India’s 2026 Growth Outlook: S&P Global’s 6.3% Forecast Amid Trump Tariffs and Global Trade Risks

An in-depth analysis of S&P Global’s 2026 GDP forecast for India in the context of Trump’s tariffs. We examine projections from S&P, RBI, Moody’s, ADB, and others, along with the potential risks, sectoral impacts, and strategic opportunities.

Introduction

Recent headlines such as “Trump Tariffs to Have Limited Impact on India’s Growth, FY26 Forecast at 6.5%: S&P” have attracted widespread attention. Some commentators even suggest that these tariffs could have positive implications for the Indian equity market, painting them as a potential “silver lining” to a trade headwind.

But how accurate are these claims? Can India truly remain insulated from a significant increase in U.S. tariffs? This analysis examines the facts, reviews expert forecasts, and assesses the realistic scenarios for India’s economy in FY26.

1. S&P Global’s Forecast and Outlook

S&P Global Ratings has offered a nuanced view of India’s prospects under evolving U.S. trade policy:

May 2025: The FY26 GDP growth forecast was revised from 6.5% to 6.3%, citing uncertainty around U.S. tariff measures and potential spillover effects (Economic Times).
February 2025: S&P stated that “reciprocal tariffs” from the U.S. would have only a limited impact, as India’s growth is primarily driven by domestic demand. Growth was estimated at 6.7–6.8% (Business Standard).
March 2025: The 6.5% forecast was maintained, highlighting resilience in services and consumption (Economic Times).
Latest assessment: Even with Trump’s proposed 50% tariffs (a 25% baseline tariff plus an additional punitive levy), S&P believes the limited export share in GDP would buffer the economy (Times of India).

However, S&P cautions that a prolonged tariff regime could reduce growth to below 6.2%, particularly if agriculture faces supply disruptions or if global trade tensions deepen.

2. Other Key Institutional Forecasts

Multiple agencies have updated their growth outlooks in response to the changing trade environment:

Asian Development Bank (ADB): Reduced its FY26 forecast from 6.7% to 6.5% in July 2025, citing tariffs, global uncertainty, and slower investment momentum (Livemint).
India Ratings & Research (Ind-Ra): Revised growth to 6.3%, pointing to weaker global trade and reduced capital inflows (Livemint).
World Bank: Forecast at 6.3%, citing trade-related risks.
IMF: Lowered its projection to 6.2%, also attributing the change to heightened trade tensions (Livemint).

3. Moody’s and RBI’s Perspective

Moody’s: Estimates that a 50% U.S. tariff could reduce India’s FY26 GDP growth by around 0.3 percentage points, but believes strong domestic demand and a robust services sector will mitigate the impact (Economic Times).
RBI: The Reserve Bank of India reduced the repo rate by 25 basis points to 6.00% in April 2025, and adopted an “accommodative” stance to counteract possible tariff-related headwinds (Reuters).

4. Market Analysts and Economists Weigh In

Morgan Stanley Research: Projects tariffs could shave 0.3–0.6 percentage points off growth if fully implemented (ET BFSI).
Infomerics Chief Economist: Predicts minimal impact of around 0.2 percentage points, citing the benefits of the Make in India initiative, growth in services exports, and diversification of trade markets (Livemint).

5. Government Officials and Strategic Responses

A senior government official stated that a favourable monsoon and stable crude oil prices could offset much of the tariff impact, keeping growth above 6% (Moneycontrol).

Authorities are considering targeted support for export-dependent industries—such as textiles, gems & jewelry, and electronics—to cushion them from reduced U.S. market access (Time.com).

6. Forecasts and Estimated Tariff Impact

Institution	FY26 GDP Forecast (%)	Estimated Tariff Impact
S&P (Feb)	6.7–6.8	Limited
S&P (May)	6.3	Slight decline due to uncertainty
ADB	6.5	Tariffs, global uncertainty
Ind-Ra	6.3	Slower trade and investment
World Bank	6.3	Trade-related risks
IMF	6.2	Trade tensions
Moody’s	6.0	~0.3 pp reduction
RBI	6.5	Monetary easing to support growth
Govt. Officials	6.0	Offset by monsoon, oil stability, and policy

7. Key Takeaways

Impact Will Be Limited, But Not Zero – The consensus is that direct effects will be modest due to India’s domestic demand-driven economy.
Downside Risks Remain – Persistent tariffs, a global slowdown, or agricultural shocks could pull growth closer to 6.0–6.3%.
Policy Will Be Crucial – Monetary easing, fiscal measures, and trade diversification will be central to maintaining momentum.
Sector-Specific Vulnerabilities – Export-heavy industries remain more exposed and will require targeted intervention.
A Strategic Opening – This period offers India a chance to accelerate Make in India, expand into alternative markets, and strengthen domestic value chains.

Conclusion

While S&P Global and other forecasters suggest that Trump’s tariffs will have only a limited impact on India’s FY26 growth, “limited” should not be mistaken for “nonexistent.” Resilience will come from domestic consumption, services-sector strength, and proactive policy—but these buffers will not render the economy immune to prolonged global trade disruptions.

India’s policy challenge is twofold: protect vulnerable export sectors while leveraging the opportunity to deepen self-reliance and global competitiveness. Done well, this strategy could allow India not just to weather the headwinds but to emerge stronger in the post-tariff landscape.

Author’s Note

This article was written to cut through the noise surrounding the so-called “Trump Tariffs” and their impact on India’s economic outlook for FY26. Media narratives often swing between alarm and optimism, but the reality lies in the nuance. By drawing on forecasts from S&P Global, RBI, Moody’s, ADB, IMF, and other credible institutions, my goal was to provide a fact-driven, balanced assessment of the risks, sectoral vulnerabilities, and strategic opportunities India faces.

The central message is simple: India’s economy is resilient, but not invincible. Domestic demand and services strength offer powerful buffers, yet sustained global trade tensions require proactive policy responses and targeted sectoral support. If addressed strategically, these challenges could become a catalyst for deeper structural reforms and a more self-reliant growth model.

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