With India’s exports taking a hit, the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) in its latest report has said that the country’s economy may be impacted if global trade war escalates further into a ‘full-scale global trade war’. The Industry body added that it may reflect in enlarging the country’s current account deficit (CAD) and it will impact Gross Domestic Product (GDP) growth as well.
ASSOCHAM stated that tensions in the market look quite justified, as Trump's move to levy tariff on trading partners could lead to a further retaliation against the US. Though, it said that the measures taken by the US may not have a direct impact on India but the collateral damage could be in the form of adverse impact on the overall sentiment.
Besides, the chamber suggested the government to formulate a backup plan which should include opening bilateral trade with key trading partners, while taking precautions that we remain WTO compliant. It further said that if market confidence is eroded, there would be an outflow of portfolio investment taking a toll on the dollar rates.
