Rates are the risk of growth, but GST reductions, low inflation offer lighting: MPC -member Saugata Bhattacharya

The Indian economy has to do with some obstacles because of the recently imposed rates, but strong local demand, falling raw materials and supporting policy can help alleviate the impact, according to the Independent Economist and Monetary Policy Committee (MPC) member Saugata Bhatacharya.

Bhattacharya now spoke with ET that if the 50% rate remains due to FY26, this could influence both directly and indirectly. “It is not only export that will be affected, but also related sectors. MSMEs in textiles and leather, as well as affordable homes, can be confronted. The impact can be relatively strong,” he said.

At the same time, he emphasized some positives. Low global raw materials prices are likely to keep inflation under control, while the recent 100-based point reduction in the repo rate and the liquidity support of the RBI has contributed to the lowering of the loan costs. Proposed GST speed reductions can further support the consumption. “This steel wind can compensate for part of the tariff shock, so the final hit for GDP may not be as serious as suggesting initial estimates,” he explained.

Almost half of $ 100-pn export to us to be hit by new rates

Bhattacharya came to risks and marked the loss of access to the US, an important export market. India exported goods worth more than $ 100 billion to the US last year, and almost half of them could be influenced by the new rates. “These are companies with a low margin, so even a small disruption can have a big impact,” he noticed.

Looking ahead, Bhattacharya said that free trade agreements (FTAs) with partners such as EFTA, the UK and possibly the EU can open new opportunities for exporters and reduce dependence on the American market.

As for private investments, he acknowledged that uncertainty about the question, especially in the metals and related sectors, could postpone new projects. “Domestic investors can use a wait -and -see approach. But some sectors such as petrochemicals, renewable energy and special chemicals are still pushing with new investments,” he said.

In general, Bhattacharya emphasized that although rates are a serious challenge, the Indian economy still has buffers that can keep growth on the right track.