The US has been India's largest trading partner since FY22, accounting for 18% of total goods exports, over 6% of imports, and approximately 11% of bilateral trade. During April-December of the current fiscal year, India’s exports to the US increased by 5.57% to $59.93 billion, while imports grew by 1.91% to $33.4 billion.
Potential Economic Impact
Ind-Ra's projections suggest that if the US moves forward with reciprocal tariffs, India’s exports to the US may fall within the range of $2 billion to $7 billion in FY26.A more likely scenario, as per Devendra Kumar Pant, Chief Economist and Head of Public Finance at Ind-Ra, is a decline of $2 billion to $3.5 billion, which could result in a 5-10 basis points (bps) reduction in GDP growth from the current estimate of 6.6%.
Trade Negotiations to Play a Key Role
With discussions between the two governments expected to yield clarity within the next four to six weeks, the geoeconomic landscape remains a critical factor for India’s economic outlook.Ind-Ra also highlighted that bilateral trade talks, along with defense and energy agreements between India and the US, could help cushion the adverse impact of any tariff imposition.
As global trade dynamics continue to shift, the outcome of these negotiations will play a pivotal role in shaping India's export strategy and overall economic growth.