Merchandise exports: CRISIL sees stronger headwinds; US trade risks keep outlook cautious

India’s merchandise exports are likely to face intensifying pressure in the coming months as uncertainty over the proposed US-India trade deal persists and concerns grow over possible additional US levies linked to India’s crude oil purchases from Russia, ratings firm CRISIL said.In its latest assessment, CRISIL warned that near-term stress could emerge in select agri-export segments, particularly tea and basmati rice, following the US decision to impose a 25 per cent tariff on countries trading with Iran, reported PTI. The report noted that weak export momentum relative to imports has already pushed the merchandise trade deficit to $25 billion in December 2025, widening sharply from $20 billion a year earlier.Export growth to key markets has also slowed. Shipments to the US rose just 1.8 per cent year-on-year in December, while exports to other regions increased at a softer pace. Despite the deceleration, the US continued to be India’s largest export destination, supported mainly by rising smartphone shipments.Even as merchandise exports struggle, CRISIL said India’s current account deficit (CAD) is expected to remain manageable, helped by a strong services trade surplus, steady remittance inflows and softer crude oil prices.

The ratings firm projected the CAD at around 1 per cent of GDP in the current financial year, with a mild rise to 1.6 per cent in 2026-27, still within what it described as a safe range.CRISIL underlined that while external balances remain resilient for now, the outlook for goods exports faces stronger headwinds as global trade frictions and geopolitical risks continue to weigh on demand and market access.