“Combining goods and services, total exports are set to increase from $824.9 billion in FY25 to $839.9 billion in FY26—a 1.8% overall gain despite heavy US headwinds,” founder of Global Trade Research Initiative Ajay Srivastava said. Last financial year India’s overall exports had grown at 6.01%.
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This analysis supports commerce and industry minister Piyush Goyal’s view that despite all the challenges the country’s overall exports will surpass last year’s level.
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, Srivastava said.
Without the full impact of US tariffs the overall exports in April-July stood at $ 263.83 billion in April-July. Of which the merchandise exports accounted for $ 144.76 billion while services exports were $ 119.07 billion.
Merchandise under pressure
On goods exports the economists see a decline from last year’s $ 437.4 billion if tariffs to the US remain at 50% levels for the rest of the year. In the first four months the Indian exporters have already pushed $ 35.53 billion worth of goods to the US in April-July, which is 21.5% more than last year.
“Considering that 50-60% of India’s exports to the US are at risk, the downside is likely to be material in case the 50% tariff rate (25% general + 25% special) is continued until the end of FY2026. Given this, India’s exports to the US are likely to contract during the remainder of the fiscal. In this scenario, we expect India’s overall merchandise exports to decline in FY2026 from the levels seen in FY2025.” chief economist at ICRA Aditi Nayar said.
“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 $387.5 billion to $ 426.2 billion, led by IT, business services, fintech, and healthcare,” a GTRI analysis said.
Services to drive growth
While services export growth may remain intact, it is not entirely spared the headwinds. The US is the biggest market for services exports for India. ”Services exports have so far been spared from any tariffs. While tariffs on services are unlikely, India’s services exports (primarily IT services) may be hit by a slowdown in the US, as well as overall global uncertainty which may reduce discretionary IT spending,” Chief Economist at Emkay Global Financial Services Madhavi Arora said.
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While the overall exports would not see any decline thus keeping pressure on Current Account Deficit under check, the tariffs are a strategic shock.
This is a strategic shock that threatens India’s long-standing foothold in U.S. labour-intensive markets, risks mass unemployment in export hubs, and could weaken India’s participation in global value chains. Competitors like China, Vietnam, Mexico, Turkey, and even Pakistan, Nepal, Guatemala, and Kenya stand to gain, potentially locking India out of key markets even after tariffs are rolled back, GTRI said.