The net impact of higher tariffs and lower domestic taxes will be a drop of 0.2%-0.3% points on GDP growth estimates for the year, says Chief Economic Advisor V Anantha Nageswaran
Chief Economic Advisor (CEA) V Anantha Nageswaran | Photo Credit: SUSHIL KUMAR VERMA
The impact of US tariffs on the Indian economy will be partially offset by recent consumption tax cuts that are expected to boost domestic demand, India’s Chief Economic Advisor (CEA) said on Wednesday. The goods and services tax (GST) cuts announced by Prime Minister Narendra Modi’s government would have “compensating effects” on India’s economy, V Anantha Nageswaran said.
The net impact of higher tariffs and lower domestic taxes will be a drop of 0.2 per cent-0.3 per cent points on GDP growth estimates for the year, he said.
India’s GDP growth for the current financial year is projected at 6.3 per cent-6.8 per cent.
“GST reforms will play a very good offsetting role, by substituting domestic demand for whatever the export demand that may not materialise from the United States,” Nageswaran said.
The initial impact of US tariffs on Indian goods in the current financial year will be limited, but prolonged tariff uncertainty from the 25 per cent penalty duty imposed by the United States on India for buying Russian oil could weigh on the South Asian economy, he said.
Published on September 10, 2025
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