‘Closer India-China ties positive for both’

Asian Development Bank (ADB) Chief Economist Albert Park says the fiscal position of the government seems robust despite the cuts in goods and services tax (GST) rates.

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In an interview on the sidelines of the Kautilya Economic Conclave in New Delhi, Park tells Ruchika Chitravanshi and Asit Ranjan Mishra the 50 per cent tariffs of the United States (US) offer opportunities for India to diversify its export destinations. Edited excerpts:

‘The ADB has projected 6.5 percent growth in gross domestic product (GDP) for India in FY26 and FY27. Are there more upside or more downside risks to these projections?

There are both, but we're worried more about the downside risks because of the uncertain trade and tariff environments, and other geopolitical risks related to conflicts in Europe and West Asia. Higher oil prices may add a headwind for India. And the $0 per cent tariff by the US is high. Even though only a small share of Indian GDP depends on exports to the US, it will have an effect. It may make foreign investors have a rethink about, let’s say, a China plus one strategy; or investment in areas that would be subject to US tariffs or create risks to supply chains that end up in the US.

How serious is the tariff risk to the Indian economy?

It is the main reason for the downgrading of our forecast this year and next year, It depends on how much those tariffs will kill demand for India’s exports. There are other opportunities to diversify India’s export destinations. There are ways to adjust to the shock.