India sees no hit to projected growth from US tariffs; economists remain sceptical

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Craftsmen work on diamonds inside a diamond processing unit in Surat, India, April 3, 2025. — Reuters File Photo
Craftsmen work on diamonds inside a diamond processing unit in Surat, India, April 3, 2025. — Reuters File Photo

India may still meet its 6.3 per cent to 6.8pc growth projection for the 2025/26 fiscal year that started on April 1 despite global disruptions from new US tariffs, if oil prices stay below $70 per barrel, government officials said, even as many private economists lowered their forecasts.

Economists, including at Goldman Sachs, have lowered India’s growth estimates by 20-40 basis points to 6.1pc for the current 2025/26 financial year, citing the impact of the global tariffs imposed by US President Donald Trump.

A 26pc tariff on Indian imports, with even higher levies on other countries like China, has escalated global trade tensions, with major stock indices plunging in Asia on Monday.

India’s diamond industry, which ships more than a third of its exports to the US, is expected to be among the worst hit sectors, putting thousands of jobs at risk.

Discussions are underway with ministries and exporters’ associations to assess the fallout, the officials said.

The Indian finance ministry has already received four to five proposals from the commerce ministry to support export industries, including an extension of interest subsidy scheme, aid for diversification, and increased bank credit, a second official said.

“We are still studying the impact of tariff hikes on the export sectors and the decision could be taken at the appropriate time,” the official said.

A third finance ministry official, however, said the tariffs would not weigh heavily on India’s key fiscal parameters for the 2025/26 year.

“We have already made provisions in the budget for duty remission schemes to help exporters and are open to doing more,” the official said.

The officials spoke on condition of anonymity as they were not authorised to speak to the media.

India’s finance ministry did not immediately respond to an e-mailed request for comment.

India does not plan to retaliate against Trump’s tariffs as officials try to negotiate a resolution, Reuters has reported.

Officials said the impact of the US tariffs on labour intensive sectors such as textiles, footwear and agriculture was the government’s biggest worry.

The government could increase support to exporters under its export promotion scheme announced in the budget, within fiscal constraints, the second official said.

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