How Fragile we are

Tariff turbulence and India's pursuit of strategic autonomy

- Vaishali Basu Sharma

ACCORDING to the latest estimates from the Union Ministry of Statistics and Programme Implementation, India’s economy surged ahead with a remarkable 7.8 per cent growth in the April-June quarter of FY2025-26, its fastest expansion in five quarters. This figure not only signals robust economic momentum, but also exceeded market expectations, which had pegged growth between 6.5 per cent and 7 per cent. The performance stands out all the more given the backdrop of intensifying global uncertainties and geopolitical headwinds.

The National Statistics Office (NSO) attributes this resilience to strong domestic demand and stable macroeconomic fundamentals, a view echoed by the finance ministry and the Reserve Bank of India in their recent assessments. Reinforcing investor confidence, Standard and Poor (S&P) Global Ratings upgraded India’s sovereign rating in August, marking its first such revision in 18 years. The agency cited India’s sound policy framework and enduring economic stability as key drivers behind the upgrade.

Geopolitical Headwinds

Yet, the road ahead is fraught with challenges. US President Donald Trump’s dramatic tariff escalation—whereby he has imposed a punitive 25 per cent tariff on Indian goods over continued purchases of Russian oil, on top of an earlier 25 per cent duty, raising total export tariffs to 50 per cent for key sectors such as textiles, leather, engineering goods, and chemicals—threatens to shave 0.2-0.4 percentage points off India's GDP growth, potentially dragging it below the 6 per cent threshold.