Synopsis: Chief Economic Adviser V. Anantha Nageswaran has warned that the US decision to impose 50% tariffs on Indian exports could shave off 0.5-0.6% from India’s GDP in FY26. If extended into the next fiscal, the impact could be even larger, posing a major risk for the economy.
India’s Chief Economic Adviser (CEA) V. Anantha Nageswaran has cautioned that the 50% US tariffs imposed on Indian exports may reduce the country’s GDP by 0.5% to 0.6% in FY26. Speaking to Bloomberg TV, Nageswaran said the severity of the impact depends on the duration of these penal duties.
“I hope the additional penal tariff is a short-lived phenomenon. Depending upon how long it lasts even in this financial year, it may translate into a GDP impact of somewhere between 0.5% to 0.6%. If it extends into the next fiscal, the impact will be larger,” the CEA noted.
The tariffs were announced last month by US President Donald Trump, citing India’s purchase of Russian oil. At 50%, these duties are the highest in Asia and are expected to hit labour-intensive industries like textiles and jewellery, making Indian exports less competitive compared to Vietnam and Bangladesh.
Despite the challenge, Nageswaran reaffirmed the government’s growth forecast of 6.3–6.8% for FY26, citing robust expansion in the April-June quarter, where GDP growth stood at 7.8% — the fastest in over a year.
On the domestic front, recent GST reforms and inflation at an eight-year low are expected to boost disposable incomes and consumer spending, providing much-needed support to the economy. The government is also likely to meet its fiscal deficit target of 4.4%, thanks to a record RBI dividend payout and planned asset sales.
Analysts, however, remain cautious that prolonged tariff tensions with the US could undermine India’s export competitiveness and affect employment in key sectors.
Disclaimer: This article is for informational purposes only. It is not intended as financial or policy advice. Readers are encouraged to consult official government and economic reports for detailed insights.
