Context:
India remains on track to meet its FY26 real GDP growth forecast of 6.3–6.8%, despite fresh global headwinds triggered by the US’ imposition of 26% reciprocal tariffs on Indian imports, senior government officials confirmed.
The projected growth band, first outlined in the January Economic Survey, had already factored in some global disruptions. However, last week’s aggressive tariff action by the US has forced policymakers to reevaluate the extent of damage to exports and domestic momentum.
Nominal Growth Stays at 10.1% Target
- Despite the volatility, the government remains committed to its 10.1% nominal GDP growth assumption for FY26, aligned with Budget projections.
- In FY25, real growth may have reached 6.5%, according to the second advance estimates released in February.
Global Firms Adjust Forecasts
Investment banks are revising their outlook in response to the unfolding global tariff war:
- Goldman Sachs: Revised India’s FY25 and FY26 growth to 6.1%, trimming 30 and 20 basis points, respectively.
- Nomura: Predicts 6.2% in FY25 and 6.0% in FY26, citing emerging global trade uncertainty.
- HSBC & UBS: Anticipate a 20–50 bps drag on India’s FY26 GDP unless a favorable trade deal with the US materializes.
Comparative Tariffs:
- India: 26%
- Vietnam: 46%
- China: 54% (including prior tariffs)
- Bangladesh: 37%
- Thailand: 36%
- Indonesia: 32%
Sectoral Concerns
Government officials acknowledged that labour-intensive sectors such as textiles, garments, agriculture, and gems & jewellery could be hit hardest. These segments account for a major chunk of India’s exports and employment.
