Indian exporters eye African markets to offset impact of 50% US tariff

By Admin

30 Aug, 2025

Indian exporters are actively exploring Africa as a strategic manufacturing base to cushion the blow of steep US tariffs. After President Donald Trump imposed a 50% levy on Indian exports as punishment for New Delhi’s continued purchases of Russian oil, businesses across sectors are scrambling to find alternatives that will allow them to maintain access to their most important overseas market.

Tariffs Shake Up India’s Export Outlook

The US has long been India’s biggest export destination, with over $20 billion worth of textiles, jewelry, and diamonds shipped in 2023. But with the new 50% duty, exports in labor-intensive sectors like apparel and jewelry could shrink by as much as 90%, according to a market note. The sudden cost escalation has forced companies to look beyond India’s borders to sustain their operations.

Africa Emerges as a Viable Alternative

For many Indian firms, Africa is now at the center of their recalibration strategy. Countries like Ethiopia, Kenya, Nigeria, Botswana, and Morocco offer significantly lower US tariffs — as low as 10% in some cases. They are also extending attractive incentives, including tax holidays, VAT exemptions, customs duty relief, and sector-specific support to encourage foreign investment. Special economic zones are being developed across the continent to fast-track manufacturing opportunities.

“African governments are offering compelling incentives such as tax breaks, land concessions, and regulatory facilitation to attract investment in manufacturing and technology transfer,” said Soumya Bhowmick, a fellow at the Observer Research Foundation. “These trade developments have created a unique arbitrage opportunity.”

Indian Firms Lead the Shift

Several Indian exporters are already pivoting towards Africa:

• Gokaldas Exports Ltd., a supplier to GAP Inc., operates four factories in Kenya and one in Ethiopia. Managing Director Sivaramakrishnan Ganapathi confirmed that the company will expand further if the tariff situation persists.
  
  

• Raymond Lifestyle Ltd. is in talks with US buyers to increase shipments from its Ethiopian plant. “We can obviously shift some of the clients to the Ethiopian factory,” said CFO Amit Agarwal, noting that lower labor costs in Africa strengthen the case for relocation.
  
  

• Dharmanandan Diamonds, based in Surat, is considering boosting production in Botswana to service US clients, according to its Managing Director Hitesh Patel.
  
  

These moves underline how critical Africa has become in India’s global trade strategy.

Challenges in Transition

Despite the promise, the shift to Africa won’t be immediate or seamless. Indian exporters must renegotiate contracts with American customers, many of whom remain cautious about supply chain risks. Concerns about political instability in certain African nations, particularly Ethiopia, have led some US buyers to hesitate. Still, labor costs in Ethiopia are roughly one-third of India’s, making the region an increasingly attractive option as India’s cost advantage erodes under heavy tariffs.

The Road Ahead

While exporters hope that the trade standoff between the US and India will ease, Africa is emerging as more than just a stopgap measure. For India’s textile, jewelry, and diamond exporters, the continent presents a longer-term opportunity to diversify supply chains, reduce tariff exposure, and tap into new growth markets.

As Ganapathi of Gokaldas Exports put it: “We will continue to expand in Africa in case of 50% tariffs.”

Indian businesses now face a defining moment — adapt swiftly and explore new horizons, or risk losing their foothold in the world’s largest consumer market.