Amid the ongoing tariff war and uncertainty over US trade policy, international agencies have reduced India's growth forecasts by up to 0.5% for the current fiscal year, though the country will remain the fastest growing major economy.
Even though the US economy may go into recession, China's growth may slow, and other nations may see slower economic activity, India is predicted to grow at a rate of 6.2–6.7 percent in the current fiscal year.
India's growth projections for 2025–2026 have been lowered by the World Bank and the International Monetary Fund (IMF) to 6.3% and 6.2%, respectively, due to high trade tensions and an uncertain global environment.
The IMF and World Bank forecasted in January that India's current fiscal year growth would be 6.5 percent and 6.7 percent, respectively.
The Indian economy is expected to have expanded by 6.5 percent in the most recent fiscal year.
According to the Reserve Bank of India, the country's economy will grow at the same rate for the duration of the current fiscal year.
The Organization for Economic Cooperation and Development (OECD) predicted in March that India's growth would decrease from its previous 6.9% growth rate to 6.4%.
Similarly, S&P forecasted 6.5% growth, while Fitch Ratings forecasted 6.4% growth. Moody's Analytics predicted a 6.1 percent growth rate for calendar year 2025.
On April 2, US President Donald Trump announced reciprocal tariffs or taxes on imports from other countries to match the duties imposed by those countries on imports from the United States.
On April 9, the US administration authorized a 90-day pause in the implementation of most reciprocal tariffs, returning to a universal rate of 10% on almost all targeted countries while raising tariffs on most Chinese goods to 145%. On April 16, the US increased tariffs on Chinese exports to 245 percent.
The IMF reduced China's 2025 GDP growth estimates to 4% from 4.6% projected in January 2025.
Another global rating agency, Moody's Ratings, stated last week that "tariffs have shocked financial markets and are raising the risk of a global economic recession." Continued uncertainty will impede business planning, halt investment, and erode consumer confidence."
Regarding the impact of tariffs on the US economy, Moody's estimates that tariffs will reduce US growth by at least one percentage point while significantly raising prices for US consumers and businesses.
Domestic constraints, particularly those resulting from already low consumer sentiment, suggest that the government may be unable to muster enough support to offset the impact of tariffs, without which the country's growth could fall to 4% or lower this year, the report said.
But in its April report, the Asia Development Bank revised its earlier estimate of 7% growth for India to 6.7% for the current fiscal year.
In January, India's Economic Survey projected that the country's economic growth would be 6.3-6.8 percent in fiscal 2025-26.
