India pushes back on tariff assumption

THE IMF IDENTIFIED FURTHER ESCALATION OF TRADE TENSIONS AND DEEPENING GEOECONOMIC FRAGMENTATION AS A SIGNIFICANT NEAR-TERM RISK FOR INDIA

- RUCHIKA CHITRAVANSHI

The Indian government has expressed its disagreement with the IMF staff’s ‘baseline’ assumption that the 50 per cent US tariffs on its goods exports “would remain in place indefinitely’, based on which the staff pegged the country’s GDP growth at 6.6 per cent this year, and pared its 2026-27 projection by 20 basis points to 6.2 percent.

It linked the growth drag next year to the “high US tariffs — assumed to persist under the baseline, dent external demand and investment.” While Indian authorities agreed that the overall economic impact of the tariff shock “should be manageable in the near term, although a few industries would be heavily affected”.