US tariffs' impact may be a bit negative for FY26 India growth: Ind-Ra

Apparel and accessories are highly vulnerable in case of such a decision.

Ind-Ra’s estimates suggest that India’s exports to the United States might decline by $1.78 billion to $7.33 billion in FY26, while GDP growth in the fiscal may decline by 5-20 bps from its earlier estimate of 6.6 per cent.

However, the weighted average tariff differential is around 7 percentage point (pp), and a more plausible scenario, as per Ind-Ra, is a decline in exports to the United States by $2-3.5 billion, leading to a decline in gross domestic product (GDP) growth in the range of 5-10 basis points (bps) from its estimate of 6.6 per cent, said Devendra Kumar Pant, chief economist and head public finance at Ind-Ra.

Clarity will likely emerge in the next four to six weeks, following the discussions between the two governments, the domestic rating agency noted.

Textiles and chemicals are among the items more exposed to the tariff imposition.

The impact of reciprocal tariff on the Indian economy depends on a number of factors like the extent of reciprocal tariff, products on which reciprocal tariffs are levied, the tariffs levied on the competing countries and ability of Indian exporters to find an alternative destination.

However, bilateral trade negotiations, defense and energy pacts between India and the US could minimise the adverse impact of reciprocal tariff India, it said in a note.

Fibre2Fashion News Desk (DS)