Archive · 30 Sep 2025
Indian Economy Growth Revised Amid US Tariffs and Air Traffic
The Asian Development Bank (ADB) has adjusted India's economic growth forecast for the current year to 6.5%, even though the economy had a strong start.
This change is due to expected impacts from new US tariffs, which are projected to slow down India's exports.
Although growth will be less than originally anticipated, factors like healthy domestic demand and service exports will help.
Simultaneously, passenger traffic is likely to slow to post-covid lows.
Lower inflation led the central bank to reduce interest rates to aid growth.
The government's spending increased, widening the fiscal deficit, but the current account deficit is expected to remain stable.
ADB lowered India's FY26 growth forecast to 6.5% due to US tariffs.
India's air passenger traffic growth in FY26 is expected to be the lowest post-Covid.
US tariffs will reduce growth, particularly in the second half of FY26 and FY27.
Inflation forecast is lowered to 3.1% for FY26.
The Reserve Bank of India cut the repo rate to 5.5% by June 2025.
- Who
- ADB & ICRA
- What
- Revised economic and air traffic growth forecasts
- When
- FY26
- Where
- India
- Why
- US tariffs & cross-border tensions, lower aircraft availability.
Impact of US Tariffs
Economic Factors
Economic Growth
Impact of US Tariffs
US tariffs will reduce India's economic growth.
Economic Factors
Strong domestic demand and service exports may cushion the impact of US tariffs.
Fiscal Deficit
Impact of US Tariffs
Fiscal deficit will be higher than budget estimates.
Economic Factors
Deficit will likely be lower than FY25.
- FY26 GDP Growth Forecast
- 6.5%
- Q1 FY26 GDP Growth
- 7.8%
- Inflation Forecast (FY26)
- 3.1%
- Repo Rate
- 5.5% (June 2025)
- Airport Passenger Growth (FY26)
- 5-7%
Sources
Moody’s Affirms India’s Baa3 Sovereign Rating, Maintains Stable Outlook
Moody's retains India rating at 'Baa3' with stable outlook due to strong GDP growth
Moody's retains India's credit rating at ‘Baa3’ with stable outlook, expects growth to outpace G20 economies
Moody’s affirms India’s Baa3 rating with stable outlook
Moody’s retains India rating at ‘Baa3’, maintains ‘stable’ outlook
Moody’s affirms India’s Sovereign Rating at ‘Baa3’ with Stable Outlook on growth strength
Moody's retains India rating at 'Baa3', maintains 'stable' outlook - Telegraph India
Moody’s follows Fitch, only affirms India’s sovereign rating with stable outlook
Moody's retains India rating at 'Baa3', maintains 'stable' outlook
Moody's retains India rating at 'Baa3', maintains 'stable' outlook
Moody’s keeps India’s rating steady at Baa3, highlights growth and fiscal balance
Moody’s Reaffirms India At Baa3 With Stable Outlook, Flags Fiscal Pressures Amid Strong Growth
Moody's Retains India's Credit Rating at Baa3
India rating at ‘Baa3’ unchanged: Moody’s
ADB trims India’s growth forecast to 6.5% in FY26 amid US tariffs
Indian economy to grow at 6.5% in FY26; US tariffs to weigh on exports: ADB
