The India’s economy is developing each day, even with 50% tariffs. The India’s GDP rise to 7.8% in Q1. The economy picked up pace in the April to June quarter, contrary to expectations of slower growth. A sharp rise in US tariffs on Indian imports threatens to impact business activity in the coming quarters.
The United States doubled tariffs on Indian goods to as high as 50% due to ongoing imports of Russian oil. This created the highest tariff rate among U.S. trading partners, alongside Brazil. Economists warn that this could hurt exports, including textiles, leather goods, and chemicals.
Gross domestic product grew 7.8% in the latest quarter, making it Asia’s third-largest economy. This is the fastest growth in five quarters, up from 7.4% in the previous three-month period, according to government data released on Friday. This growth exceeded the 6.7% increase that economists predicted in a Reuters poll.
Consumer Spending Rises India’s GDP
Private consumer spending, which accounts for about 57% of GDP, increased by 7.0% year-on-year in April to June, compared to 6% in the prior quarter. Rural spending rose, and demand for durable goods and farm equipment, such as tractors, remained strong.
PM Modi’s government has promised support for sectors affected by U.S. tariffs. The government has indicated it will propose tax cuts to boost domestic demand. It previously reduced income taxes starting April this year.
US Tariffs Weigh on Growth
Economists warn that growth could slow significantly when the effects of the higher U.S. import duties are felt. Indian government sources say that New Delhi hopes the U.S will reconsider the additional 25% tariff imposed this week, which brought the overall rate on various Indian imports to 50%. But it will make rise in India’s GDP.
The 50% U.S. tariff could impact exports and create a “domino effect on employment, wages, and private consumption,” which would further hinder private investment and growth.
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