How badly will Donald Trump’s reciprocal tariffs hit the Indian economy? Government officials have said that the ongoing global economic turmoil is likely to have a minimal impact on India.
Despite global disruptions from new US tariffs, India could achieve its projected growth of 6.3%-6.8% for fiscal year 2025-26, provided oil prices remain under $70 per barrel, according to government officials quoted by Reuters.
This assessment comes even as numerous private economists have reduced their forecasts. Several economists, including those at Goldman Sachs, have decreased their growth predictions for India by 20-40 basis points to 6.1% for the 2025-26 financial year, citing the effects of global tariffs implemented by the US President Donald Trump.
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The implementation of a 26% tariff on Indian imports, alongside higher duties on other nations such as China, has heightened international trade tensions, resulting in significant declines across Asian stock indices on Monday. Indian stock markets have also crashed over 4%.
The Indian diamond sector, which exports over one-third of its production to the U.S., is likely to be severely affected, potentially endangering numerous jobs. Officials indicate that consultations are ongoing with ministries and export associations to evaluate the consequences.
The commerce ministry has submitted four to five proposals to the finance ministry for supporting export industries, a second official confirmed. These include extending interest subsidy programmes, providing assistance for diversification, and enhancing bank credit availability.
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The government continues to evaluate how tariff increases affect export sectors, with decisions pending for an appropriate time, according to the official.
A separate finance ministry representative told Reuters that these reciprocal tariffs would have minimal impact on India’s primary fiscal indicators for 2025-26.
“We have already made provisions in the budget for duty remission schemes to help exporters and are open to doing more,” the official said.
India’s stance remains non-retaliatory towards the imposed tariffs, whilst officials seek diplomatic solutions.
Government representatives expressed primary concerns about the American tariffs’ effects on workforce-intensive industries, including textiles, footwear and agricultural sectors.
The administration could enhance support for exporters through the budget’s export promotion programme, within available fiscal space, as stated by the second official.
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