India’s economic outlook faces fresh headwinds as Crisil Intelligence warns that escalating US tariffs could pose a major risk to growth, especially in export-driven sectors. The report, released on September 28, 2025, highlights vulnerabilities in automotive components, electronics, textiles, and IT services, which are heavily exposed to U.S. trade flows.
Key Findings from Crisil’s Report
1. Export Dependency
Nearly 18% of India’s merchandise exports are U.S.-bound. Tariff hikes on electronics, auto parts, and processed goods could dent margins and reduce competitiveness.
2. IT Services Under Pressure
Stricter visa norms and higher compliance costs are impacting Indian IT firms, with reduced onboarding and slower contract renewals.
3. Manufacturing Slowdown Risk
PLI-linked sectors like electronics and semiconductors may face delayed capex cycles if U.S. demand weakens further.
4. Currency Volatility
The rupee’s depreciation adds to import costs, while export gains may be offset by tariff barriers and global uncertainty.
5. GDP Impact
Crisil estimates that sustained tariff pressure could shave off 30–50 basis points from India’s FY26 GDP growth, depending on policy response and global demand recovery.
Sectoral Impact Overview
What This Means for Policymakers and Investors
- Policy Response Needed: Crisil urges faster trade diversification, export incentives, and bilateral negotiations to mitigate risk
- Investor Strategy: Focus may shift to domestic demand-driven sectors like banking, FMCG, and infrastructure
- Currency Watch: RBI may intervene to stabilize the rupee and manage inflationary spillovers
- Global Positioning: India must strengthen ties with ASEAN, EU, and Africa to reduce U.S. dependency
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Final Takeaway
As US trade barriers rise, India’s export-heavy sectors face mounting pressure. Crisil Intelligence’s warning underscores the need for strategic diversification, policy agility, and investor caution. The coming quarters will test India’s ability to adapt and sustain growth amid shifting global dynamics.