Indian Exporters Demand Trade Agreements As US Airfreight Market Declines

In today's volatile global trade landscape, Indian exporters are facing unprecedented challenges as airfreight markets to the United States experience significant disruption. With rising tariff tensions and shifting trade dynamics, businesses are urgently calling for more comprehensive trade agreements to maintain market access and competitiveness.

The US Airfreight Slump: Numbers Don't Lie

The American air cargo market has witnessed a dramatic downturn since the implementation of new tariff policies in April 2025. Reports indicate that airfreight volumes from China and Hong Kong to the US have plummeted by approximately 60% since the tariff increases, creating ripple effects throughout global supply chains .

The situation has become so severe that:

• Overall air cargo volumes to the US have fallen by about 25% year-over-year
• Some US air cargo carriers have reported 30% decreases in orders from China
• Numerous flights have been cancelled or redirected to other markets
• E-commerce giants like Shein and Temu are shifting to sea freight for US-bound goods

Table: Impact of US Tariff Policies on Air Cargo (2025)

India's Strategic Response: Pursuing Trade Agreements with Urgency

Recognizing the market disruption as both a challenge and opportunity, Indian exporters and policymakers are responding with unprecedented urgency to secure favorable trade terms with multiple partners.

The US-India Trade Negotiations

Indian trade representatives have been working tirelessly to negotiate a trade agreement with the United States. What makes this effort remarkable is the speed at which New Delhi is moving – a notable departure from their traditionally deliberate negotiation approach .

The key aspects of these negotiations include:

1. Potential tariff exemptions for Indian labor-intensive exports like textiles, gems, jewelry, and leather goods
2. Mutual reduction or elimination of tariffs on selected goods
3. Addressing non-tariff barriers and online trade provisions
4. Protecting India's competitive advantage in the American market

As one official noted, "The bilateral trade agreement with the US would be a win-win policy for both countries" .

Diversifying Beyond the US Market

While engaging with the US, India is simultaneously pursuing trade agreements with other partners to reduce dependence on any single market:

1. Eurasian Economic Union (EAEU)

• Signed terms of reference to launch FTA negotiations in August 2025
• Bloc includes Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan
• Combined GDP of $6.5 trillion represents significant market potential
• 2024 bilateral trade stood at $69 billion, a 7% increase from 2023

2. European Union and United Kingdom

• Intensive negotiations underway with both entities
• EU leadership aims to conclude agreement within 2025
• India-UK Comprehensive Economic Trade Agreement (CETA) already providing framework for expanded trade

How Indian Exporters Are Adapting to New Realities

Forward-thinking Indian businesses aren't waiting for trade agreements to finalize before adapting their strategies. The Federation of Telangana Chambers of Commerce and Industry (FTCCI) recently hosted a program focused on helping exporters understand and leverage opportunities under existing agreements like the India-UK CETA .

Practical Strategies Being Embraced:

1. Market Diversification: Exporters are actively seeking new markets to reduce reliance on traditional partners affected by tariff wars.
2. Digital Transformation: Embracing digital platforms like the Trade Connect Portal and paperless documentation to streamline cross-border trade.
3. Supply Chain Restructuring: Some businesses are exploring hybrid models that combine air freight with forward warehousing near end customers.
4. Compliance Focus: Increasing attention to rules of origin, compliance frameworks, and Certificate of Origin procedures to qualify for preferential tariff treatment.

The Road Ahead: Challenges and Opportunities

The international trade environment remains highly volatile. The International Air Transport Association (IATA) has downgraded its 2025 air cargo growth forecast from 5.8% to nearly zero, reflecting the widespread uncertainty .

For Indian exporters, key considerations include:

Short-term challenges:

• Navigating fluctuating demand patterns as importers adjust to new tariff regimes
• Managing cash flow amid uncertain market conditions
• Addressing potential cost increases from supply chain restructuring

Long-term opportunities:

• Leveraging trade agreements to gain competitive advantage over suppliers from countries facing higher tariffs
• Capturing market share in emerging sectors like clean energy, EV components, and nutraceuticals
• Positioning as a stable alternative in global supply chains amid geopolitical tensions

Conclusion: A Pivotal Moment for Indian Exporters

The dramatic decline in US airfreight markets serves as a stark reminder of the vulnerabilities inherent in global trade. For Indian exporters, the current turbulence underscores the critical importance of diversified market access through comprehensive trade agreements.

While challenges abound, India's proactive approach to trade negotiations – with the US, EAEU, UK, and EU – positions its exporters to potentially emerge stronger from the current period of uncertainty. The key will be maintaining negotiation momentum while simultaneously helping businesses adapt to the new realities of global trade.

As the Director of FTCCI noted regarding the India-UK CETA, such agreements represent "more than a trade agreement-it is a strategic tool for businesses to expand, innovate, and thrive in a competitive international market" .

For exporters navigating these complex dynamics, staying informed about trade agreement developments and remaining flexible in supply chain strategies will be essential to capitalizing on emerging opportunities in the evolving global trade landscape.

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