Kerala’s export economy is set for a recovery in 2026 following a sharp reduction in US tariffs under the newly announced India–US bilateral trade agreement, offering relief after a prolonged export slump in 2025.
A study by the Kerala Exporters’ Forum and its Research & Analysis Wing at the Dr. John Mathai Centre, University of Calicut, notes that US “reciprocal tariffs” on Indian goods—raised to as high as 50% in 2025—have now been cut to 18%, restoring price competitiveness for key Kerala exports.
From Tariff Shock to Stabilisation
The tariff escalation last year led to order cancellations and volume losses across seafood, spices, coir, cashew, rubber products, tea, and coffee, as US buyers shifted sourcing to Vietnam, Sri Lanka, Ecuador, and Thailand. The February 2026 agreement reverses this trend, enabling exporters to regain market share.
Sector Impact
Marine Products: The most significant beneficiary. Export volumes, which fell by an estimated 15% in 2025, are expected to stabilise, supporting nearly one million livelihoods across Kerala’s fisheries and processing clusters.
Spices: The tariff cut protects Kerala’s premium pepper and spice-extract exports from being priced out of the US market.
Cashew Kernels: The relief is critical for the Kollam cashew cluster, which sends nearly 50% of India’s value-added cashew exports to the US.
Coir Products: With the US accounting for about 37% of coir exports, the deal helps Indian suppliers regain shelf space in American home improvement retail chains.
Tea, Coffee and Rubber Products: Plantation and rubber-based manufacturing units receive moderate gains from improved market access.
Malabar in Focus
The report underscores the role of Malabar districts—Kozhikode, Kannur, Wayanad, and Kasaragod—as major sourcing hubs for US-bound exports, despite shipments moving primarily through Cochin Port.
Key products include Tellicherry Black Pepper, Kannur handloom home textiles, seafood from Kozhikode and Beypore, and GI-tagged Wayanad Robusta coffee. Exporters expect the tariff rollback to revive bulk orders, particularly in handlooms and seafood.
Risks Remain
The study cautions that reciprocal market-access commitments by India could expose domestic agriculture to future import pressure, though sensitive sectors such as dairy are reported to have been protected.
The report was prepared by M.S. Raunaq, Assistant Professor, with the Kerala Exporters’ Forum.
