India must 'fire all cylinders' to sustain growth and boost trade, says IMF

India must fire all cylinders with focus on domestic demand, reforms, investment, innovation, and trade integration, to sustain high growth and meet its long-term development goals, Krishna Srinivasan, IMF Director of the Asia and Pacific Department (APD), said Thursday.

Answering a question from ET Online Editor Deepak Ajwani on India’s approach to tariffs and self-reliance, Srinivasan said, “If India has to grow at the rate at which you’re talking about in terms of being fixed by 2047, India has to fire all cylinders. Strengthen domestic demands, build internal integration within India… But also, there is an opportunity here for India to integrate itself in global supply chains.”

Srinivasan said that India’s recent reforms, including GST, are helping boost domestic consumption. “The GST reforms go in that direction, which will provide lift to, you know, consumption, they will improve domestic demand,” he said.

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He also said that India should balance domestic growth with global trade opportunities. “There are many things India needs to do. One thing is pre-liberalization… If you want to really scale up and compete with China, you need to liberalize your trade, make labor laws more flexible, so that industry can scale up,” Srinivasan said.

He added that improving the business environment is crucial, adding that “there are lots of regulations which impede the ability of the private sector to unleash its full potential.”

On India’s current economic performance, Srinivasan said growth remains strong despite global shocks. “India continues to be the fastest growing major economy. We have India going at 6%, 6.6% this year, slowing to 6.2% next year, and that slowed next year is because of the higher tiers of tariffs. If you look at India’s fundamentals, pretty strong, growth is good, inflation’s coming down, fiscal deficit well managed,” he said.

Srinivasan further said that India should not choose between domestic self-reliance and global trade engagement. “In my view, it’s not one or the other. It needs all cylinders if you want to get to 8% or more growth and meet your objective of Viksit Bharat,” he said.

On Asia's growth and dealing with Trump's tariffs
On India’s current economic performance, Srinivasan said growth remains strong despite global shocks. “India continues to be the fastest growing major economy. We have India going at 6%, 6.6% this year, slowing to 6.2% next year, and that slowed next year is because of the higher tiers of tariffs. If you look at India’s fundamentals, pretty strong, growth is good, inflation’s coming down, fiscal deficit well managed,” he said.

He also highlighted Asia-Pacific’s broader resilience. “Economic activity in the Asia-Pacific is holding up better than expected… We project the region to grow by 4.5 per cent in 2025 and moderate to 4.1 per cent in 2026. The region is once again set to contribute the lion’s share of global growth—about 60 per cent, both this year and in 2026,” Srinivasan said. He noted that strong exports, a tech boom, and accommodative macro policies, supported by favorable financial conditions, are helping the region withstand shocks.

He added that deeper regional and global integration could unlock significant gains. “Concerted efforts to pursue reforms to boost trade and investment will help fuel durable growth for years to come… Countries can cut non-tariff barriers, broaden and modernize trade agreements to cover services and digital trade, and ease FDI restrictions,” he said in his opening remarks, reflecting the IMF’s view that policy reforms are key to sustainable and inclusive growth.