Tariff hit on GDP growth at 0.2-0.3 pc in FY26; GST reforms to negate impact: CEAGSTDated:- 10-9-2025PTINew Delhi, Sep 10 (PTI) The goods and services tax (GST) reforms will help offset some of the adverse impacts of steep tariffs of 50 per cent imposed b
Tariff hit on GDP growth at 0.2-0.3 pc in FY26; GST reforms to negate impact: CEA
GST
Dated:- 10-9-2025
PTI
New Delhi, Sep 10 (PTI) The goods and services tax (GST) reforms will help offset some of the adverse impacts of steep tariffs of 50 per cent imposed by the US on Indian shipment and the net impact of this on the GDP growth would be 0.2-0.3 per cent in the current financial year, Chief Economic Adviser V Anantha Nageswaran said on Wednesday.
On the positive side, he said, the GST reforms will play a very good offsetting role by substituting domestic demand for whatever export demand that may not materialise from the United States.
The GST Council last week decided to overhaul the tax regime by tweaking the four-slab GST structure of 5 per cent, 12 per cent, 18 per cent, and 28 per cent to a two-slab structure of 5 per cent and 18 per cent. The council also introduced a new GST rate of 40 per cent, to be imposed on sin and luxury goods.
Nearly 400 products from
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we want it to, especially the penal tariff of 25 per cent, then the second and third round effects will become more pronounced, which is the uncertainty with respect to investments, capital formation, overall sentiment in the economy,” he said.
However, Nageswaran said GST reform would not only boost domestic consumption but more importantly it provides an antidote to the second and third rounds of tariff impact.
“So net-net, I think if you take the GST into consideration, the impact of tariffs and the compensating effects of GST, rate reductions and process reform could probably give us a 0.2-0.3 per cent on a net basis, in terms of drag on the GDP estimates that we have of 6.3 to 6.8 for the current financial year,” he said.
The steep tariffs of 50 per cent among the highest in the world include a 25 per cent penalty for buying crude oil from Russia. The penalty of 25 per cent kicked in from August 27.
On August 7, the Trump administration enforced a 25 per cent tariff on
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culture sector still has room to contribute at least 0.5-0.7 per cent more to India's GDP growth and that is a function of giving farmers the right to sell to whosoever, whatsoever, wherever, and whenever.
“That is the kind of freedom that farmers need much more than agriculture subsidies,” he said.
Farmers also need some element of insurance, given their business is inherently prone to ravages of nature and uncertainties, he suggested.
“Empowering farmers and not imposing restrictions in their ability to tap market signals from within India or overseas, these would unleash productivity in agriculture and add to GDP growth,” he added.
Asked if India is part of any initiative on finding an alternate currency to dollar for global trade, Nageswaran said there is no attempt in this regard.
“No, certainly not. India is not part of any such initiative,” he emphasised.
Although last year, at the BRICS Summit, India and other BRICS nations had contemplated settlement of cross-borde
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