De-risking India’s exports from the US tariff regime

Trade is a key driver of economic growth. After a prolonged period of disruptions and volatility, global trade regained momentum in 2024, outpacing global output growth for the first time since 2017. India mirrored this trend, with net exports contributing positively to GDP growth during 2024-25. However, there has been renewed volatility, driven by the tariff changes announced by the US since April 2025.

- Jahanwi Singh and Neha Raman

The latest executive order by the US, which includes increased tariffs of up to 50% on select Indian goods, is set to take effect from today. As per our estimates, over 44% of India’s exports to the US is expected to remain insulated from the tariff hike. This includes products that are exempted from tariffs, such as pharmaceuticals, petroleum products, select electronics, minerals, etc. Additionally, India is expected to remain price-competitive in the US market across 713 products, wherein the unit value price of Indian goods would remain lower compared to the average unit value price of the US' imports of the product, despite the tariffs. These products account for about 13.9% of India’s merchandise exports to the US and include products across sectors, such as machine tools, two-wheelers, leather goods, cereals, etc.

Besides, the impact of tariff hikes on India’s exports in the current year is also likely to be eased by front-loading being undertaken by Indian exporters. In fact, India’s exports to the US have grown by over 22.3% year-on-year (yo-y) during April-June 2025, with eight out of the top 10 exported product categories registering positive export growth during this period. Among these, export of telecom instruments recorded a substantial 191.5% yo-y growth, while electronic components registered a 35.2% growth yo-y during the same period. India’s exports of marine products, electrical machinery, iron and steel products, and readymade cotton garments also recorded robust double-digit growth during April-June 2025, indicating a possible front-loading to avoid higher tariffs.