Tariff Effect
US tariffs, if fully implemented, may hit India FY26 growth by 20 bps - S&P
This story was originally published at 11:47 IST on 15 April 2025
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NEW DELHI – India's GDP growth can fall by 20-30 basis points from the baseline forecasts over two years if the US reciprocal tariff are implemented in the form announced by US President Donald Trump on Apr. 2, S&P Global Ratings Tuesday said in a report.
The US had implemented reciprocal tariffs on its trading partners, including a 26% levy on imports from India. However, Trump on Apr. 9 declared a 90-day pause on these tariffs and instead kept a uniform 10% duty on all US imports, except from China, which faces 145% tariffs.
According to S&P, if tariffs are fully implemented, India' GDP may grow 6.3% in 2025-26 (Apr-Mar), 20 bps lower than the baseline projection of 6.5%. Similarly, India's economic growth in FY27 may be 30 bps lower than the 6.5?seline forecast, S&P said. India's GDP grew 6.5% in FY25, as per the government's second advance estimate.
The Reserve Bank of India last week lowered its GDP growth forecast by 20 bps to 6.5% for FY26 because of the impact of global trade and policy uncertainties.
"If fully implemented as per the April 2 announcement and maintained for our forecast horizon to 2027, the tariffs would weigh on GDP growth, both globally and for many countries," S&P said. "We project the global economy would expand just 2.7% this year and next--about 0.3 of a percentage point (ppt) lower than our most recent forecast." End
Reported by Shubham Rana
Edited by Tanima Banerjee
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