Economists said the direct hit to gross domestic product (GDP) may be about 1% if the tariffs remain in effect for the full year, though the impact for 2025-26 could be closer to 0.5%. Some of the blow may be partly neutralised by the recent goods and services tax (GST) rate cuts. But Jahangir Aziz, Head of Emerging Market Economics Research at JPMorgan, cautioned against linking the two. “If you are going to say that a GST cut is a response to it, then you shouldn’t really use permanent cuts to do something that we think is temporary,” he said.
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A CNBC-TV18 survey of economists suggests that growth forecasts have not yet been revised down. State Bank of India (SBI) experts estimated a 20-30 basis points (bps) impact if tariffs remain through 2025-26, while Goldman Sachs projected GDP may fall below 6%. India’s current account deficit could rise to 1.2-1.5% of GDP from the current 0.7-0.8%, while the rupee may face near-term pressure toward ₹88 per $, economists added.
Aziz said the real stress will be at the industry level. “It is pointless to discuss what the overall impact on GDP is. It is much better to look at the sectoral impact,” he noted, pointing to textiles, leather, gems and jewellery, and seafood- industries that are both employment-intensive and heavily exposed to the US market.
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While India’s export of goods and services may still rise to $839.9 billion in 2025-26, supported by a 10% increase in services exports, economists warned that tariff uncertainty could weigh on foreign direct investment (FDI) and portfolio flows in the medium term.
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