Economic Impact of U.S. Tariffs - India's exports to the U.S. have been contracting in certain product categories due to higher U.S. tariffs, indicating a negative impact on trade [1] - The annualized impact of a sustained 50% U.S. tariff could reduce India's growth by approximately 0.5 percentage points [3] Pressure on MSMEs - Labour-intensive sectors, particularly MSMEs, are experiencing pressure on cash flow and profit margins, leading to delays in capital expenditures [2] Government Response and Reforms - The Indian government has implemented countercyclical policy measures, including interest rate cuts and liquidity easing, to mitigate the effects of U.S. tariffs over the next 12 months [3] - Recent tax cuts and labour reform measures aim to support exporters and address potential growth pressures [4] - The government is focusing on improving the ease of doing business and decriminalizing laws to attract more foreign direct investment [5] Market Reforms and Foreign Investment - There are ongoing market reforms, including potential land reforms and increased foreign investment in sectors like atomic energy, insurance, and banking [6] - The overall strategy involves a mix of reforms to boost domestic demand, enhance self-sufficiency in supply chains, and integrate into global value chains [6][7]