India's economic momentum continues to be steady, though it is too early to say what the effect of US tariffs is on growth, Chief Economic Advisor V. Anantha Nageswaran said on Wednesday.
He pointed out that high-frequency indicators show that the overall economic activity in the country continues uninterrupted.
Nageswaran’s remarks come amid rising concerns about India’s growth prospects following US President Donald Trump’s recent tariff measures. Last week, Trump signed an executive order imposing an additional 25 per cent levy on India due to New Delhi’s purchases of Russian oil, pushing total duties to 50 per cent — among the highest US tariffs on any country. Labour-intensive sectors such as shrimp farming have already raised alarm.
India clocked a GDP growth of 6.5 per cent in 2024–25, the highest among major economies, and is likely to keep this momentum in 2025–26, with projections between 6.4 per cent and 6.7 per cent, led by robust private consumption and investment, said Deloitte.
About $87 billion of Indian exports annually to the US, notably from gems and textiles, is threatened. Industry experts caution that ongoing tariffs would cut exports and slow GDP growth by 0.2–0.5 percentage points.
Nobel prize-winning economist Abhijit Banerjee has also expressed alarm over India's economic prospects in the midst of geopolitical tensions and trade volatility. "Not as good as we expected," he stated, pointing to difficulties in the middle class and lack of pick-up in private investment.
Industries like TCS are not recruiting, the compensation of IT staff is not going up. These are all problems that we have not addressed, and we are sitting on them, so we must sort of accept the fact," Banerjee said.
He also suggested that India should weigh whether low-cost Russian oil imports are "worth it" considering the Trump administration's additional 25 per cent tariff on Indian products.
Delhi holds out hope for a solution. Shashi Tharoor, Thiruvananthapuram MP and chairman of the parliamentary panel on foreign affairs, said trade negotiations will proceed. "Nothing has changed in the current plans for the sixth round," he said, citing the planned visit of a US trade team to New Delhi from August 25.
Earlier, Finance Junior Minister Pankaj Chaudhary told legislators that "the Department of Commerce is in touch with all stakeholders" to evaluate the situation.
