India’s export outlook at risk from US tariffs and global slowdown, says finance ministry

The Finance Ministry on Monday raised concerns that the United States’ recent “reciprocal” tariff measures could adversely affect India’s trade performance in the coming quarters, despite a generally optimistic domestic outlook.

In its June Monthly Economic Review, the ministry flagged that though India’s economy is showing steady growth, global challenges — especially a slowdown in the US owing to the tariffs— could impact India’s export growth.

It further noted that the US economy contracted by 0.5% in the first quarter of 2025, adding to concerns about weakening global demand.

“Despite the broadly positive outlook, downside risks remain. While geopolitical tensions have not elevated further, the global slowdown, particularly in the US (which shrank by 0.5 per cent in Q1 2025), could dampen further demand for Indian exports,” the report said.

Indian exports, already vulnerable to volatile global conditions, could see further strain if US tariffs are expanded or deepened in sectors critical to bilateral trade. The review also pointed to slow credit growth and weak private investment appetite as domestic factors likely to temper economic acceleration, even as overall macro indicators remain stable.

“Continued uncertainty on the US tariff front may weigh on India’s trade performance in the coming quarters. Slow credit growth and private investment appetite may restrict acceleration in economic momentum,” it added.