US Tariffs May Trim India’s GDP Growth by Up to 0.5 Percentage Points, Warns Finance Secretary

India’s Finance Secretary Ajay Seth has cautioned that new US tariffs could directly reduce India’s GDP growth by 0.2 to 0.5 percentage points this year, with the economy now expected to grow around 6.5%. Seth highlighted that the “second order effects” of trade disruptions—such as slower global growth—could further impact India’s outlook. The Reserve Bank of India recently lowered its GDP growth forecast to 6.5% for FY25, while the IMF has cut its estimate to 6.2%, citing increased trade tensions and uncertainty from the US tariff moves. Key export sectors like textiles, diamonds, and agriculture are expected to feel the brunt, with the government considering support measures for affected industries. Ongoing negotiations between Indian and US officials aim to address the fallout from these tariffs.

 

Sources: Economic Times, Reuters, Moneycontrol