India's Economic Resilience in the Face of US Tariffs

Madan Sabnavis, Chief Economist at Bank of Baroda, highlights how India's strong domestic demand and limited reliance on exports position the country to withstand the recent US tariff impositions. "Our non-export-oriented growth model offers us a unique advantage in these turbulent times," Sabnavis remarked during a recent webinar.

Understanding the Impact of US Tariffs on India

The announcement by US President Donald Trump of a 25% tariff on Indian goods, part of a broader executive order, has raised concerns. However, India's export composition, with services making up nearly half of its 21% GDP contribution, provides a cushion against goods tariffs.

Projections and Vulnerabilities

Bank of Baroda forecasts a GDP growth of 6.4% to 6.6% for FY26, accounting for potential export disruptions. Sectors like electronics, marine products, and gems and jewellery are identified as most vulnerable due to India's significant export exposure to the US.

Looking Ahead

With the current account deficit expected to remain below 1% of GDP and minimal near-term impact on the Consumer Price Index, India's economic outlook remains cautiously optimistic. Clarity on potential exemptions could further mitigate adverse effects.