
IMF's Gita Gopinath felt that India could enjoy economic benefits by cutting down some of its tariffs and using the opportunity to become a part of global supply chains. File photo: Facebook
Trump's threat: India can afford to cut tariffs, says IMF's Gita Gopinath
She spelt out the reasons that prevent companies from investing in India and how the country could address these issues through domestic reforms
The International Monetary Fund’s (IMF) first deputy managing director Gita Gopinath says India should look at reducing tariffs on imports not only to address the threat of higher tariffs from the newly sworn-in US President Donald Trump but also for its own advantage.
She felt that India could enjoy economic benefits by cutting down some of its tariffs and using the opportunity to become a part of global supply chains.
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“India remains an attractive destination for businesses, but needs to address the tariff issue,” she said, during an interaction with India Today on the sidelines of the World Economic Forum (WEF) 2025 in Davos.
Focus on domestic reforms
Gopinath said India should focus on carrying out domestic reforms rather than tariff wars as it positions itself as a global manufacturing hub.
She spelt out the reasons that prevent companies from investing in India – the (un)ease of doing business, the lack of adequate infrastructure, improving the ability for firms to buy or sell land, the enforcement of contracts.
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She said that the US would have bilateral negotiations with all their trading partners to rectify what they feel are unfair trade practices.
India’s growth outlook
On the question of India’s growth outlook, Gopinath was quite optimistic despite the recent slowdown in GDP growth. She believed that the IMF’s projection of GDP growth of 6.5 per cent for the current fiscal year represents its current potential.
She felt it is important for India to carry out the “soft reforms” to raise the potential for substantially higher growth. She also said that the slowdown in growth is temporary, and may be due to delays in project implementation of public infrastructure.
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Gopinath emphasised that it was important for the government to continue investing in public infrastructure, especially at the state level, while ensuring fiscal stability.