Donald Trump tariffs to dent India’s GDP growth? Up to 30 basis points dip possible, say experts; expected trade deal could soften blow – Times of India

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The imposition of a 25 per cent US tariff on Indian items from August 1, together with an unspecified penalty over India’s continued trade with Russia, could weigh on India’s GDP progress and export prospects, consultants have warned. Sectors akin to prescription drugs, gems and jewelry, textiles, and cars are seemingly to be most affected. Whereas the tariff blow is expected to decrease India’s GDP by up to 30 basis points, analysts imagine the affect could be mitigated by an eventual trade settlement between the 2 nations, helped by India’s home demand-pushed progress mannequin, in accordance to PTI.

ICRA: Progress forecast could also be downgraded if penalty is extreme

ICRA Chief Economist Aditi Nayar mentioned the US transfer was harsher than beforehand anticipated. “We had already factored in a decrease progress projection of 6.2 per cent for FY26 due to earlier tariffs. Now, the brand new 25 per cent tariff plus the penalty could pose a sharper headwind,” she mentioned, including that the precise affect will rely upon how steep the penalty seems to be.

EY: Lively trade engagement nonetheless provides hope

EY India’s Trade Coverage Chief Agneshwar Sen harassed the significance of the continued bilateral negotiations. “Given the shared historical past and strategic partnership, either side can resolve these contentious points constructively and attain a mutually helpful settlement,” he mentioned.

Barclays: India’s home demand limits gdp hit

Barclays estimates that the brand new tariffs could shave off 30 basis points from GDP in FY26, however India’s comparatively closed economic system will cushion the blow. “We count on the ultimate tariff to settle under 25 per cent as talks progress,” it mentioned. It additionally highlighted that the Indian rupee is oversold, although stress will persist within the quick time period.

Elara Capital: India’s drawback vs others

Garima Kapoor, economist at Elara Capital, mentioned the tariff makes India much less aggressive in contrast to friends like Vietnam and Indonesia, which face decrease duties. The uncertainty round pharma inclusion is especially worrying, she famous, for the reason that US accounts for over 30 per cent of India’s pharmaceutical exports. “If no deal is signed by September-October, we see a draw back to full-12 months GDP progress estimate for India by 20 basis points,” she mentioned.

Grant Thornton: Market will adapt regardless of geopolitical shocks

Rishi Shah of Grant Thornton Bharat mentioned the financial ecosystem is resilient. “Markets regulate, and new equilibria emerge. The multi-alignment technique adopted by India will assist it navigate such shocks,” he added.

Moody’s Analytics: Pharma, gems, and dairy entry are key flashpoints

Aditi Raman of Moody’s Analytics mentioned India’s relative insulation from world trade shocks is a plus, however the tariffs will harm key sectors. She identified that agriculture and dairy entry stay delicate points in US-India negotiations.

Artha Bharat Fund: Tariff excessive however not a shock

Nachiketa Sawrikar of Artha Bharat International Multiplier Fund mentioned the federal government seemingly expected such a transfer. “China already faces a 30 per cent tariff. India’s fee could have been worse, although it nonetheless places us behind ASEAN friends,” he mentioned.

FED: India now worse off than opponents like China

Rahul Ahluwalia of the Basis for Financial Growth mentioned the 25 per cent tariff places India at an obstacle in opposition to nations like China and Vietnam. “India should act quick to safe a beneficial deal,” he warned.

Selection broking: Momentary blow to investor confidence

Utsav Verma, Head of Analysis at Selection Broking, mentioned sectors akin to pharma, auto parts, and textiles might even see a brief-time period dip in investor sentiment. Nonetheless, he believes the tariff will seemingly settle nearer to 15 per cent as soon as negotiations progress.

Medical Expertise Affiliation: Tariffs politically and strategically misguided

Chairman Pavan Choudary referred to as the transfer “economically shortsighted and strategically inappropriate.” He mentioned coercive trade measures in response to India’s sovereign selections on defence and power partnerships with Russia are “counterproductive.”