“The US accounts for about 20–25% of India’s goods exports, and nearly half of that basket is now subject to a 50% tariff. This is a significant blow to export competitiveness,” Gupta told ET Now. Labour-intensive sectors such as leather, footwear, and gems & jewellery could face the sharpest short-term pain, she added.
Still, Gupta noted that key export categories such as pharmaceuticals, electronics, semiconductors, and petroleum products have been spared, providing some relief.
3 factors could offset tariff impact
On the broader GDP impact, Gupta said HDFC Bank’s baseline growth forecast of 6.3% for FY26 could see a downside of 40 bps due to tariffs. However, she highlighted several offsetting factors: a robust rural economy, GST rationalisation expected around Diwali (which could add 20 bps to growth), and likely fiscal support for affected exporters, particularly MSMEs. These factors could play out and cushion the impact. These will need to be accounted for.
“While tariffs are a clear headwind, we must weigh them against domestic demand drivers and policy responses. Our sense is that growth will remain modest but not collapse,” she said.On the monetary policy front, Gupta dismissed fears of a sharp inflationary spike from tariffs. Food inflation has been easing, she said, and GST rate cuts could lower inflation further over the next year.“The real challenge for the Monetary Policy Committee (MPC) is growth. If high-frequency indicators weaken, the probability of a rate cut in the October policy has increased. The inflation backdrop gives the MPC enough space to ease,” Gupta noted.
With exports under strain and global trade flows slowing, Gupta underlined the importance of sector rotation within markets. “The shift towards domestic consumption plays is already underway. Autos, consumer sectors, and even segments like renewables and e-commerce may offer opportunities, while exporters tied to tariff-hit sectors will continue to struggle,” she said.