When the US slapped reciprocal tariffs on a number of countries, including India, New Delhi was faced with exports from the country facing a tariff of 26%. 

However, late on April 9, President Trump then announced a 90-day pause on the tariffs on all countries except China. The reciprocal tariff now stands at a relatively minor 10%. This provides some breathing space to New Delhi, but a lot of uncertainties remain. In the case that  India is not able to sign a deal within 90 days and the higher tariffs return, then the impact of the new US tariff regime on Indian exports would vary significantly across sectors. CRISIL Intelligence published a report to this end just before the pause was announced, analysing the impact of the tariffs on Indian exports. 

According to the CRISIL report, pharmaceuticals, which account for 32% of domestic production with over half exported to the US, face no additional tariffs and are therefore expected to remain neutral. However, on April 8, Trump hinted that pharma imports, too, could soon attract tariffs. 

Solar photovoltaic (PV) modules, with 97% of exports destined for the US, remain exempt from new duties and face a neutral outlook.

Textiles and apparel, where 28% of domestic production is exported and 37% goes to the US, would face a combined tariff of 37%—up from 11% previously—yet the impact is assessed as marginally favourable due to India’s competitiveness in the sector, according to the CRISIL Intelligence report. 

Smartphones meanwhile fall into the marginally favourable category; although they will face  a 26% tariff - if the tariffs return - and their strong 30% export share of domestic production and 37% US market share offer room for growth.

In contrast, gems and jewellery, with 26% of production exported and 37% of that going to the US, now face potential future tariffs ranging between 26–33%, making the outlook unfavourable. Auto components and aluminium, facing total tariffs of 25% and nearly 30% respectively, are considered marginally unfavourable, especially given their substantial export share of domestic output—15% for auto components and 47% for aluminium.

Chemicals too are affected, with 40% of output exported and 13% going to the US, also falling under the marginally unfavourable category, with tariffs rising from 3.7% to nearly 30% if reimposed. Meanwhile, agriculture exports, though not quantified as a share of domestic production, see a potential 26% duty imposed, but the overall impact is judged to be marginally favourable due to global demand dynamics. Steel, with minimal exposure to the US, maintains a neutral outlook despite a possible 25% duty.

According to CRISIL Intelligence, these sectoral assessments highlight both vulnerabilities and opportunities within India’s export landscape under the revised US trade framework.

Rupee volatility and its impact

The Indian rupee has been volatile in recent weeks due to global geopolitical factors and the new US tariff regime. The rupee’s volatility against the US dollar is expected to negatively impact the earnings of some sectors by up to 250 basis points (bps) in fiscal year 2026, CRISIL said in a separate report.

The Indian rupee moved from INR83.81 to the dollar on October 1, 2024, to INR87.40 on February 28, 2025, before appreciating to INR85.65 on April 3, 2025. This is compared to a yearly rupee depreciation of 1–2% witnessed over the previous two years through September 2024. CRISIL Intelligence sees the rupee declining compared to the dollar and touching the levels of INR88 by the end of March 2026.

When the rupee weakens sharply, sectors with a large share of imported raw materials will witness a significant jump in their costs without a corresponding rise in revenues, Crisil said in the report. Hence, earnings reported by these sectors are expected to be negatively impacted in the short term. Complex fertilisers, airlines, oil and gas (refining and marketing), polyvinyl chloride (PVC) pipes and fittings, capital goods, pharmaceuticals (active pharmaceutical ingredients, or APIs) and renewable power are some sectors that benefit from rupee depreciation. 

The extent of the impact will depend on exposure to foreign trade, the ability to pass on the cost increase, and hedging practices, CRISIL said.

On the flip side, a weakening rupee could boost earnings of companies operating in sectors such as information technology (IT), home textiles and marine foods. The impact may not be substantial for other sectors with significant overseas trade exposure such as pharmaceuticals (formulations), chemicals, primary steel producers, gems & jewellery, ceramics, city gas distribution and edible oil due to a high propensity to pass on the incremental cost to customers.

For oil and gas (refining and marketing) companies, the regulated and fixed prices of key end-products such as diesel and petrol mean that a rise in dollar-denominated crude oil costs, influenced by rupee decline, could cut operating profitability by up to 125 basis points. However, given the current favourable crude oil prices (average price of about $75 per barrel over the past six months for the Indian basket), profitability is trending above the historical average and there is some cushion against the adverse forex movement.

In capital goods, given the diversity in the sector, segments that import many components could see profitability take a hit, while those that export finished products will be better placed.

Pharmaceuticals (APIs) and renewable power may witness a marginal impact on profitability and project returns, respectively, as the majority of the raw materials are imported, CRISIL said.