Chief Economic Adviser V Anantha Nageswaran on Monday cautioned that the 50 percent tariff imposed by the United States could reduce India’s GDP by 0.5 percent in FY26. Speaking to Bloomberg TV, he said the impact may climb to 0.6 percent if the measures remain in force for the entire financial year. While expressing hope that the duties will be short-lived, he warned that an extension into the next fiscal could bring a heavier drag and become a major risk to India’s growth momentum. The steep tariff announced by US President Donald Trump took effect on August 27. It combines a 25 percent secondary duty with an additional 25 percent penalty related to India’s imports of Russian crude oil.

Growth outlook: Despite the tariff pressure, Nageswaran maintained that India is positioned to achieve real GDP growth of 6.3 to 6.8 percent in FY26, broadly in line with government expectations. He highlighted that the economy grew by 7.8 percent in the first quarter, the fastest expansion in over a year, demonstrating resilience in the face of global headwinds.

GST reforms and fiscal position: Nageswaran further noted that the recent overhaul of the Goods and Services Tax could raise GDP by 0.2 to 0.3 percent. He added that India remains on track to meet its fiscal deficit target of 4.4 percent this year. The target will be supported by the Reserve Bank of India’s record dividend payout and government asset sales to cover shortfalls.

Finance Minister Nirmala Sitharaman recently announced sweeping GST reforms, cutting four existing slabs to a simpler two-tier structure of 5 percent and 18 percent, with a 40 percent rate on sin goods. The move delivers on Prime Minister Narendra Modi’s longstanding promise to simplify India’s indirect tax system.
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Union Commerce and Industry Minister Piyush Goyal on Thursday called the recent cut in GST rates a “game-changing” step and the “biggest reform since independence,” urging industries to ensure that consumers fully benefit from it. He said the reform would help boost demand across sectors, strengthen the economy, and significantly benefit areas such as the pharmaceutical industry, agriculture, and MSMEs. “Every consumer and every stakeholder will gain from this change,” Goyal said, while stressing the importance of also promoting the Made in India initiative.

Goyal credited Prime Minister Narendra Modi for this “transformative and historic” move, saying the tax cut would reduce prices on everyday items, directly easing the burden on citizens. He described it as a Diwali gift that would improve the ease of living and overall quality of life for India’s 1.4 billion people. Besides lower rates, Goyal highlighted that simplified GST processes will make it easier to do business. He added that increased demand would attract investment, create more jobs, and strengthen the cycle of economic growth.

Responding to Opposition criticism that the reform should have been introduced earlier, Goyal accused Congress of spreading negativity, saying that India’s current 7.8% GDP growth makes it the fastest-growing major economy in the world. He criticized Rahul Gandhi for calling India a “dead economy,” saying such remarks reflect a “negative mindset.” The minister was speaking at the India MedTech Expo and Bharat Nutraverse Expo.
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Russia has assured that it will maintain oil exports to India despite increasing pressure and tariff threats from the United States. In recent statements made in New Delhi, Russian officials emphasized the strength of India-Russia energy ties and highlighted a special mechanism designed to ensure uninterrupted crude supplies even amid external sanctions and 25–50% tariffs imposed by the US on Indian imports.

Evgeny Griva, Russia’s Deputy Trade Representative in India, confirmed that India’s imports of Russian crude are expected to remain at current levels. “There will be around a 5% discount on Russian crude for India, subject to negotiations,” he said, pointing out that Russia sells oil to India at a notable price advantage compared to other sources. This discount and existing trade complementarity, Russia believes, position India as a key and growing consumer of its oil.

Despite Washington’s attempts to discourage India’s purchases of Russian crude—part of broader sanctions aimed at curtailing Russia’s revenues amid the Ukraine conflict—New Delhi has defended its right to buy from the most affordable sources, calling the US tariffs “unreasonable.” The Indian government has also signaled willingness to expand bilateral trade with Russia, potentially reaching $100 billion in annual turnover by 2030.

Roman Babushkin, the Russian Deputy Chief of Mission in India, was vocal in criticizing the US stance, labeling the sanctions “unjustified” and “unilateral.” He also expressed confidence that India-Russia energy cooperation will continue unabated despite external pressure. Babushkin noted that while the situation is challenging for India, Russia remains a reliable partner, and these sanctions largely harm those imposing them.

India’s state-owned refiners have reportedly resumed Russian oil imports after a short pause due to US tariff pressures. Deliveries of Russian Urals crude scheduled for September and October 2025 are expected to proceed, reinforcing India’s position as one of Moscow’s largest oil buyers alongside China.

This ongoing energy relationship highlights the complicated geopolitics of global energy markets, where economic pragmatism intersects with international diplomatic tensions. For India, securing affordable and reliable energy supplies remains a national priority, while Russia counts on sustained demand from Asia to offset Western sanctions.

Disclaimer: This image is taken from Reuters.

The Reserve Bank of India (RBI) decided to maintain its key lending rate at 5.5% during the latest bi-monthly Monetary Policy Committee (MPC) meeting, which concluded on Wednesday. After three days of deliberations, Governor Sanjay Malhotra shared the central bank’s views on the country’s economic outlook, touching upon inflation trends, growth prospects, and the growing concerns over global trade tensions, especially in light of new tariff measures announced by the United States.

This was Malhotra’s fourth monetary policy statement since taking office. In his address, he outlined how India’s economy stands at a crucial juncture, navigating domestic strength while facing external challenges. Stressing the MPC's unanimous decision to hold the repo rate at 5.5%, he added that other key rates, including the Standing Deposit Facility at 5.25% and the Marginal Standing Facility and Bank Rate at 5.75%, would also remain unchanged. The Governor noted that the central bank would remain vigilant, continuously assessing fresh data and evolving economic conditions to guide future policy actions with a neutral stance.

A significant portion of Malhotra’s remarks focused on the uncertainties emerging from global trade disputes. He pointed out that the recent wave of tariff announcements and ongoing trade negotiations could pose headwinds to India’s growth in the near term. While the domestic economy shows resilience, he cautioned that external factors like tariffs, geopolitical tensions, and global financial market volatility could influence India’s growth trajectory.

Despite these risks, the RBI has retained its GDP growth projection at 6.5% for 2025-26. Malhotra attributed this confidence to favourable factors such as an above-normal monsoon, easing inflation, and supportive financial conditions. He also emphasized that sectors like construction and trade are likely to contribute significantly to services sector growth in the coming months.

On inflation, the Governor highlighted that headline inflation has eased considerably, mainly due to volatile food prices, while core inflation has remained stable. He acknowledged that although inflationary pressures have softened, volatility in food prices, especially vegetables, remains a concern. The RBI has previously reduced rates by 100 basis points since February 2025, and Malhotra mentioned that the effects of these cuts are still unfolding across the economy.

He further remarked on the global economic scenario, noting that while political uncertainties have somewhat subsided, global trade issues continue to pose challenges. Policymakers around the world are grappling with slow economic growth, sticky inflation, and elevated public debt. Despite these global challenges, Malhotra expressed optimism about India’s medium-term prospects, backed by strong fundamentals and robust economic buffers. However, he also cautioned that navigating this complex global environment will require careful policy manoeuvring.
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In the daily market analysis on Open For Business, Andrea Heng and Hairianto Diman discuss market insights with Jun Bei Liu, Founder and Lead Portfolio Manager at Ten Cap.

Disclaimer: This Podcast is taken from CNA.

After the US announced a pilot program that may require bonds up to 15000 dollars for certain tourist and business visas, Hairianto Diman and Susan Ng explore the importance of travel visas in today's interconnected world with insights from Scott Moore, Managing Director of Henley and Partners.

Disclaimer: This Podcast is taken from CNA.

On Wednesday (Jul 16), Indonesian President Prabowo Subianto welcomed what he called a “new era of mutual benefit” with the United States after President Donald Trump set a 19 per cent tariff on Indonesian exports to the U.S. — significantly lower than the previously threatened 32 per cent. Andrea Heng and Hairianto Diman discuss the economic implications of the revised tariff with Adam Samdin, an economist from Oxford Economics’ Asia Macro team.

Disclaimer: This Podcast is taken from CNA.

If the US dollar falls against the Singapore dollar, is it a good idea to buy it even if you’re not planning a trip to the US soon? And what are the risks if the exchange rate drops sharply? In this week’s episode of Money Talks, Khoon Goh, Head of Asia Research at ANZ, explains the fundamentals of currency exchange.

Disclaimer: This Podcast is taken from CNA.