Experts Urge Tax Cuts as Impact of US Tariffs on India Deepens.

4 April, 2025 | New Delhi

Gurmeet Chadha, CIO of Complete Circle, stated to a leading news portal that the Indian government should view this as a critical opportunity to support domestic demand by reducing GST and income tax rates. ‘This is the ideal time to consider cutting GST to strengthen domestic demand,’ he said. ‘A reduction in income tax along with GST can help cushion the economy and position India as a more appealing destination for global capital—both in bonds and equities.’

Backing Chadha’s view, Mandar Silam, Partner at Complete Circle, added, ‘With rising US tariffs, companies are reevaluating supply strategies. India can emerge as a strong alternative if tax pressures are eased. Cutting GST and income tax can spark domestic demand and invite foreign capital—a win-win for growth.’

Donald Trump’s announcement, made in a fiery White House address, accused India of levying 52% tariffs on US products and proclaimed April 2 as ‘Liberation Day’ for the American economy. The move has heightened concerns in global markets and prompted Indian policymakers and experts to reflect on strategic responses.

Kotak Mutual Fund MD Nilesh Shah warned of broader economic consequences. ‘The US has introduced sweeping tariffs only twice before—in 1828 and 1930—and both led to economic downturns including the Great Depression,’ Shah said. He cautioned that the 2025 action could result in slower growth, higher inflation, and even stagflation in emerging markets, while the US could face a severe downturn.

Shah noted potential risks to Indian exports but said the country was relatively well-positioned. “We have a chance to bring in manufacturing for sectors like garments and footwear if we act decisively,” he said, urging proactive trade policy and stronger engagement with China.

The impact of US tariffs on India is also being felt across capital markets, as Sensex and Nifty saw early dips following the announcement.

Markets reacted swiftly. The Sensex and Nifty dipped in early trade on Thursday, pulled down by losses in IT stocks and concerns over global sentiment. However, analysts remain optimistic about India’s investment appeal, provided internal levers such as tax reform and trade clarity are strengthened.

Concluding his remarks, Shah said, ‘The script is still being written,’  implying that India’s economic trajectory will be shaped by the steps it takes in the coming weeks to respond to these global disruptions.

Looking to protect your business amid shifting global trade policies? Our expert team provides tailored support on GST restructuring, income tax planning, and trade compliance to help you stay resilient. Consult our tax experts today.

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Martina Arokiyaraj

CMS Content Assistant at Vakilsearch

I'm Martina Arokiyaraj A, a CMS Content Assistant at Vakilsearch. I focus on simplifying legal topics into easy-to-understand articles. As a regular contributor to the Vakilsearch news portal, my aim is to keep you informed about the latest in law, compliance, taxation, and more. I make sure you stay updated with Vakilsearch experts' insights on every piece of news, how it impacts you, and the steps you should take.

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