Economic Survey says Trump tariffs on India surprised many: 'Growth estimates revised downward but in reality ...'

US President Donald Trump

• US imposed unexpected punitive tariffs on India, but India's growth accelerated
• GST regime overhauled with new two-tier rates and cuts for everyday items
• India anticipates over 7% real growth despite global economic challenges

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The Economic Survey released by the finance ministry on Thursday said that US President Donald Trump's reciprocal and punitive tariffs on India surprised many since New Delhi was expected to be among the first winners in America's "new tariff regime".

The Economic Survey, tabled by finance minister Nirmala Sitharaman in Parliament, said that while India’s growth forecasts were revised downward in the wake of Trump’s tariffs, the economy in fact recorded an acceleration in growth.

"Although the President of the United States announced reciprocal tariffs of 25% on India

in April, India was expected to strike an early agreement with the US administration and lower

them. So, in August, when the American President announced an additional penal tariff of

25% on most of India’s merchandise exports to the United States on top of the reciprocal tariff

of 25% announced in April, it surprised many since India was expected to be one of the early

winners in the new tariff regime of the United States. Growth forecasts were revised downward," the survey said.

It added that growth accelerated due to a slew of structural reforms and policy measures taken by the Centre.

Among these, it listed the government's decision to rationalise the Goods and Services Tax regime in September 2025, calling it one of the "most radical GST overhaul" since its implementation. The Centre introduced a two-tier rate structure of 5 percent and 18 percent and abolished the 12 percent and 28 percent slabs. It also cut GST on several everyday items in a boost for middle class and poor.

The survey also noted the government's decision to open up nuclear power generation to the private sector and the insurance sector to 100% foreign direct investment.

It added that the four labour codes were also notified by the Centre last year, with the rules expected to come into force in the next few months.

"The Ministry of Environment and Forests relaxed green cover norms for industries based on their

polluting potential from the uniform 33% mandate. Indiscriminate Quality Control Orders,

which adversely affected downstream industries, were put on hold," it added.

The survey said that a sense of "dynamism" has taken hold in the government over the last year, signalling the efficacy of policy moves undertaken by the Centre to offset the impact of tariffs and external shocks.

"Fast forward five months, and India is now anticipating a full-year real growth rate of over 7%, with another year of real growth at or near 7%," it said.

The survey, however, highlighted one paradox that is hurting India's growth story.

"There is one wrinkle in the ointment, however. The paradox of 2025 is that India’s strongest macroeconomic performance in decades has collided with a global system that no longer rewards macroeconomic success with currency stability, capital inflows, or strategic insulation," it said.

Last year, Trump imposed 25% tariffs on India due to trade barriers and then slapped 25% additional duties due to India's purchase of discounted Russian oil.