America’s tariff
The World Bank said on Tuesday that the high tariff (fee) imposed by the US on Indian exports could slow down in South Asia’s economic growth rate in 2026. However, due to government expenditure in the current year, the situation remains under control. According to the report, South Asia’s growth rate may come down from an estimated 6.6% to 5.8% in 2026 in 2025. This report of the World Bank includes countries like India, Bangladesh, Sri Lanka, Nepal, Bhutan and Maldives.
America’s tariff is the main reason for decreasing growth in 2026
The World Bank said that the growth estimate for 2026 has been reduced as India is facing higher tariffs than expected on the goods exported by the US. The report states that some effects will gradually reduce, but America’s increased fees will put pressure on India’s growth.
Fresh estimate of India’s growth
The World Bank has increased the growth rate of India’s current financial year (by March 2026) to 6.3% to 6.5%. However, the estimate for the next financial year (2026–27) has been reduced from 6.5% to 6.3%.
America’s 50% tariff is the biggest shock
US President Donald Trump has imposed a 50% tariff on most exported products coming from India, the highest fee levied on any American trade partner. The move is affecting Indian exports of about $ 50 billion, especially labor-dominated sectors such as textile, gems and shrimp industries.
Emphasis on tax deduction and investment
To reduce the impact of the tariff, Indian Prime Minister Narendra Modi took a big decision to reduce tax from shampoo to cars last month. This is said to be the biggest tax improvement after 2017 (tax overhaul). Along with this, India is continuing rapid expenditure on infrastructure projects, which is supporting domestic demand. According to experts, India will have to focus on diversity in domestic investment and export markets to reduce this effect.