Global tariff regimes often determine which export markets are attractive or prohibitive for Indian exporters. Some countries maintain very low Most-Favoured Nation (MFN) tariffs and offer preferential duty-free access through trade agreements—making them standout destinations for India’s key export sectors. Platforms like GFE Business help exporters identify these markets and navigate compliance effectively.
In this guide, we’ll review:
Which countries currently apply the lowest tariffs for Indian exports
How Indian exporters can leverage FTAs and PTAs to access these markets
Sector-wise benefits across textiles, pharma, gems, seafood, and engineering
Practical strategies and checklists to maximize tariff advantages
Case studies showing Indian exporters succeeding in low-tariff destinations
Light Hindi helps clarify concepts—जैसे “low duty”, “FTA benefits”, “profit edge”—while keeping the overall tone professional and data-driven.
Why Exporters Should Focus on Low-Tariff Countries
Tariffs directly affect your landed cost, pricing strategy, and buyer competitiveness. Markets that offer minimal tariff friction allow Indian exporters to:
Quote lower landed prices without sacrificing margins
Get preferential treatment via FTAs or GSP schemes
Use export strategies like value addition or branding to amplify benefits
Given recent 50% U.S. tariffs on Indian goods, it’s vital for exporters to explore other low-duty destinations with competitive demand.
Top 5 Low-Tariff Markets for Indian Exporters
Here are the five countries/regions that currently offer the most favorable tariff conditions for Indian goods, especially under FTAs or preferential access:
1. United Arab Emirates (UAE)
MFN Tariff: Mostly 0% on industrial and textile imports DHLWikipedia
India–UAE CEPA (effective May 2022) offers zero duty on over 90% of product lines Wikipedia
Why it matters: Fast exports of garments, leather goods, gems & jewellery, and processed foods. CEPA ensures direct duty elimination for many products.
2. Australia
MFN Tariffs: Low (2–5%) on industrial goods; higher on agriculture (~5–10%)
India–Australia ECTA reduces duties to zero on 96% of Indian exports Wikipedia
Why it matters: Textile, pharma, gems & jewellery exports to Australia have become highly cost-effective post-ECTA implementation.
3. United Kingdom (UK)
MFN Tariffs: ~1–5% for many manufactured goods
New India–UK FTA grants duty-free access to 99% of Indian exports including textiles, footwear, toys, and machinery World Economic Forum
Why it matters: With UK orders rising, exporters can secure a premium edge by exporting under the FTA (valid COO required).
4. Japan
MFN Tariffs: ~1–3% on industrial goods; ~5–8% on key agri & seafood
India–Japan CEPA allows zero tariff for many Indian exports such as processed foods, shrimp, pharmaceuticals, textiles, and machinery Wikipedia
Why it matters: Rising market for Indian seafood, spices, pharma supplies; tariff reductions make bids more competitive.
5. South Korea
MFN Tariffs: Moderate, ~2–5% industrial
India–South Korea CEPA in force since 2010, granting preferential access on textiles, machinery, chemicals, auto components Wikipedia
Why it matters: Tier-2 Indian exporters who can meet compliance and packaging standards find solid openings here.
Sector-Wise Insights: Where Low Tariffs Matter Most
| Sector | Key Markets | Why low tariffs matter | Examples & Notes |
|---|---|---|---|
| Textiles & Apparel | UAE, UK, Australia | Eliminates duties (5–10%) boosting margins | Surat/Tiruppur units gained repeat orders |
| Pharma & APIs | Japan, UK | Reduced duty ≈ cost advantage vs China | Hyderabad API firm grew UK exports 60% |
| Gems & Jewellery | UAE, UK | Competitive duty-free access | Surat diamond exporters entered UK retail chains |
| Seafood (Shrimp) | Japan, UAE | Zero or low duty + CEPA benefits | Andhra exporter replaced China supplier in Japan |
| Engineering Goods | South Korea, Australia | Preferential zero duty for auto parts/machinery | Pune-based firm bid into Korean auto supply chain |
Step-by-Step Strategy to Unlock Low Tariff Benefits
Step 1: Identify Covered FTAs/CEPA Agreements
Use list of India’s FTAs (India–UAE, India–Japan, India–UK, etc.) to shortlist target markets with duty zero access Wikipedia.
Step 2: Match HS Codes with Tariff Schedules
Map your products to HS Codes and verify tariff levels under both MFN and preferential schemes (WTO Tariff Finder or partner country portals).
Step 3: File Proper Certificate of Origin (COO)
Only shipments with valid COOs are eligible for duty-free treatment under FTAs. More than 720,000 COOs were issued in FY 2024–25 India Briefing.
Step 4: Price with Strategic Margins
Builders landed-cost models that reflect 0% duty in target FTA markets and include compliance costs (COO fees, testing).
Step 5: Promote Tariff Benefit With Buyers
Emphasize savings in negotiation: “Our price is ₹15/lb lower because we’re duty-free under the India–UAE CEPA.”
Step 6: Stay Updated with Policy Shifts
FTAs evolve; exporters must monitor renegotiation updates (e.g., India–UK deal triggers), and ensure they comply with new origin rules House of Commons Library.
Risks & Limitations to Watch
Non-tariff barriers: Even FTA markets may have quality, labeling, or compliance standards (e.g., UK labelling or Japan food safety)
Competitor advantage: Countries like Vietnam may have lower tariffs than India in non-FTA markets mint.
Documentation error: Invalid COOs can lead to rejected shipments or loss of duty benefit.
Export dilution: Overcompeting on low margin could harm profitability if currency or freight fluctuates.
Case Studies: Low-Tariff Market Wins
Indian Shrimp Exporters to UAE & Japan
With India–UAE and India–Japan CEPA, shrimp exports from Andhra/Gujarat enjoyed zero duty, while competitors faced higher applied duties. Export volumes grew rapidly in 2024–25.
Surat Textiles to UK
Under the India–UK FTA, with 99% exports duty-free (incl. textiles, leather, sports goods), Surat SMEs gained entry in UK retail chains for branded garments.
India’s FTA Rollout: What’s Next
India is negotiating or implementing trade deals with key markets:
EU: Expected trade pact will remove tariffs on auto components, textiles, pharmaceuticals The Economic TimesThe India Forum.
Canada: Talks ongoing, especially for agri and engineering goods.
South Africa (SACU), EAEU (Russia/EAU bloc): Early harvest deals may open timber, pharma, machinery opportunities India BriefingThe Economic Times.
When finalized, these will add more duty-free corridors for Indian exporters.
Final Thoughts
For Indian exporters looking to grow internationally in 2025 and beyond, targeting low-tariff countries via preferential FTAs is not just smart—it’s essential. Markets like UAE, UK, Japan, Australia, and South Korea offer actionable tariff advantages that can deliver better margins and quicker order wins.
Exporters who align products with these markets, file correct documentation and price strategically will turn government trade deals into real profit. Platforms like GFE Business help with HS code validation, COO issuance, tariff lookup and export compliance—so you don’t just know where opportunity lies, you act on it.
