India’s economic system may develop slower than beforehand anticipated in FY26, with HSBC Chief India Economist Pranjul Bhandari warning that US President Donald Trump’s sweeping tariff hike might shave off 0.5 proportion factors from GDP progress this yr.
“We (India) promote numerous items to the US and now we will probably be charged additional tax on that, which is greater than what you have been charged earlier than,” Bhandari mentioned in an unique interview with Enterprise Right this moment’s Rahul Kanwal. “Any person must bear that ache—both the Indian producer of that good or the American client of that good or a mixture of the 2.”
Bhandari estimates India’s GDP progress could possibly be decrease than earlier projected as a result of direct hit from tariffs. “For instance, I used to be anticipating progress to be 6.5% but it surely could possibly be 6% now or perhaps barely decrease,” she mentioned. “So there’s going to be a progress drag on the again of all of this.”
Whereas the Reserve Financial institution of India’s fee cuts might assist cushion the blow, Bhandari flagged a second, extra worrying influence: a slowdown in international commerce volumes.
“There’s additionally an oblique drag which we’ve to be very cautious about. With all of those tariffs, international progress volumes will sluggish…There’ll be this huge oblique influence. My sense is that GDP progress in India goes to be decrease in FY26 way more than we had thought.”
On sector-specific results, Bhandari mentioned the influence is fluid and extremely delicate to coverage adjustments. “We are able to focus on a set of winners and losers at this time, but when any adjustments are made that set may utterly change tomorrow,” she famous.
As an example, she identified that pharma exporters initially feared successful, however their outlook modified in a single day when prescribed drugs have been exempted from the tariffs. “So at this time, the pharma shares did very effectively…however there are a lot of different sectors —textile, autos, agri, chemical substances — which is able to now face greater tariffs than we thought simply 48 hours in the past.”
The uncertainty, she mentioned, may stall funding. “Individuals who need to do investments in capex on pharma or textile—they’re going to all sit again. No one will do something as a result of issues are altering fairly quickly with a stroke of a pen.”
The US has imposed 27% reciprocal tariffs on most Indian items beginning April 9, over and above the baseline 10% efficient from April 5. Whereas sectors like power, semiconductors, and choose prescribed drugs have been exempted, key Indian exports together with clothes, medical gadgets, and jewelry are anticipated to be affected.
The Indian authorities has mentioned it’s carefully evaluating the influence and exploring methods to show the disruption into alternative by deeper commerce engagement with the US.
