The financial year 2025-26 marked the first full year of trade between India and the United States of America under the reciprocal tariff regime, introduced by the U.S. administration on April 2, 2025 through Executive Order 14257 – the most far-reaching U.S. tariff action in nearly a century. India was initially subjected to a 26% reciprocal tariff under a regime that underwent several revisions over the course of the year. These tariffs were particularly important for India given its overdependence on the U.S. market for its exports.
The Ministry of Commerce and Industry, India, has recently released trade data for the full financial year April 2025 to March 2026. Coming exactly one year after the initial imposition of these measures, the data provides an opportunity to meaningfully assess their impact on India’s export performance and evolving trade patterns.
This policy brief traces the evolution of U.S. tariff measures affecting India, assesses the extent of India’s dependence on the U.S. market, examines how the tariff measures affected its export performance in different markets, and evaluates the extent to which affected exports were absorbed by alternative markets. It further reviews the Government of India’s response, examining both longstanding export policies aimed at market diversification and the renewed push that followed the tariff episode. The brief suggests recommendations aimed at deepening market diversification and strengthening resilience against market-specific policy shocks.
