Tax incentive measures to help in protecting the Indian economy from the impact of tariffs

New Delhi| Moody’s Analytics has cut India’s economic growth forecast for 2025 by 0.3 per cent to 6.1 per cent, given the risks associated with US counter tariffs. In March, the Indian economy was projected to grow at a pace of 6.4 percent. The financial services company said on Thursday, America is one of India’s largest trading partners. Therefore, imposing a 26 per cent tariff on imports of Indian goods would have a huge impact on the trade balance. However, the tax incentive measures announced in the 2025-26 budget will boost the domestic economy and this will help reduce the tariff shock on overall growth compared to other weaker economies.

Repo rate will be cut again by 0.25 per cent
The report says that gross inflation in India is decreasing at a good pace. This will help RBI maintain its accommodative stance. On the interest rates front, Moody’s said, we expect the RBI to cut the repo rate once again by 0.25 per cent. This will reduce the key policy rate to 5.75 per cent by the end of the year.

Maximum impact on gemstone and jewellery industry
Gems and jewellery, medical equipment and textiles industries will be worst affected by the 26 per cent U.S. tariff on India, Moody’s said in the ‘APAC Outlook: U.S. vs. Them’ report. These sectors have a higher share in exports to the US. Nevertheless, we expect overall growth to remain relatively untouched by this shock as external demand accounts for a fairly small share of GDP.