India Needs Clear Product- & Geography-wise Plan for Export Diversification, Says Nomura’s Sonal Varma – Outlook Business

Sonal Varma: To understand that, it’s important to note two key things. First, the US—our largest export market—is closing up, so India needs to offset that by diversifying exports. But high US tariffs are affecting many countries, not just India. So now, several countries are trying to diversify simultaneously.

That means competition outside the US is extremely high. This is very different from the last seven or eight years when third-country competition was relatively limited. Now, with rising US tariffs, competition has intensified—especially with China’s emergence as a dominant player in many of these alternative markets.

So while diversification makes sense strategically, we need to be very clear about which markets and which product categories we focus on. For instance, in the EV space, China is dominant, but in small cars, demand is growing in Africa and parts of Latin America. Those markets—with similar consumption patterns to India—might make more sense than, say, ASEAN countries, where Chinese competition is already intense.

Similarly, for electronics, most of India’s recent export growth has come from increased shipments to the US, even as we’re trying to diversify away from it. So we need a clear game plan by product and geography.