Former top economic adviser warns that higher global tariffs could slow India’s economic recovery
India’s growth story has entered a more fragile phase as concerns over global tariffs rise sharply. Former Chief Economic Adviser Arvind Subramanian warned that widening tariff barriers, especially from major markets like the United States, are now a tangible risk to the Indian economy’s expansion prospects.
These fears come as headlines spotlight the lingering impact of punitive duties on Indian exports and the possibility of more restrictive trade barriers emerging in the near term. The warning marks a shift in narrative from assumptions of robust resilience to questions about external headwinds and trade policy uncertainty.
Domestic narrative meets trade reality
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India’s government continues to highlight strong growth figures for the current fiscal year, with GDP estimates above earlier projections based on domestic consumption, investment, and manufacturing performance.
Meanwhile, the former adviser’s emphasis on global tariffs underscores that external pressures are now shaping the growth discourse, rather than purely domestic demand or policy reforms.
Background on global tariffs and India
The recent surge of global tariffs on Indian goods has roots in broader geopolitical tensions, particularly between India and the United States over issues such as energy sourcing and trade negotiations. In 2025, the US doubled tariffs to 50 per cent on many Indian exports, in part linked to New Delhi’s continued purchase of Russian oil.
This move altered trade dynamics with India’s largest export destination and stretched traditional trade ties. The prospect of further tariff escalation, including proposed legislation that could hike duties on certain imports to very high levels, has contributed to market volatility and exporter unease.
Timing of warnings amid uneven recovery
The former adviser’s comments arrive at a moment when India’s economic indicators are mixed. While headline growth rates suggest resilience, deeper measures of trade balance and industrial output reflect the squeeze from rising global tariffs.
This intersection of timing matters because it challenges the assumption that India’s domestic demand alone can offset external shocks. The persistence of tariff-related constraints now intersects with inflation, currency fluctuations, and investment sentiment, complicating the recovery narrative.
Implications for trade and investment
Higher global tariffs have direct implications for Indian exporters. When duties climb, Indian goods become more expensive and less competitive abroad, reducing demand in key markets. This can dent export revenues, dampen manufacturing output, and restrict job growth in trade-intensive sectors.
Beyond export numbers, tariff barriers feed into investor expectations. Markets tend to price in uncertainty quickly, potentially slowing foreign direct investment in areas closely tied to global supply chains and export markets.
Global relevance of rising tariff pressures
India’s tariff challenges unfold against a backdrop of shifting global trade policies. Many countries are recalibrating supply chains in response to geopolitical tensions, rising protectionism, and efforts to balance domestic industries with global integration.
In this broader environment, global tariffs are not simply bilateral frictions but part of systemic tensions affecting emerging market economies. India sits at the crossroads of these trade realignments, trying to sustain its export momentum even as major partners tighten trade barriers.
The Hinge Point
The turning point in this story is the shift from viewing global tariffs as episodic trade irritants to recognising them as structural headwinds with economy-wide consequences. Up until recently, tariff disputes were treated as manageable within India’s broader growth framework, buoyed by strong internal demand and sectoral performance. That assumption is no longer sustainable.
What changes now is the risk calculus policymakers must adopt. Tariff barriers are no longer confined to specific industries; they are reshaping export competitiveness, trade coalitions in negotiations, and firms’ strategic supply-chain decisions. India’s economic planners can no longer treat tariff risk as temporary. They must integrate tariff scenarios into growth forecasts, budget planning, and diplomatic strategies. This shift reflects a deeper recognition that global trade policies, and not just domestic reforms, are central to India’s next phase of growth.