Deloitte, Morgan Stanley reports India growth despite 25% tariff blow by Trump
By Anjali Sharma
WASHINGTON – Morgan Stanley report on Tuesday said that India will play a larger role in the global economy in the coming decades despite 25% tariff imposed by President Trump.
The report said that with the expectation of India’s credit-to-GDP ratio rising and manufacturing gaining a bigger share in GDP, India role in the global economy will significantly go up.
“India is on track to gain more share in global output in the coming years due to a mix of strong foundational factors. These include robust population growth, a functioning democracy, stable macroeconomic policies, improved infrastructure, a rising entrepreneurial class, and better social outcomes,” the report said.
The report mentioned that India will become the world’s most sought-after consumer market, it will undergo a major energy transition, credit to GDP will rise and manufacturing could gain share in GDP.
According to Morgan Stanley India is on track to become the world’s most sought-after consumer market, driven by a major energy transition, rising exports, and stronger growth in credit and manufacturing.
The report said that fiscal consolidation, a likely primary surplus within three years, and structurally lower interest rates will boost equity valuations, supported by households’ growing shift towards stocks.
The soft earnings phase is ending, foreign investor positioning is at a record low.
Morgan Stanley remains bullish on India’s long-term prospects, cited its low beta, but warned of risks from global growth slowdown, geopolitical tensions, rising oil prices, and supply chain disruptions.
Deloitte India forecast India’s GDP growth at 6.4–6.7% for FY 2025-26, slightly lower than the 6.5% recorded in 2024-25, cited strong domestic fundamentals, easing inflation, and expanding global trade opportunities.
It said strategic trade pacts, including a recent deal with the UK, ongoing talks with the US, and a possible agreement with the EU by year-end, could boost income, jobs, market access, and domestic demand.
Deloitte economist Rumki Majumdar said India’s momentum is powered by “resilient capital markets, a dynamic consumer base, and a globally competitive workforce.”
The firm noted that trade agreements are likely to deepen cooperation in AI, digital transformation, and innovation-led startups.
It cautioned that India must monitor its trade exposure and brace for geopolitical risks, including regional conflicts and restrictions on critical minerals and specialized fertilizers, which could weigh on growth.
Trump announced a sweeping 25% tariff on all imports from India, effective August 1, 2025, with additional penalties over India’s continued purchases of Russian energy and defense equipment.
He also branded India and Russia as “dead economies” in a Truth Social post earlier.
