CRISIL flags strong headwinds for merchandise exports

Kolkata: Ratings firm CRISIL said that merchandise exports are likely to be buffeted by stronger headwinds due to the continuing impasse on the US-India trade deal and the fear of further levies by America for the purchase of Russian crude oil.

In its latest report, CRISIL said that in the near term, tea and basmati rice could face some pressure because of the imposition of a 25 per cent tariff by the US on countries trading with Iran.

The report said that the current account deficit (CAD) is expected to remain manageable because of a robust services trade surplus, healthy remittances and softer crude oil prices.


The ratings firm said the CAD is expected to be one per cent of gross domestic product (GDP) this financial year, with a mild uptick, but still within the safe zone, to 1.6 per cent in the financial year 2026-27.

With the merchandise exports growth rate lagging imports, the merchandise trade deficit widened to USD25 billion in December 2025, from USD20 billion a year earlier.

In terms of destinations, exports to the US decelerated to 1.8 per cent year-on-year in December. Exports to the rest of the world rose at a slower rate. However, the US remained India's top export destination, largely driven by smartphone shipments from India.