Amid Trade War, US Share In India's Software Service Exports Rose To 54%, Pg15

Key Highlights:

• The US share in India's software service exports rose to 54.1% in the financial year 2025-26.
• India's total software service exports reached $221.4 billion in 2025-26, marking an 8% increase from the previous year.
• The Reserve Bank of India released this data, confirming the US as the largest destination for these exports.
• This growth occurred despite the US initiating a global trade war with Liberation Day tariffs in April 2025.
• Exports to the US specifically increased by 11% to $119.7 billion in 2025-26.

India's Software Exports.jpg

Detailed Insights:

• The US's share in India's software service exports increased from 52.9% in 2024-25, further widening its lead over the UK, which held 15.4%.
• The Liberation Day tariffs, announced by then-US President Donald Trump on April 2, 2025, imposed a 10% baseline tariff on nearly all imports.
• These tariffs were later struck down by the US Supreme Court in February 2026, ruling that the use of emergency powers to enact them was illegal.
• Revenue from "on-site" software services for Indian companies decreased to $18.4 billion in 2025-26, down from $19 billion, reflecting tightening visa norms.
• Tightening H-1B visa rules have led Indian IT firms to reduce dependence on these visas, increase local hiring in the US, and shift more work offshore.

Key Concepts Involved:

• Software Service Exports: The provision of IT-related services, such as development, maintenance, and consulting, to clients in foreign countries.
• Trade War: An economic conflict between countries involving the imposition of tariffs or other trade barriers on each other's goods and services.
• Tariffs: Taxes levied on imported goods and services, often used to protect domestic industries or as a tool in international trade negotiations.
• On-site Services: Software services delivered by personnel who travel to and work directly at the client's physical location in a foreign country.