Trump Tariffs Shocked in 2025, Yet India’s Exports Stay Strong — Momentum to Carry Into 2026

Despite steep US tariffs in 2025, India’s exports show resilience, diversify markets, and rise across sectors, with strong momentum expected to continue into 2026.

2025 may go down as the year of tariffs, but India’s export engine never quite stalled. Even as the United States — India’s largest trading partner — slapped a steep 50 per cent duty on Indian goods, exporters quietly got to work. They rewired trade routes, found new markets and refused to let global headwinds dictate the story. 

Or, as one of the senior-most officers in the commerce ministry put it with a touch of poetry: “Trade is like water, it finds its own course.”

That analogy feels apt for a sector that has endured — and adapted to — an almost relentless series of disruptions: the Covid-19 pandemic (2020–22), the Russia-Ukraine conflict, the Israel-Hamas war, the Red Sea shipping crisis, semiconductor shortages and now, punitive US tariffs.

From Shockwaves to Stability

India’s export numbers over the last few years read like a roller-coaster chart — but one that ultimately trends upward.

• USD 276.5 billion in 2020
• USD 395.5 billion in 2021
• USD 453.3 billion in 2022
• A dip to USD 389.5 billion in 2023
• Then a recovery to USD 443 billion in 2024

In January–November 2025 alone, merchandise exports have already touched USD 407 billion.

Commerce Secretary Rajesh Agrawal says the larger trade picture — goods and services — tells the story of resilience even more clearly.

“India's exports of goods and services reached a historic high of USD 825.25 billion in 2024-25, over 6 per cent year-on-year growth and this strong upward trajectory continues into the current fiscal year also (USD 562 billion during April-November 2025), which is a clear demonstration of resilience amid global headwinds,” he was quoted as saying in a PTI report.

He adds that the momentum doesn’t look set to fade.

"Based on current trends, India's exports are poised to deliver solid growth in 2026 as well. Notably, three free trade agreements -- UK, Oman, and New Zealand -- will enter into force next year, unlocking enhanced market access for both goods and services exports."

Tariffs Hurt — But Exporters Pivot

The US tariff shock, imposed in August 2025, hit shipments hard in September and October.

Yet November told a different story: exports to the US surged 22.61 per cent to USD 6.98 billion.

Exporters are hopeful — but realistic. With geopolitical tensions simmering and trade talks still in play, they are banking on early conclusion of the proposed India-US deal and progress with the European Union.

Meanwhile, the WTO warns of softening global trade:

"With higher tariffs now in place and trade policy still highly uncertain, frontloading of purchases is expected to unwind as accumulated inventories are drawn down and as GDP growth slows. Possible signs of weakness in trade and manufacturing output have been observed in developed economies, including reduced business and consumer confidence and slower growth in employment and incomes."

Even so, India believes its policy buffer will help cushion the blows.

Policy Push: From FTAs to Credit Support

An official familiar with the government’s strategy says the response is multi-layered.

“The government continues to monitor India's exports and take steps to promote them. It continues to work to mitigate the impact of the US tariff measures on Indian exports through a comprehensive multi-pronged strategy,” he said in a PTI report.

This includes:

• ₹25,060-crore export promotion mission
• Collateral-free credit up to ₹20,000 crore
• Moratoriums on export-credit repayments
• Leveraging new and existing FTAs

In fact, the NDA government has been unusually active on the FTA front in the last five years — sealing agreements with Mauritius, Australia, the UAE, Oman, the UK, EFTA nations and New Zealand (talks concluded).

Electronics Lead a Structural Shift

Export watchers say the story of 2026 will be less about recovery — and more about structural transformation.

Rudra Kumar Pandey, Partner at Shardul Amarchand Mangaldas & Co, frames it this way:

"India's export outlook for 2026 is best seen as the result of structural shifts rather than a cyclical recovery in global trade."

Electronics are the star performer.

"Electronics have emerged as a key driver, with exports rising nearly 39 per cent in November, reflecting sustained FDI-led capacity creation and deeper integration into global value chains."

Engineering goods, pharmaceuticals and automobile exports remain strong pillars. Just as importantly, India is no longer over-reliant on a handful of destinations. Exports to Spain jumped nearly 150 per cent in November, while flows to China and Bangladesh also rose.

‘We Remain Confident’

For exporters themselves, the mood is cautiously optimistic.

Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai believes the ecosystem is shifting in India’s favour.

"With continued policy support and market diversification, we remain confident of a strong and stable export outlook in the coming year," he was quoted as saying in a PTI report.

He points to growth across sectors — engineering, electronics, pharmaceuticals, apparel, textiles, marine and services — as evidence that diversification is finally paying off.

But Sahai also sounds a note of caution.

"Slower growth in key developed markets may temper demand, while rising protectionism, including carbon-related measures and non-tariff barriers, will raise compliance costs. Exchange-rate volatility, high freight and insurance costs, and tighter global financing conditions could impact margins, especially for MSMEs."

The rupee itself has had a choppy year, dipping around 5 per cent in 2025 and hovering near ₹90 to the dollar by late December.

A Test of Resilience — And Reinvention

If 2025 tested India’s exporters, it also revealed their adaptability.

They navigated wars, shipping disruptions, semiconductor shortages — and now tariffs — without allowing the system to seize up. The result is that India enters 2026 not unscarred, but undeniably steadier.

Perhaps that unnamed commerce official was right after all.

Trade really does behave like water.

It flows. It adapts. And somehow — it finds its course.