India’s exports shrank to eight of its 20 key markets in the first quarter of the 2025–26 financial year, even as the full impact of the United States’ steep 50% reciprocal tariffs on Indian goods is yet to be felt.

Commerce department data, cited by Business Standard, show that between April and July, shipments fell sharply to the Netherlands (-21.2%), the UK (-11.2%), Singapore (-11.8%), Saudi Arabia (-11.8%), South Africa (-16.3%), Italy (-9.2%), France (-17.3%), and Malaysia (-28.8%).

Overall, India’s exports still managed to post a modest 3% growth to USD 149.2 billion in April-July, largely buoyed by strong demand from the US, where shipments rose to account for 22% of total exports compared with 19% in the same period last year. Exporters said global demand has remained subdued, with uncertainty deepened by the US move to impose country-specific reciprocal tariffs on multiple trading partners.

“Exporters said that global demand has remained sluggish due to uncertainties caused by the imposition of country-specific reciprocal tariffs by the US on several nations,” the report said.

However, India’s trade with the US stood out, with exporters reporting “healthy double-digit growth” driven by frontloading.

“India’s exports to the US have been robust, seeing healthy double-digit growth, because of frontloading,” the report added.

American buyers have been stockpiling goods in anticipation of the steep tariff regime, but this surge is expected to taper off once the 50% reciprocal tariffs take effect from August 27. Exporters admitted that shipments to the US were being prioritised amid the uncertainty, often at the expense of other important markets.

The US remains India’s largest export destination, but industry insiders caution that the second half of FY25 and into FY26 could see a significant contraction in outbound trade as the new tariff regime bites.

The tariffs, announced by the Donald Trump administration on August 7, include a 25% reciprocal tariff on Indian goods and an additional “penalty” tariff of 25%, citing India’s crude oil imports from Russia. Together, they amount to an unprecedented 50% levy on Indian exports entering the American market.

Sectors such as textiles and apparel are expected to be hardest hit, with effective duty rates climbing above 60%. The carpet industry, gems and jewellery, and India’s lucrative shrimp exports are also projected to suffer major setbacks, raising concerns over employment and earnings in these labour-intensive sectors.