Revised Growth Forecast for India

Moody's Analytics has adjusted India's GDP growth forecast for 2025 downward to 6.1% from the previous estimate of 6.4%. This revision comes in light of potential full implementation of US tariffs following a 90-day freeze announced by President Donald Trump.

Impact of US Tariffs on Indian Economy

The agency highlights that the US, being one of India's largest trading partners, could significantly disrupt the trade balance with a 26% tariff on Indian imports. Sectors such as gems and jewellery, medical devices, and textiles are expected to be the most affected.

Monetary Policy Adjustments Ahead

In response to these challenges, Moody's anticipates the Reserve Bank of India to reduce interest rates, potentially by 25 basis points, aiming to lower the policy rate to 5.75% by year-end. Coupled with earlier announced tax incentives, these measures are intended to bolster the domestic economy and mitigate the tariff impact.