New Delhi: India’s economic growth could slow to around 6% in FY2025-26, the lowest pace in half a decade, if the 25% tariffs imposed by US President Donald Trump on Indian goods continue through the year, economists and brokerage firms warn.
Current estimates
• Barclays projects a 30 basis point fall in GDP growth due to the tariffs.
• Nomura and Elara Capital forecast a 20 basis point decline each.
• One percentage point equals 100 basis points.
This would mark a slip from the 6.5% growth recorded in the financial year ended March 2025 — already India’s weakest performance since the pandemic-hit year of 2020 21.
Broader forecasts remain steady
Despite the tariff threat, major agencies remain optimistic:
• RBI, IMF, and ADB continue to project growth at 6.2–6.5% for this year.
• The IMF recently raised its forecast to 6.4% from 6.2% in April.
Why the impact may be limited
Barclays expects final tariffs to be lower than announced, citing ongoing trade negotiations between India and the US. SBI Securities estimates that even if half of India’s $85 billion exports to the US are affected, the hit to GDP would be around 0.5% — as some products could find new markets.
Emkay Global, however, warns of a $30 33 billion export loss, or up to 0.9% of GDP, if tariffs persist. BMI, a Fitch Solutions unit, also cautions that the drag on global growth may be greater than expected due to higher than assumed tariff rates.
Fastest-growing major economy — still
Even with the slowdown, India is set to remain one of the world’s fastest-growing large economies, driven primarily by strong domestic consumption.
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