Indian econ may emerge strong amid ongoing tariff war
Fin panel Panagariya
This story was originally published at 18:52 IST on 2 May 2025
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--Panagariya: India may emerge stronger from tariff war if US, China delink
--Fin panel Panagariya: May see some more rate cuts from RBI going ahead
--Panagariya: Trade pact with US can expedite pacts with EU, UK too
--Panagariya: Impact of tariffs on global trade to be clear in next 3 mos
--Arvind Panagariya: Growth slowdown a blip due to extended rate tightening
--Fin secy: Indian econ resilient enough to find way through global issues
--Fin secy: Hopeful India will find resilience amid tariff war
--Fin secy: Must mitigate trade-related uncertainties to encourage pvt capex
NEW DELHI– The Indian economy is likely to emerge stronger amid the ongoing tariff war as the US intends to decouple from China, Sixteenth Finance Commission Chairman Arvind Panagariya said. The impact of the tariff war on global trade would become clear in the next three months, Panagariya added.
"US-China conflict is set to stay here," Panagariya said at Isaac Centre for Public Policy's Growth Conference on Friday. Indian exporters may gain market access in the US if the latter delinks from China, Panagariya added. Washington and Beijing have been at loggerheads since April after US President Donald Trump launched a trade war with China with a levy of 145% tariff on Chinese goods. Beijing also retaliated with 125% duty on American goods.
The US is also likely to impose its reciprocal tariff on Indian goods in July. However, Indian trade ministry officials are negotiating for a trade deal with their American counterparts on mission mode. The trade agreement with the US, which is New Delhi's hope to safeguard the economy from the impending reciprocal tariffs, may also expedite conclusion of trade deal with several other developed economies like the European Union and the UK, Panagariya said. "We are very close to free trade."
Finance Secretary Ajay Seth, who was also present at the event, said that the Indian economy was resilient enough to find its way through the global challenges. Amid the current uncertainties, Indian economy is poised to grow at 6.3-6.8% in 2025-26 (Apr-Mar), as estimated in the Economic Survey for FY25, Seth told media. "The growth may be towards the lower side, but it will be within the range."
The government is also looking for ways to mitigate trade-related uncertainties to encourage private capital expenditure, Seth said. This should support the economic growth, according to Seth.
There was some loss of momentum in the growth of the Indian economy recently due to the tight monetary policy, which was "longer than necessary", Panagariya said. India's GDP had slowed down to a seven-quarter low of 5.4% in Jul-Sept.
Since February, the Reserve Bank of India has cut the policy repo rate by 50 basis points to 6.0%. Going ahead, as more rate cuts are expected, Panagariya's economic growth outlook is optimistic, he said. End
Reported by Krity Ambey and Sagar Sen
Edited by Akul Nishant Akhoury
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