India sees no hit to projected growth from US tariffs, but economists remain skeptical

Economists, including at Goldman Sachs, have lowered India’s growth estimates by 20 to 40 basis points to 6.1 per cent for the 2025/26 financial year, citing the impact of the global tariffs imposed by US President Donald Trump. A 26 per cent 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 April 7.

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 under way with ministries and exporters’ associations to assess the fallout, the officials said. The 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 does not plan to retaliate against Mr Trump’s tariffs as officials try to negotiate a resolution, media has reported. Officials said the impact of the US tariffs on labor-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.