Crisil Ratings has stated that the newly announced US tariffs—ranging from 10% to 50%—will likely have a moderate to low impact on 11 critical Indian export sectors. The statement comes after US President Donald Trump announced reciprocal tariffs on over 50 countries, including a 26% duty on India, while offering a 90-day reprieve for more than 75 nations.
Although these tariffs are steeper than previously expected, Crisil noted that they are not expected to drastically affect India’s core export sectors. “We believe the 11 key sectors will see moderate to low impact because of the tariffs,” Crisil said, though it flagged increased vulnerability in one area—diamond polishing—and improved outlooks for smartphones and textiles.
Sector-Specific Insights from Crisil:
- Diamond Polishing:
Crisil now categorizes this sector as moderately impacted, up from a previously assessed “low” impact. The segment is already facing a decline in demand due to the popularity of lab-grown diamonds, and it may struggle to absorb the higher tariff costs. - Smartphones:
The sector’s impact has been revised to moderate, down from high. With higher tariffs on competitors like China and Vietnam, India could emerge as a more attractive sourcing destination for US companies. - Textiles:
Crisil now sees a low impact here, revised from moderate. India’s relative cost advantage has improved due to steep tariffs imposed on rival exporters like Bangladesh, Vietnam, and China.
Macroeconomic Perspective:
India’s merchandise exports to the US represented just 2.0–2.5% of GDP during the past three fiscal years. While a global trade slowdown could create challenges, Crisil expects strong domestic balance sheets to provide a buffer. Additionally, cost increases in the US could hit consumer sentiment and corporate investment.
The ongoing tariff uncertainty may hinder capital inflow and global trade consistency. However, India’s unique positioning in specific sectors and tariff diplomacy could help mitigate the risks.
Geopolitical & Trade Considerations:
Trump’s temporary relief—a 90-day pause and reduced 10% tariff during the period—adds an element of unpredictability. Crisil also warned that further changes in trade relationships, bilateral agreements, or retaliatory tariffs from other nations could significantly alter the export landscape.
India’s response through strategic diplomacy and safeguard duties will be crucial in shielding domestic markets from dumping and maintaining competitiveness.
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