance and Policy, said retaliatory tariffs could hurt Indian manufacturers like steel firms, affecting both trade and foreign direct investment (FDI).

"Regional trade agreements offer a viable solution to mitigate these effects. As India's trade dynamics shift towards neighboring countries, the 'gravity models of trade' support prioritizing trade with countries nearby," Chakraborty told DW.

"This crisis presents opportunities for India to bolster neighborhood ties. By focusing on regional trade, India can reduce its dependence on distant markets and strengthen its economic resilience."

She added that India's strategic location and economic potential make it an attractive partner for regional trade agreements, enabling it to navigate the challenges posed by the Trump administration's trade actions.

Nikul Shah, co-founder and CEO of IndieSemic, which specializes in semiconductor and embedded systems, told DW that Indian manufacturers are "not sitting quietly."

"Many global companies looking for alternatives to China are turning to India, and we are grabbing that chance," she said. "Tariffs may come and go, but the tech growth happening in India right now is phenomenal.

"We are also reducing our reliance on the US by finding new customers in Europe, the Middle East and South East Asia. In electronics, instead of just sending parts, we are building smarter, complete products."

Diversifying beyond the US

India's $32 billion gem and jewelry industry is also using the 90-day pause to reassess its exposure to the US and diversify their export markets.

Many exporters are eyeing markets in the UAE, Latin America and Saudi Arabia to offset potential losses in US sales.

"In response to the recent US tariffs, Indian manufacturers themselves are changing their export strategies instead of holding out for a delayed resolution to trade," said Kushal Patel, managing director of Axita Cotton, a major exporter of international quality cotton bales and yarn.

Patel told DW that manufacturers are turning to value addition and innovation to offset the effect of tariffs and increase competitiveness.

Meanwhile, auto parts suppliers are speeding up shipments to the US to take advantage of the tariff suspension.

"For the short term, auto part suppliers can look at flying out goods to the US to keep a buffer until prices could be renegotiated. We must look at alternative markets, but that will be challenging as many firms will be doing the same," Dilip Chenoy, former director general of the Society of Indian Automobile Manufacturers, told DW.

"Ultimately, we must strive to be leaders in technology and innovation. It is a tough and difficult road but doable," added Chenoy.

Edited by: Keith Walker