Piyush Goyal Explains Why High US Tariffs May Not Impact India's GDP Much

Union Commerce and Industry Minister Piyush Goyal has downplayed the impact of the US-imposed 50% tariffs on India's economy, arguing the country's total merchandise exports accounted for only about 10% of its gross domestic product (GDP).

"First of all, we should understand that the total merchandise export of India is only 10% of the country's GDP. Secondly, our imports are more than our exports, which means our GDP is not dependent on our exports. Actually, the GDP gets reflected because imports are comparatively higher," Mr Goyal said at the NDTV Profit GST Conclave.

The Union Minister also highlighted that the exports directly impacted by the tariffs accounted for only 1% of India's GDP. He emphasised that the contribution of value addition within India's exports was relatively low.

"I had heard during the COVID days that there would be a lot of difficulty because of COVID; exports were going to decrease, and there were losses, but our inputs will decrease at a faster pace because we are an import-dependent economy. The contribution of value addition within our exports is relatively low, due to which, in fact, during Covid, we became a surplus nation, a current account surplus. So keep in mind that this is not going to have any significant impact on GDP. If we look at the exports on which reciprocal tariffs have been imposed, then 1% of our GDP is the export affected," he added.

In a sector-wise analysis, he said that jewellery exports contributed only around 3-4% at most, with a limited impact on other sectors. However, three sectors - textiles, garments, and leather products - would experience some impact. Specifically, leather exports may get affected by around $2 billion, and gems and jewellery by around $1 billion, Mr Goyal added.

Regarding GST rate cuts, he noted that every household was eagerly discussing purchases on September 22, showcasing the enthusiasm for spending triggered by lower tax rates.  

On India's potential to attract global investments, he highlighted the country's demographic advantages. India produces 2.3 million STEM graduates annually, with half of them being women, he said.