Indian exports to the US could stage a sharp recovery in FY27 following a dramatic reset of American tariff policy after the US Supreme Court struck down President Donald Trump’s reciprocal tariffs on February 20.
In response, the White House rolled back the earlier duties but imposed a fresh universal tariff of 10% on all trading partners, including India, under Section 122 of the Trade Act of 1974. President Trump has since indicated that this rate could be raised to 15%, adding a new layer of uncertainty for exporters.
Trade experts say the shift, while disruptive, may ultimately support a rebound in India’s shipments to the US.
“The revised tariff measures have provided relief to exporters. We are already seeing some orders moving to India. Whatever little hit we have taken in exports to the US, we should be able to bounce back,” said Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisation (FIEO).
Sahai noted that India’s US exports in FY26 are likely to close with a contraction of around 15%, after a steep decline of nearly 22% till December. “From that lower base, India could be looking at export growth in the range of 30% to the US in FY27, assuming tariff stability,” he added.
From expected advantage to neutralised edge
Earlier this month, India had anticipated that US tariffs would moderate to roughly 18% under the interim trade framework signed on February 6. While India benefits from a lower headline tariff, the universal structure reduces the comparative edge it may have gained over rival exporters, experts explained.
“At that time, we were relatively better placed compared to competitors — China at 34%, Bangladesh at 19%, Vietnam at 20% — so getting 18% looked like an advantage. “But now, with tariffs moving to 10% or 15%, two things have happened. One, 15% is lower than 18%, so that is a benefit. Two, everyone is facing a similar structure, which means India’s relative advantage is largely neutralised,” said Ajay Shrivastava, Founder of the Global Trade Research Initiative (GTRI).
Bilateral trade agreement gains importance
Against this backdrop, experts argue that the proposed India–US bilateral trade agreement (BTA) becomes even more critical.
“The BTA goes beyond tariffs. It covers investment, services trade, and digital trade. Even if tariff-related issues have seen disruption, it does not mean we should step back from broader engagement,” Sahai said.
However, Shrivastava cautioned that negotiations must now be approached with greater scrutiny, adding that if tariffs are becoming universal, policymakers must ask what incremental benefit a trade deal actually delivers.
“Concessions should be weighed carefully unless the agreement offers tangible gains such as duty reductions, regulatory alignment, or sector-specific access,” he said.
Durability of tariffs remains uncertain
While the tariff reset offers near-term relief and a potential rebound from a depressed FY26 base, the evolving legal and political landscape in the US means exporters may need to brace for further shifts in trade policy. As questions linger over the legal sustainability of the new US tariff regime.
Shrivastava pointed out that Section 122 provisions are intended for balance-of-payments emergencies. And the US does not face such a problem. Legal challenges could alter the structure again, he said.
Garima Kapoor, deputy head of research and economist at Elara Capital, highlighted section 122 measures are capped at 150 days, raising questions about what tariff regime will follow. Key to watch will be incremental announcements regarding the status and validity of the trade deal negotiated earlier this month, Kapoor said.
She emphasised that Indian exporters should not rely solely on a US recovery, adding that the US still accounts for roughly 23–25% of India’s exports, and uncertainty in that market is likely to persist.
“Indian exporters should actively pursue market diversification, particularly towards Europe and the UK. We are also seeing a gradual increase in exports to China, while a relatively weaker USD–INR provides some currency comfort,” she said.
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