RBI Official Urges Export Diversification Amid US Tariff Risks

Nagesh Kumar, a member of the Reserve Bank of India's Monetary Policy Committee, warned that India must urgently diversify its export markets to mitigate risks stemming from United States tariffs. In the minutes of the central bank's August policy meeting, Kumar noted that the US accounts for 20% of India's total exports and approximately 33% of labour-intensive exports, including textiles and garments.

India currently faces a 10% tariff imposed due to forced labour concerns and an ongoing Section 301 investigation into excess capacity. Furthermore, projected tariffs on generic drug imports are expected to reach 100% by 2028 and 200% by 2029.

To reduce this dependence, Kumar highlighted the importance of Free Trade Agreements with the UK and the European Free Trade Association. He specifically noted a January 2026 agreement with the European Union, expected to take effect by the end of the year, which he stated provides a "level playing field" against competitors like Vietnam and Bangladesh in European markets.