India Turns to UAE and Singapore to Mitigate the Impact of U.S. Tariffs

India is bracing for the impact of sweeping U.S. tariffs that have imposed a 50% duty on a wide range of Indian exports. In an attempt to shield its economy and protect vulnerable industries, New Delhi is turning to trusted allies such as the United Arab Emirates (UAE) and Singapore to reroute exports and create new trade pathways.

The US tariff setback can act as a push for India to achieve its long-desired diversification of the trade basket. (Bloomberg) | Livemint

Strategic Trade Diversions

The government is working with both partners to reconfigure its trade flows. According to reports, seafood exports are being redirected through Singapore, while textiles—one of the hardest-hit sectors—are being channeled via the UAE. Both countries are not only serving as transit hubs but are also emerging as direct markets, creating fresh opportunities for Indian producers.

Singapore has already expressed willingness to expand imports of Indian seafood and agricultural products. The UAE, on the other hand, has emerged as a crucial partner for India’s textile sector, providing an outlet for an industry that has been struggling under high tariffs in the American market.

The Economic Sectors Under Strain

The tariffs have had a disproportionate effect on India’s labor-intensive industries. The seafood industry, particularly shrimp exports, has been severely hit. India exported $7.4 billion worth of shrimp last year, with nearly 40% going to the U.S. Tariffs exceeding 60% have forced exporters to slash prices, pushing many farmers and small businesses toward bankruptcy.

The textile industry, which employs millions and contributes significantly to India’s export earnings, has also been dealt a heavy blow. Roughly one-third of its output goes to the U.S., and the imposition of tariffs is forcing global buyers to look at alternatives like Bangladesh and Vietnam. The disruption threatens jobs and puts pressure on domestic producers to find new international buyers.

Government Measures to Counter the Tariff Shock

The Indian government has adopted a multi-pronged strategy to soften the blow. On September 3, the Goods and Services Tax (GST) was reduced on hundreds of products to stimulate domestic demand and help absorb some of the tariff-related costs. In addition, New Delhi is working on relief packages for exporters, including tax incentives, easier credit, and policy support for trade diversification.

Simultaneously, India has launched outreach programs targeting 40–50 countries, including the UK, Australia, Japan, South Korea, and Qatar. This initiative is designed to reduce dependency on the U.S. market and encourage Indian exporters to tap into new opportunities. Negotiations under the Bilateral Trade Agreement framework with Washington are also underway, with hopes of finding common ground in the coming months.

Industry Response and Adaptive Strategies

Industry bodies and exporters are calling for patience and strategic diversification. The Southern India Mills’ Association, for instance, has urged against panic, suggesting that textile exporters explore markets where India already has free trade agreements. Businesses are also considering setting up manufacturing bases abroad, including in the UAE and Mexico, to circumvent tariffs. Some firms are even eyeing acquisitions or partnerships within the U.S. itself to maintain access to the world’s largest consumer market.

The Geopolitical Dimension

Beyond economics, the tariff dispute has a strong geopolitical undertone. The U.S. decision is tied to India’s continued purchase of Russian oil, a move Washington sees as undermining its sanctions regime. India, however, has defended its position by emphasizing energy security and strategic autonomy. Analysts caution that the tariffs could strain India-U.S. relations, potentially impacting defense cooperation and regional initiatives like the Quad.

At the same time, countries such as Brazil, Egypt, and Singapore are being identified as potential beneficiaries of the global trade realignment, stepping in to fill gaps created by India’s restricted access to the American market.

The MGMM Outlook

India’s economic resilience is once again being tested as steep U.S. tariffs threaten its crucial export sectors, particularly textiles and seafood. At a time when these industries face mounting challenges, India has wisely turned to trusted allies like the UAE and Singapore to mitigate the blow. By rerouting trade through these strategic hubs, New Delhi is not only safeguarding exporters from immediate losses but also creating new opportunities for long-term growth. Singapore’s willingness to expand imports of Indian seafood and the UAE’s support for the textile sector highlight the importance of nurturing regional partnerships that can help India withstand global economic shocks. This strategy aligns with India’s broader vision of reducing dependence on the American market while ensuring stability for its millions of workers.

Beyond trade adjustments, the government’s proactive steps—including GST reductions, relief packages, and outreach to over 40 nations—reflect a determined push to secure India’s economic future. While the tariffs stem from geopolitical disagreements over energy policy, India has remained firm in defending its strategic autonomy. The decision to prioritize self-reliance and trusted partnerships underlines a larger shift in global trade, where India positions itself as both resilient and adaptive. This moment is not just about cushioning industries from tariffs—it is about redefining India’s trade diplomacy in a way that strengthens its standing in an increasingly unpredictable world.

(Sources: OpIndia, Livemint, Times of India)