Goldman Sachs stated the most recent US tariffs, if applied, might cut back India's annual gross home product (GDP) progress by round 0.3 proportion factors.
“Elevated coverage uncertainty within the US may cause Indian companies, notably these uncovered to US tariffs, to postpone funding choices,” it added.
Nomura projected 0.2 proportion level draw back danger to its FY26 GDP forecast of 6.2%. Equally, S&P World Market Intelligence expects India's GDP progress to gradual to six.2% in FY26 from 6.5% in FY25, with additional downward revisions seemingly.
Barclays famous that if the 25% tariff is applied from August 1 as introduced by Trump on Wednesday, the efficient common US import tariff on Indian items will rise to twenty.6% in trade-weighted phrases. That is sharply increased than each the pre ‘Liberation Day' tariff charge of two.7% and the 90-day pause tariff charge of 11.6%. In distinction, India's import tariff on US items is decrease, at 11.6% in trade-weighted phrases.
“We don't see this 25% tariff menace impacting GDP progress meaningfully, pegging the seemingly influence at 30 bp. We anticipate ultimate tariffs on India to settle in decrease than the introduced 25%, as India and the US proceed with commerce deal talks,” it stated.
The upper tariffs might have broader detrimental results on monetary markets and enterprise sentiment, in accordance with S&P.
“Renewed capital outflows and the Indian rupee depreciation might disrupt the continued coverage easing cycle by the Reserve Financial institution of India, resulting in a slower home demand progress,” it stated.
In FY25, India exported items value $86.5 billion to the US and imported $45.7 billion, recording a surplus of $40.8 billion. Merchandise exports to the US account for about 2% of India's GDP, with the commerce surplus accounting for about 1%.
If the 25% tariff extends past September, the supposed timeline for the BTA, it might influence the Indian economic system, primarily because of the nation's relative drawback in comparison with different Asian nations that secured a decrease tariff charge, S&P famous.
Nomura famous that though Vietnam's decrease tariffs could not instantly divert commerce flows, India is anticipated to learn within the medium time period from the China plus one technique, as corporations look to diversify their provide chains.
Nonetheless, India's domestic-driven economic system offers it some resilience.
Aditi Raman, affiliate economist at Moody's Analytics, stated whereas the US is India's largest commerce accomplice, India is comparatively extra domestically-oriented than many of the area and depends far much less on commerce.
