U.S. President Donald Trump's tariffs are expected to reduce India's GDP growth for fiscal 2026 by 0.2% to 0.4%, lowering the growth from 6.8% to around 6.6% or 6.5%.
The GDP, initially projected at ₹200.7 lakh crore, could drop to ₹200.3 lakh crore (6.6% growth) or ₹200.1 lakh crore (6.5% growth).
Tariffs may cause inflation due to exchange rate fluctuations, with a 10% depreciation in INR leading to a 0.12–0.16% short-term and 0.38–0.49% long-term rise in wholesale price index (WPI) inflation.
Monetary Policy: The RBI might cut interest rates by 50 basis points in FY26 to counteract the economic impact.
9–11% of India’s exports to the U.S. (including electronics, precious stones, machinery, and garments) may be affected, potentially reducing exports by ₹57,000–₹64,000 crore.
Export-dependent companies may face lower revenues and may need to cut prices to remain competitive, impacting their profitability.
The Ministry of Commerce is exploring options, including potential negotiations with the U.S., to mitigate risks.
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