A slowdown in 2023 in advanced economies, especially the U.S. and the eurozone, is expected to make India's footwear and leather products export trade vulnerable, said Crisil Ratings.
"Domestic labour-intensive sectors such as textiles, footwear, and leather depend significantly on these two regions, making them particularly vulnerable to a slowdown in these economies," it said in a report titled 'The Slowdown Shadow'.
It said since these regions being two of India's largest export destinations, a slowdown in their economies would lower demand for Indian exports.
Many economists and global institutions earlier projected to a global slowdown in 2023, as the impact of continued monetary policy tightening across major economies manifests.
Raising interest rates typically cools demand in the economy and thus helps in managing inflation, but it also has the potential to trigger a slowdown in overall economic activities.
"Advanced economies are expected to bear the brunt as they aggressively pursued monetary tightening in 2022," Crisil said.
The forecast of a global slowdown, Crisil said, is worrisome because India's growth cycles have become highly synchronised with those of advanced economies over the years.
"The most important and direct impact of this will be reduced demand for Indian goods abroad. The U.S. and European Union (EU) are two of the largest destinations, accounting for 18% and 15.4%, respectively, of India's merchandise exports in fiscal 2022," it added.
It also raised concerns about India's textile exports. "It is noteworthy that labour-intensive categories such as leather articles, footwear, and textiles have the highest export dependence on these advanced economies," the report added.