As the world’s largest economy continued to strengthen its standing as the top buyer of India’s software services exports, global trade tensions that started with the Liberation Day tariffs imposed by the U.S. on imports were a factor during the fiscal period. The official data from the Reserve Bank of India shows that software service exports to the United States rose 11% to $119.7 billion in 2025-26. During the year, the share of the US in Indian software service exports increased from 52.9% in 2024-25 to 54.1% of total service exports.

Contraction and growth in US demand

Export growth to the United States enabled India to extend its dominance over its second-largest market in software, the UK.UK’s share of the market was marginally down to 15.4% in 2025-26 compared to 15.5% in the previous financial year.

Software services export turnover from India for 2025-26 increased by 8% to reach $221.4 billion. This export figure does not include exports of $17.9 billion made by foreign units of Indian tech companies.

Although software exports overall reflected strong expansion, there were also indications that the routes through which services are supplied were changing. Indian software firms have posted a decline in on-site revenue to $18.4 billion in 2025-26 from $19 billion in the previous fiscal year. 

This reduction in on-site delivery, in which engineers and specialist staff travel directly to clients’ sites abroad to facilitate installation, is a sign of stricter visa procedures in destination countries.

The modest setbacks were unable to tarnish India’s overall services exports, which grew by 9% to reach $421.29 billion. At this level, software services formed the primary services pillar, accounting for 53% of India’s overall service exports during the FY. 

Analysis of the $221.4 billion software export basket reveals that IT services contributed $147 billion, with BPO services contributing $56 billion. Software product development export revenue was $6.4 billion.

RBI survey details and trade policy divergence

The steady growth of software services exports took place amidst a dramatic surge in tariff turbulence underpinning physical goods trade. The US administration’s April 2, 2025, declaration of Liberation Day tariffs affected foreign merchandise across the globe. 

While these tariffs were eventually overturned by the U.S. Supreme Court, continuing attempts to impose import taxes produced obstacles for physical commerce. Indian goods were once even subject to tariffs of up to 50% when they first entered the US, after arms and oil were bought from Russia and the tariff was doubled accordingly.

Due to these limitations in trade, the Commerce Ministry reported that goods exports to the US rose by 0.9% to $87.31 billion in 2025-26. This closely tracked the Global goods export growth rate for India at 0.9%, amounting to $441.45 billion. While the U.S. accounted for 20% of India’s total merchandise exports in the fiscal year, it accounted for 54.1% of software services exports.

The figures are taken from the Reserve Bank of India’s annual survey on computer software and information technology (IT) enabled services exports. The central bank reached out to 7,569 software export companies from all over the country to compile these external sector statistics.

A comprehensive response by the RBI was received from 2363 companies, which include most of the top major players in the industry. Together, the companies that responded to the survey represented around 89% of the total estimated software services exports during 2025-26 in India.

Conclusion

India’s software services sector showed strong resilience in 2025-26 with its US exports rising by 11% to $119.7 billion, representing a 54.1% share of Indian software exports. Despite the tariff-related pressure in the merchandise business and declining receipts in on-site delivery under the tougher visa requirements, the offshore digital service delivery continued to drive the export momentum in India. Software services accounted for 53% of total services exports, maintaining their status as a key player in India’s external trade.