Indian exports to the US might stage a pointy restoration in FY27 following a dramatic reset of American tariff coverage after the US Supreme Court docket struck down President Donald Trump’s reciprocal tariffs on February 20.
In response, the White Home rolled again the sooner duties however imposed a recent common tariff of 10% on all buying and selling companions, together with India, below Part 122 of the Commerce Act of 1974. President Trump has since indicated that this fee may very well be raised to fifteen%, including a brand new layer of uncertainty for exporters.
Commerce specialists say the shift, whereas disruptive, might in the end help a rebound in India’s shipments to the US.
“The revised tariff measures have offered aid to exporters. We’re already seeing some orders transferring to India. No matter little hit now we have taken in exports to the US, we must always be capable of bounce again,” mentioned Ajay Sahai, Director Common & CEO of the Federation of Indian Export Organisation (FIEO).
Sahai famous that India’s US exports in FY26 are likely to shut with a contraction of round 15%, after a steep decline of almost 22% until December. “From that decrease base, India may very well be taking a look at export progress in the vary of 30% to the US in FY27, assuming tariff stability,” he added.
From anticipated benefit to neutralised edge
Earlier this month, India had anticipated that US tariffs would reasonable to roughly 18% below the interim commerce framework signed on February 6. Whereas India advantages from a decrease headline tariff, the common construction reduces the comparative edge it could have gained over rival exporters, specialists defined.
“At the moment, we had been comparatively higher positioned in comparison with rivals — China at 34%, Bangladesh at 19%, Vietnam at 20% — so getting 18% appeared like a bonus. “However now, with tariffs transferring to 10% or 15%, two issues have occurred. One, 15% is decrease than 18%, so that may be a profit. Two, everyone seems to be dealing with an analogous construction, which suggests India’s relative benefit is basically neutralised,” mentioned Ajay Shrivastava, Founding father of the International Commerce Analysis Initiative (GTRI).
Bilateral commerce settlement beneficial properties significance
In opposition to this backdrop, specialists argue that the proposed India–US bilateral commerce settlement (BTA) turns into much more important.
“The BTA goes past tariffs. It covers funding, companies commerce, and digital commerce. Even when tariff-related points have seen disruption, it doesn’t imply we must always step again from broader engagement,” Sahai mentioned.
Nonetheless, Shrivastava cautioned that negotiations should now be approached with larger scrutiny, including that if tariffs have gotten common, policymakers should ask what incremental profit a commerce deal really delivers.
“Concessions must be weighed rigorously except the settlement gives tangible beneficial properties such as responsibility reductions, regulatory alignment, or sector-specific entry,” he mentioned.
Sturdiness of tariffs stays unsure
Whereas the tariff reset gives near-term aid and a possible rebound from a depressed FY26 base, the evolving authorized and political panorama in the US means exporters might have to brace for additional shifts in commerce coverage. As questions linger over the authorized sustainability of the brand new US tariff regime.
Shrivastava identified that Part 122 provisions are meant for balance-of-payments emergencies. And the US doesn’t face such an issue. Authorized challenges might alter the construction once more, he mentioned.
Garima Kapoor, deputy head of analysis and economist at Elara Capital, highlighted part 122 measures are capped at 150 days, elevating questions on what tariff regime will observe. Key to observe will probably be incremental bulletins concerning the standing and validity of the commerce deal negotiated earlier this month, Kapoor mentioned.
She emphasised that Indian exporters shouldn’t rely solely on a US restoration, including that the US nonetheless accounts for roughly 23–25% of India’s exports, and uncertainty in that market is likely to persist.
“Indian exporters ought to actively pursue market diversification, notably in the direction of Europe and the UK. We’re additionally seeing a gradual improve in exports to China, whereas a comparatively weaker USD–INR gives some forex consolation,” she mentioned.
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