How govt & RBI made US-Iran war a 'non-event' for Indian economy
India's economy has demonstrated resilience against global headwinds, including the US-Iran conflict, by maintaining a 7.8% growth rate. Government policies, such as tax cuts and GST adjustments, have bolstered domestic consumption to offset external trade pressures.
Why it matters
Understanding how emerging economies manage external geopolitical shocks provides insight into the effectiveness of domestic-led economic strategies.
India’s growth story is a hot topic of discussion these days. How has one of the world’s largest economies managed to cushion the blow of the US-Iran war to still grow at 7.8%? What measures have helped the world’s sixth largest economy retain the tag of being the fastest growing major country?Global headwinds for the Indian economy began from the second half of 2025 when the Donald Trump administration’s reciprocal tariffs came into effect at 50%. The start of the year brought some relief with an 18% tariff being announced by Trump as part of trade negotiations with India.But, then began the Middle East conflict which exposed India’s dependence and vulnerability to the Middle East for key needs, especially its energy security.Yet, the economy has shown resilience in the face of multiple crises. GDP growth is just one aspect of the story.
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