India-US tariff battle: Goldman Sachs trims India’s GDP growth outlook; inflation forecast offers silver lining

India’s growth story could also be headed for a tough patch after US President Donald Trump imposed a steep 25% “reciprocal” tariff on Indian items, a latest report by Goldman Sachs confirmed.In a newly revised outlook, the brokerage trimmed its forecast for India’s actual GDP growth by 0.1 share level. It now expects the financial system to broaden by 6.5% in calendar yr 2025 and by 6.4% in 2026 which marks a 0.2 share level minimize from earlier projections.“In our view, some of these tariffs are likely to be negotiated lower over time, and further downside risk to the growth trajectory mainly emanates from the uncertainty channel,” the report mentioned, as quoted by ANI.However, whilst growth is predicted to decelerate, there’s a silver lining on the inflation entrance. The agency lowered India’s inflation projections by 0.2 share factors for each calendar yr 2025 and monetary yr 2026, now pegging it at 3.0% year-on-year. The easing costs are largely being pushed by falling vegetable prices.The report additionally added a word of warning, the inflation forecast sits in “the left tail of India’s historical inflation distribution,” that means such low ranges are uncommon and should not maintain if sudden financial shocks emerge.The uncertainty round commerce has additionally raised broader considerations about investor confidence and planning. “Further downside risk to the growth trajectory mainly emanates from the uncertainty channel,” the report famous as soon as once more, pointing to the broader results past simply numbers on a chart.It additionally warned of two main dangers that might stop inflation from cooling additional, a fast and clean decision of US-India commerce negotiations, or a sharper-than-expected rise in core inflation, particularly if it edges nearer to the 4.0% mark.Meanwhile, the Reserve Bank of India (RBI) has chosen to carry its floor. In its coverage announcement on Wednesday, the central financial institution saved the repo charge unchanged and maintained its personal growth forecast of 6.5% for the present fiscal. Simultaneously, it additionally minimize its CPI inflation projection for FY26 from 3.7% to three.1%.As commerce tensions simmer and inflation outlook improves, all eyes stay on how negotiations proceed between the 2 nations and whether or not India can map a gradual path by the turbulence forward.