It is expected that the recent United States decision to impose reciprocal tariffs on Indian goods will have significant implications for India’s economic growth. Expert analysis suggests that these rates could reduce Indian GDP growth to 50 basic points.

United States President Donald Trump implemented a 27% reciprocal rate in India, along with increasing duties on many other nations. These large world rates are expected to disrupt international markets and have a negative effect on various national industries, ranging from information technology to automotive sector.

DK Srivastava, Minister of Chief of Ey, stated: “The maximum adverse impact on the growth of India GDP will not be more than 50 basic points. According to our previous projection, the estimate of GDP growth for the current prosecutor was 6.5 percent, which can drop to 6 percent without retaliation.” This occurs when India faces a potential 20% tariff increase in exports to the United States, which could reduce India GDP by 35-40 basic points according to Anubhuti Sahay by Standard Chartered Bank.

The implementation of reciprocal rates implies that the United States impose taxes in response to similar rates or high import functions in another country. This commercial policy serves as a tit-pert measure where a country increases the functions to counteract the commercial restrictions imposed by another.

Changes in the tariff structure of Indian goods are as follows:

Existing rates: 25% on steel, aluminum and car parts.
New rates: From April 5, an initial rate of 10% will be applied to the remaining Indian goods. From April 9, a 27% rate will be imposed on the specific imports of India.
Exempt sectors: pharmaceuticals, semiconductors, energy products (oil, gas, coal, GNL) and copper.

This adjustment to the fare system aims to address commercial imbalances and protect the national industries.

The North -American Administration has announced rates for Indian exports, while certain essential goods remain exempt. Sahay emphasized: “However, the final impact would depend on the agreement of the trade agreement between India and the United States, along with the way each country negotiates/ retaliates the proposed rates.” Despite the potential of economic loss, India may have less impact compared to other Asian economies, which have a higher fare rate and larger commercial surplus with the United States. The expected fare scenario could lead to a decrease in the growth of India exports to the United States by 2-3 percentage points during the current fiscal year.

The economists of Morgan Stanley Upasana Chachra and Bani Gamhir have scored a prominent risk of 30-60 basic points for the Estimation of India growth of 6.5% for FY’26. They noted, “while the rates exceed our estimates for India, relatively relatively, are in PAR/Less than other competing economies. However, they also highlighted concerns about the slowdown in the U.S. growth and the weak global commercial impetus, which could cushion the foreign demand.

Ey analysis indicates that the increase in United States rates can exert pressure on the North -American dollar, favoring the Indian change rate. Srivastava said that the increase in inflation in the United States could make the dollar vulnerable, affecting the world currency markets. Imports of India are already subject to a 25% steel and aluminum rate, which illustrates the complexity in layers of the commercial environment. The wider impacts on corporate trust and capital spending cycles are still to be seen, with possible mishaps with risk hunger among companies.

(With agency contributions)