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 share factors from GDP progress this 12 months.
“We (India) promote plenty of items to the US and now we can be charged further tax on that, which is greater than what you had been charged earlier than,” Bhandari stated in an unique interview with Enterprise Right this moment’s Rahul Kanwal. “Anyone should bear that ache—both the Indian producer of that good or the American shopper of that good or a mixture of the 2.”
Bhandari estimates India’s GDP progress might 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 might be 6% now or possibly barely decrease,” she stated. “So there’s going to be a progress drag on the again of all of this.”
Whereas the Reserve Financial institution of India’s price cuts might assist cushion the blow, Bhandari flagged a second, extra worrying impression: a slowdown in international commerce volumes.
“There’s additionally an oblique drag which now we have to be very cautious about. With all of those tariffs, international progress volumes will sluggish…There’ll be this massive oblique impression. My sense is that GDP progress in India goes to be decrease in FY26 rather more than we had thought.”
On sector-specific results, Bhandari stated the impression is fluid and extremely delicate to coverage modifications. “We will talk about a set of winners and losers immediately, but when any modifications are made that set may utterly change tomorrow,” she famous.
For example, she identified that pharma exporters initially feared a success, however their outlook modified in a single day when prescription drugs had been exempted from the tariffs. “So immediately, the pharma shares did very effectively…however there are a lot of different sectors —textile, autos, agri, chemical compounds — which can now face greater tariffs than we thought simply 48 hours in the past.”
The uncertainty, she stated, may stall funding. “Individuals who need to do investments in capex on pharma or textile—they will 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 prescription drugs have been exempted, key Indian exports together with clothes, medical gadgets, and jewelry are anticipated to be affected.
The Indian authorities has stated it’s intently evaluating the impression and exploring methods to show the disruption into alternative by means of deeper commerce engagement with the US.
