India's Growth Steady at 7.4% Despite US Tariff Threats, Says PHDCCI

"With the proposed tariff of around 500%, doing business with the US is out of the question right now. It will very badly affect exporters in textiles, engineering goods, pharmaceuticals, toys, and gems and jewellery," Mehta told ANI in an exclusive interview in the national capital.

He described the development as part of a broader trend of economic self-interest by major economies and said India must accelerate efforts to diversify export markets.

India has already signed free trade agreements with the United Kingdom, New Zealand and Oman, and is in advanced negotiations with the European Union, which Mehta said would be critical in offsetting risks arising from protectionist trade measures.

"We have to look for new markets. The EU FTA will be very significant and important for India, and discussions are at a very advanced stage," he said.

Despite global uncertainties, Mehta said PHDCCI remains aligned with the government's advance estimate of 7.4% GDP growth for the current financial year, supported by strong domestic demand.

"Growth is being driven primarily by consumption and investments. Gross Fixed Capital Formation at around 7.8% shows the economy is on a very solid footing," he said.

He added that the services sector continues to anchor growth, while manufacturing is strengthening, supported by domestic consumption and rising capital formation.

Recent industrial data underline that resilience. India's Index of Industrial Production (IIP) recorded year-on-year growth of about 6.7% in November, with manufacturing expanding by nearly 8%, Mehta noted.

"These numbers show very solid activity in manufacturing. Our macroeconomic fundamentals are strong and the economy is showing a lot of resilience," he said, while cautioning that geopolitical tensions and tariff actions remain key downside risks.

On fiscal policy, Mehta said sustaining growth would require continued public capital expenditure, simpler compliance norms, and timely access to finance at competitive rates, particularly for small and medium enterprises (MSMEs).

He said strong GST collections, including about Rs 1.75 lakh crore in December, reflected both higher compliance and genuine economic activity, adding that GST 2.0 has helped simplify the tax system and improved consumer spending power. However, he called for faster GST refunds and further simplification for MSMEs.

To ease credit constraints, Mehta urged deeper implementation of the Credit Guarantee Trust for MSMEs (CGTMSE), greater emphasis on cash-flow-based lending, and faster rollout of initiatives such as a proposed Rs 5 lakh MSME credit card for working capital needs.

He also said PLI schemes should be fine-tuned to focus not only on production targets but also on job creation, especially in labour-intensive sectors such as textiles and food processing. Large-scale apprenticeship programmes, he said, could help boost employment.

Looking ahead, Mehta said higher budgetary support for infrastructure, healthcare, R&D, food processing and agriculture would be critical, while emerging sectors such as semiconductors, defence, rare earths and critical minerals should receive sustained policy attention.

"India has made rapid progress in building a semiconductor ecosystem over the last two years. For a Viksit Bharat by 2047, self-reliance in semiconductors and critical minerals is essential," he said.

- ANI