New Delhi: As the steep 50 per cent tariff on Indian goods entering the United States came into effect from August 27, 2025, Global Trade Research Initiative (GTRI) released a report stating that India has the potential to tackle the tariff storm.
The tariffs imposed by the Donald Trump administration would lead to India’s exports to the US falling from $86.5 billion in FY2025 to about $49.6 billion in FY2026. However, GTRI stated that India’s global exports remain resilient and the momentum stays positive. “Goods exports (excluding the U.S.) are projected to grow 5%, rising from $350.9 billion in FY2025 to $368.5 billion in FY2026. More significantly, services exports—India’s standout strength—are expected to jump 10%, from $383.5 billion to $421.9 billion, led by IT, business services, fintech, and healthcare,” the report mentioned.
Combining goods and services, India’s total exports are set to jump from $820.9 billion in FY2025 to $839.9 billion in FY2026, a gain of 2.3% and this despite US tariff impacts. “This underscores India’s diversification, resilience,and growing reliance on services, proving that while American tariffs hurt, India’s export engine is slowed—not derailed,” GTRI stated.
US Tariff Impact on GDP Growth
“India’s nominal GDP was $4,270 billion in FY2025 and is expected to grow at 6.5% in FY2026 under normal conditions. However, the $36.9 billion export loss to the U.S. lowers the FY2025 base to $4,233.1 billion. *At 6.5% growth on this adjusted base, FY2026 GDP would reach $4,508.25 billion, implying an effective growth rate of 5.6%—a 0.9 percentage point drop. This is a worst-case scenario. With tax reforms, ease-of-business measures, and aggressive export diversification, India can offset the shortfall and sustain robust growth,” GTRI report stated.
Low Export Dependence = Cushion Against Shocks
GTRI states that the additional tariffs imposed by the United States would impact sectors like shrimp, carpets, textiles, jewellery, and furniture. However, most Indian companies will have the option to export their products to other nations and tap a growing domestic economy, it said.
In a sigh of relief, GTRI said that exports form only 20% of GDP, so India’s growth is less vulnerable to external shocks. It further mentioned that the ongoing taxation and business reforms initiated by the government would enhance competitiveness, reduce costs, and position India to seize opportunities in new global markets
Conclusion: The U.S. tariffs are a significant setback, but India’s diversified export base, strong services sector, large domestic market, and ongoing reforms provide the foundation to withstand the storm and keep moving forward.
(The report has been published by Global Trade Research Initiative)