Will India able survive Trump’s tariffs or…, fear of economic recession rising because….

India's economy has grown well in the last few years. But due to Trump's tariffs, some concerns are also emerging now.

India has been performing very well in recent years, with an average growth rate of 7.85 percent. But the recently introduced tariffs by United States President Donald Trump have created turmoil all over the world, including India. Because of the tariffs, the World Bank has reduced India’s GDP growth forecast for 2025–26 from 6.7 percent to 6.3 percent. Some other data suggest that the situation may get worse; however, it is too early to say anything right now. If we compare recent years, India’s economy has been very strong — good macroeconomic performance is one of the reasons. The current account deficit is almost zero, and the inflation rate was 2.1% (June 2025), the lowest since 2019.

Impact Of Startups On Indian Economy

Several multinational companies are setting up their global hubs for engineering and R&D in India because of the growing Global capability centers in the country. In recent years India’s startup culture has also attracted billions of dollars from foreign countries, contributing in the country’s economy.

Major Companies Witnessing Decrease In Demands

Some major companies in India have complained of a decrease in demand for the past two years. FMCG product sales have also been witnessing a decline. Nestle’s annual report title ‘Adversity Makes us Stronger’ says it all.

Another major player Hindustan Unilever’s sales have also reported lower-than-expected sales. Asian Paints can show us the current situation of the construction industry.

The biggest concern of many industries is that due to Trump’s high tariffs, countries like China and Vietnam will dump on a large scale in India. Dumping means selling expensive products in your country and cheaper price in another.

Goods Exports Almost Stable

In June goods exports were reported to be stable while the imports declined by 3.71percent. It can be understood that imports generally increase when there is growth and the decline in imports indicates economic slowdown. However, these figures don’t include strong service export. According to a report by the Financial Times, the middle class belt of India is sinking in debt, due to which consumer demand is decreasing.

GDP Growth Decreased

Economic growth dropped from 9.2 percent in 2023–24 to 6.5percent in 2024–25, which some see as a sharp decline. However, this slowdown is due to the unusually high growth last year which economist Larry Summers termed as an unsustainable period of rapid growth.

Pakistan, Sri Lanka and Bangladesh all went to the IMF for help. Critics predicted it correctly that the 9.2 percent figure was inflated due to the GDP deflator. GDP deflator is a tool to measure inflation.

• In order to judge India’s growth, the best way is to average the past two years, which gives a solid 7.85 percent per year. This is much higher than government’s estimate of 6.5 percent.
• This performance is pretty good as other developing countries were struggling during the same period.
• The last quarter of 2024–25 witnessed a growth rate of 7.4 percent. It is also a positive sign.
• With inflation indicators so low, the GDP deflator is expected to remain low as well.
• Several factors are currently working in India’s favour like – Wholesale Price Index is in the negative due to falling food prices. Consumer Price Index (CPI) has increased by only 2.1 percent, which indicates low inflation.