Crisil Ratings has assessed that the recent reciprocal tariff measures announced by US President Donald Trump are likely to have a limited impact on most of India’s key export sectors. On April 2, the US imposed tariffs ranging from 10% to 50% on more than 50 countries, including a 26% levy on Indian goods. However, a 90-day reprieve and a temporary lower tariff of 10% announced on April 9 has offered some relief to exporters and policymakers.
Limited Exposure and Sectoral Cushion
In a detailed report, Crisil noted that merchandise exports to the US comprise just 2–2.5% of India’s GDP, offering some insulation from trade shocks. While a slowdown in global trade could still weigh on export-driven industries, strong corporate balance sheets across sectors are expected to cushion the blow and support credit stability in the near term.
Crisil analysed 11 key export sectors and concluded that:
Eight sectors will face no change in risk assessment
Impact is lower than earlier anticipated for smartphones and textiles
Impact is higher than expected for the diamond polishing sector
Also read: Tariff Relief Opens Trade Talks Window: Exporters
Sector-wise Breakdown
1. Diamond Polishing: Now at Moderate Risk
Initially assessed to be at low risk, this sector is now expected to see a moderate impact. The added tariff pressure would increase the price of polished diamonds, which could dampen already-weak global demand due to competition from lab-grown alternatives. However, India’s dominant position in global diamond polishing may soften the blow.
2. Smartphones: Impact Lowered to Moderate
The smartphone sector’s risk has been revised downward from high to moderate. With China and Vietnam facing higher tariffs, India could become a more attractive sourcing destination for US buyers, offsetting some of the negative impacts.
3. Textiles: Impact Downgraded to Low
Previously deemed at moderate risk, the textiles sector now stands at low risk. India’s price competitiveness has improved significantly as key rivals Bangladesh, Vietnam, and China face much steeper tariff hikes, giving Indian exporters a comparative edge.
Broader Economic Implications
Crisil also warned that higher input costs passed on to US consumers could weaken consumer sentiment, while trade policy uncertainty may dampen corporate investment appetite. The global trade environment remains volatile, and the response of other countries—either through countermeasures or bilateral negotiations—could shift dynamics further.
The ratings agency also highlighted the importance of tariff diplomacy and safeguard duties by the Indian government, especially to protect domestic markets from dumping risks in key commodity segments.
Constant Monitoring Required
Crisil concluded that the situation remains fluid, and the evolving nature of tariff implementations and geopolitical shifts may require continuous reassessment. “Further changes in tariff levels and their influence on global trade will affect the credit quality outlook of affected sectors,” the report added.
