Petroleum exports to US surge in Oct as labour intensive sectors bear brunt

Even as gems, jewellery, garments slump under tariff pressure, energy and telecom exports offset broader decline to the US

India’s petroleum exports to the US surged 94.5 per cent in October to $251.5 million, making it the only major export category to post positive growth, apart from iPhone-led telecom instruments, which jumped 204 per cent during the month.  

This surge comes even as India’s key refined petroleum markets — including the Netherlands (-15.7 per cent), Australia (-93.1 per cent) and Togo (-62.3 per cent) — sharply cut their purchases from India during the same month. 

The US has long been a major buyer of Indian petroleum products, accounting for 6.9 per cent ($5.8 billion) of India’s petroleum exports in financial year 2024 (FY24). In October, its share stood at 6.4 per cent. 

During the month, exports of gems and jewellery continued to be the hardest hit to the US, with shipments of pearls, precious, and semi-precious stones plunging 77.3 per cent. Exports of gold and other precious metal jewellery dropped 51.2 per cent, disaggregated data released by the commerce department showed. 

Among other categories, exports of cotton fabrics and madeups (-28.3 per cent), marine products (-22.5 per cent), industrial machinery for dairy (-28.1 per cent), readymade garments (-19.6 per cent), drug formulations (-7.5 per cent) and auto components (-18.9 per cent) also contracted significantly to the U.S. 

The U.S. stepped up pressure on India to halt purchases of discounted Russian crude oil after US President Donald Trump assumed office in January this year. On August 7, Trump imposed an additional 25 per cent tariff on India for buying Russian oil, effective from August 27, doubling the total tariff to 50 per cent, which has led to significant dip in India’s shipments to the US. 

India’s exports to the US contracted 8.6 per cent to $6.3 billion in October, while imports rose 13.9 per cent to $4.5 billion leading to a trade surplus of $1.8 billion during the month.    

The US imposed sanctions on Russia’s largest oil producers — Rosneft and Lukoil — in a renewed bid to end the war in Ukraine during the month. The move forced Indian private, as well as, state-run oil refiners to substantially reduce their crude oil purchases from Russia. 

India’s Commerce Secretary, Rajesh Agrawal, had told reporters that the country can double its annual energy imports from the US from $12-13 billion at present. In October, India’s crude oil imports from the US rose 18.3 per cent to $496 million.   

A US trade delegation, led by Deputy US Trade Representative (USTR) Rick Switzer, is scheduled to visit India for the first time later this week, at a time India is aiming to conclude the first tranche of the bilateral trade agreement (BTA) before the end of the calendar year. Assistant USTR and the Chief Negotiator of the proposed trade deal Brendan Lynch, along with other senior officials from USTR, will be a part of the delegation travelling to New Delhi to take stock of the deal. 

Talks with the US have been moving in parallel on two tracks — the broader BTA, which will take longer, and the framework deal that would address the 50 per cent tariff burden on exporters.