New Delhi, Aug. 8 -- US President Donald Trump's decision to impose an additional 25% penalty tariff on Indian imports for continuing to buy Russian oil and arms could shave 0.3 percentage points off India's FY26 growth, Moody's Ratings said on Friday.

Moody's now expects real GDP growth in FY26 to slow from its earlier forecast of 6.3%, as higher tariffs weigh on trade. Even so, resilient domestic demand and a robust services sector are likely to cushion the blow, it added.

The tariff, signed on 6 August and set to take effect in 21 days, follows a 25% reciprocal duty announced just a week earlier. Together, they leave India facing one of the steepest US tariff rates in Asia-Pacific-well above the 15-20% faced by regional peers.

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