25% US tariff to hit India's GDP growth by 25-30 bps: SBI Research

The tariff is expected to affect India’s gross domestic product (GDP) growth by 25 to 30 basis points (bps) for fiscal 2025-26 (FY26), it said.

US GDP, inflation and currency face greater risk of downgrades compared to India, it noted.

US tariffs are projected to cost the average US household about $2,400 in the short term, mainly due to higher prices from tariff-driven inflation.

Low-income US families may lose around $1,300, nearly triple the relative burden compared to high earners, while high-income households could face losses of up to $5,000, though with less impact on their overall financial stability, it observed.

India’s primary exports will be affected by the 25-per cent US tariff. Among the sectors to be affected the most is textile products, including toilet and kitchen linen; bedspreads; furnishing articles of cotton, not knitted or crochted; and cotton bed linen.

India has been an emerging supplier to US solar Industry, as US is restricting import of Chinese products. Therefore, imports from India to the United States has increased massively in 2023 and reached over 8 GW in 2024.

The new tariff could make solar industry products from India more expensive for US buyers. So Indian supply will become less attractive to US companies, and they may replace solar modules from with tariff-free nations, SBI Research added.

Fibre2Fashion News Desk (DS)