New Delhi: Indian economy particularly exports may be impacted if the global trade war escalates further, industry body Assocham said on Sunday.
"If the tariff war escalates into a full-scale global trade war, it would have a collateral damage for the Indian economy as well, with the country's exports taking a hit, current account deficit facing pressure and the GDP taking a setback," the chamber said in a statement.
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.
"Even if India chooses to take a responsive action on its imports, the impact on our exports could be more even as the volatility in the foreign exchange rates would also rise," it added.
The chamber asked the government to formulate a backup plan which should include opening bilateral trade with key trading partners, to insulate the country from the impacts of protectionist measures.
Further, it said that if the market confidence is eroded, there would be an outflow of portfolio investment taking a toll on the dollar rates.
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