The Indian government has objected to the International Monetary Fund’s (IMF) baseline assumption that the U.S.’ 50% tariffs would continue, saying they would not remain in place “indefinitely”. 

The government added that the IMF’s assessment of the growth impact of the tariffs was “on the high side”. The IMF has estimated that the tariff hit would reduce India’s GDP growth rate by 0.4% in 2025-26 and by 0.3% next year.

The IMF’s comments and the government’s response are encapsulated in the latest Article IV consultation report by the IMF, which comprises its staff’s assessment of India’s financial and economic system based on its calculations and consultations with officials in the Ministry of Finance and the Reserve Bank of India.

“The authorities [government and RBI officials] generally concurred with staff’s assessment of the outlook and risks, though they did not agree with staff’s tariff assumption,” the report said. 

The government agreed that the overall economic impact of the tariff shock should be “manageable” in the near term, although it did concede that a few industries would be “heavily affected”. 

“That said, the authorities disagreed with staff’s baseline assumption that the 50% U.S. tariffs would remain in place indefinitely and considered staff’s estimated growth impact to be on the high side given frontloading and the potential for developing other export markets,” the report added. 

According to the IMF report, the Indian government recognised the risks of elevated global uncertainty and potential further external shocks, but emphasised the positive potential from newly concluded and forthcoming free trade agreements.