The Indian economy's overall momentum has not slowed but it is too early to assess the impact of US tariffs on growth, chief economic advisor V. Anantha Nageswaran said on Wednesday.
He said the country’s economic momentum remains intact, as reflected in high-frequency indicators.
Nageswaran’s comments come against the backdrop of growing concern about India’s economic growth in the face of US President Donald Trump’s harsh tariffs on the country’s exports.
Last week, Trump signed an executive order imposing an additional 25 per cent levy on India for New Delhi’s purchases of Russian oil, bringing the total duties to 50 per cent — among the highest imposed by the US on any country.
Sectors like shrimp farming are already sending out SOS messages.
India recorded GDP growth of 6.5 per cent in 2024–25, the highest among large economies, and is projected to sustain this trend in 2025–26, with forecasts in the range of 6.4 per cent to 6.7 per cent, driven by strong private consumption and investments, according to Deloitte.
An estimated $87 billion in annual Indian exports to the US is at risk, particularly in labour-intensive sectors such as textiles and gems. Industry analysts warn of a potential drop in exports and a GDP growth drag of 0.2–0.5 percentage points if the tariffs persist.
Nobel laureate economist Abhijit Banerjee has also expressed concern over India’s economic outlook amid geopolitical tensions and trade uncertainties.
“Not as good as we expected,” he recently said, pointing out that the middle class is hurting and that private investments have not picked up in recent years.
“Companies like TCS are not hiring, the salary of IT employees is not increasing... These are all issues we have not dealt with, and we are sitting on them, so we need to kind of embrace the fact,” Banerjee added.
He further suggested that India should reconsider whether cheap oil imports from Russia are “worth it” in light of the Trump administration’s additional 25 per cent tariff on Indian goods.
Delhi still hopes a deal can be struck with Washington.
Shashi Tharoor, the Thiruvananthapuram MP who heads the parliamentary panel on foreign affairs, said trade talks would continue.
"As of now, there is no change in the existing plans for the sixth round," he said on Tuesday, referring to the scheduled visit of a US trade delegation to New Delhi from August 25.
Earlier, finance junior minister Pankaj Chaudhary told lawmakers that "the Department of Commerce is engaged with all stakeholders" for their assessment of the situation.