US funding group Goldman Sachs on Thursday mentioned that the steep 50 per cent tariff on imports from India might scale back the nation’s actual GDP development by round 0.6 proportion level (PP).
“We had beforehand estimated a possible direct affect of round 0.3 proportion level (annualized) to India’s actual GDP development, following President Trump’s shock announcement of a 25 per cent tariff on Indian imports,” the US funding group mentioned.
If the brand new extra obligation (together with exclusions) is enforced, then that might represent a possible incremental drag of round one other 0.3 proportion level (annualized), Goldman Sachs mentioned. “This estimate relies on India’s items exports publicity of roughly 4 per cent of GDP to US last demand and a items export demand elasticity of 0.5 as referenced within the IMF examine. There are oblique impacts on actual GDP development by way of trade-related uncertainty as nicely, as we had written earlier,” it mentioned.
Amid the worldwide uncertainty, the RBI on Wednesday retained its annual and quarterly actual GDP development forecasts for 2025-26 at 6.5 per cent for April-June 2025, 6.7 per cent for July-September 2025, 6.6 per cent for October-December 2025, and 6.3 per cent for January-March 2026
Goldman Sachs has estimated the full efficient US tariff on Indian imports can be round 32 per cent in any case exemptions.
Nevertheless, the agency said that it’s going to look forward to 20 days earlier than deciding whether or not to revise its GDP forecast for India. “We see draw back dangers to our development estimates for each CY25 and CY26, however don’t make any modifications to our development forecasts for the time being, given that there’s a three-week window for negotiations till the brand new incremental tariffs come into impact,” Goldman Sachs mentioned. Right here CY denotes calendar yr.
US President Donald Trump by way of a White Home government order introduced a further 25 per cent “advert valorem” obligation on Indian items imports, efficient August 27, which is able to take the full tariff levy on Indian imports to 50 per cent. The manager order mentioned that this “advert valorem” obligation is owing to India’s continued power purchases from Russia.
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The extra “advert valorem” obligation won’t apply to commodities included in Sec. 232 of the Commerce Growth Act of 1962.
In response, the Ministry of Exterior Affairs, Authorities of India in an announcement reiterated that the federal government “will take all actions crucial to guard its nationwide pursuits”, it mentioned.
The US accounts for round 4 per cent of India’s crude oil imports, whereas Russia accounts for a 3rd: The US accounted for round 4 per cent of India’s crude oil imports (in quantity phrases) in 2024-25, growing from round 3 per cent in 2023-24, whereas Russian imports represent round a 3rd of Indian oil imports. In April and Could 2025, the US accounted for 8 per cent (on common) of India’s crude oil imports, the US agency mentioned.
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