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CEA V Anantha Nageswaran has cautioned that US President Donald Trump’s recent tariff hike could shave up to 0.6% off India’s GDP this year
CEA Nageswaran
Chief Economic Adviser V. Anantha Nageswaran has cautioned that US President Donald Trump’s recent tariff hike could shave up to 0.6% off India’s GDP this year. “I hope the additional penal tariff is a short-lived phenomenon,” Nageswaran told Bloomberg TV’s Haslinda Amin on Monday. “Depending upon how long it lasts even in this financial year, it may translate into a GDP impact of somewhere between 0.5% to 0.6%,” he added.
The warning comes in the wake of Trump’s decision last month to double tariffs on Indian goods to 50% as punishment for the country’s continued purchase of Russian oil. These duties, now the highest in Asia, threaten to make Indian exports less competitive than those from rivals like Vietnam and Bangladesh. Labour-intensive sectors such as textiles and jewellery are expected to feel the brunt of the tariff shock. Nageswaran stressed that a prolonged period of uncertainty around US trade policy would pose a “larger risk” for India.
Despite the immediate headwinds, Nageswaran said he would stick to the government’s GDP growth forecast of 6.3%–6.8% for FY26, pointing to strong momentum in the April–June quarter, when the economy expanded 7.8%, the fastest pace in over a year.
On domestic policy support, the CEA highlighted that the recent GST rate cuts combined with inflation at an eight-year low would provide a boost to consumption and disposable incomes. The GST Council last week approved reductions in taxes on several daily-use items to spur demand. Nageswaran estimated that these reforms could add between 0.2% and 0.3% to GDP.
He also reiterated confidence that India would achieve its fiscal deficit target of 4.4% in the current year, aided by a record central bank dividend and government asset sales that are expected to offset revenue pressures.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
September 08, 2025, 14:57 IST
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