US Tariffs Can Trim Up to 0.5 Percentage Points off of India’s GDP: Finance Secy
The ongoing trade tensions between the United States and India have taken a toll on the Indian economy, with Finance Secretary Ajay Seth warning that the US President Donald Trump-led government’s imposition of reciprocal tariffs could shave off between 0.2-0.5 percentage points from India’s GDP growth.
Seth’s statement comes as a sobering reality check for the Indian government, which has been grappling with the aftermath of the US tariffs on Indian goods. The tariffs, which were imposed in a bid to address India’s alleged trade practices, have had a significant impact on India’s exports, particularly in the textiles and apparel sectors.
India’s GDP growth has been a major concern for the government in recent times, with the country’s economy growing at a rate of 6.5% in the current year. While this growth rate is still impressive, it is significantly lower than the 7.5% growth rate that India achieved in the previous year.
Seth’s warning is a stark reminder of the potential risks that the US tariffs could pose to India’s economic growth. With the US being one of India’s largest trading partners, the impact of the tariffs on India’s economy cannot be overstated.
In an interview with Reuters, Seth said that the potential growth rate of around 7% could be achieved over the next decade, provided that the country addresses its structural issues and implements policies that boost economic growth.
India’s economic growth has been facing several challenges in recent times, including a decline in manufacturing output, a slowdown in consumer spending, and a sharp decline in exports. The country’s GDP growth has been impacted by various factors, including the COVID-19 pandemic, which has led to a significant decline in global trade and economic activity.
The US tariffs on Indian goods have added to India’s economic woes, with the country’s exports to the US declining by around 10% in the first half of the current financial year. The tariffs have also led to a significant decline in foreign direct investment (FDI) inflows into India, with FDI inflows declining by around 25% in the first half of the current financial year.
India’s government has been trying to address the impact of the US tariffs on its economy by implementing various measures, including reducing import duties on certain goods and increasing the duty-free import limit for raw materials. The government has also been negotiating with the US to resolve the trade disputes and avoid further tariffs.
However, despite these efforts, the impact of the US tariffs on India’s economy cannot be overstated. The tariffs have led to a significant decline in India’s exports to the US, which has had a major impact on the country’s GDP growth.
In conclusion, the US tariffs on Indian goods have the potential to trim up to 0.5 percentage points off of India’s GDP growth, according to Finance Secretary Ajay Seth. The tariffs have had a significant impact on India’s exports, particularly in the textiles and apparel sectors, and have led to a decline in foreign direct investment inflows into the country. While the government has been trying to address the impact of the tariffs, the potential risks to India’s economic growth cannot be overstated.
Source:
