India's US Exports May Decline By $2 To $7 Billion In Fiscal 2026 Post Reciprocal Tariff: Ind-Ra

India Ratings and Research on Friday said India's exports to the US may decline by $2 billion to $7 billion in fiscal 2026 if the reciprocal tariffs being contemplated by the US is put into place.

India's exports to the US rose by 5.57% to $59.93 billion during April-December this fiscal. On the other hand, imports during the first nine months of 2024-25 grew by 1.91% to $33.4 billion.

The US is the largest trading partner of India from 2021-22 and accounts for about 18% of India's total goods exports, over 6% in imports and about 11% in bilateral trade.

Ind-Ra estimates suggest that should reciprocal tariffs be imposed by the US, India's exports to the US may decline anywhere between $2 billion and $7 billion in fiscal 2026.

"However, the weighted average tariff differential is around 7 percentage points, and a more plausible scenario as per Ind-Ra is a decline in exports to the US by $2 billion-3.5 billion, leading to a decline in the GDP growth in the range of five to ten basis points from our current estimate of 6.6%,' said Chief Economist and Head Public Finance Devendra Kumar Pant.

Clarity will likely emerge in the next four to six weeks, following the discussions between the two governments. Therefore, the emerging geoeconomic situation is a key monitorable for the Indian economy.

Bilateral trade negotiations, defense and energy pacts between India and the US could minimise the adverse impact of reciprocal tariff for India, Ind-Ra said.