MUMBAI— Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday voiced confidence that ongoing trade negotiations between New Delhi and Washington would yield a constructive outcome despite heightened tariff tensions.
“We are hopeful that negotiations on tariffs will play out and there will be minimal impact,” Malhotra said at an event in Mumbai, as the sixth round of talks under the India-US Bilateral Trade Agreement (BTA) was postponed from its scheduled date of August 25.
The comments come against the backdrop of escalating duties. Earlier this month, U.S. President Donald Trump imposed a 25 percent tariff on Indian imports, with an additional 25 percent levy set to take effect from August 27, effectively doubling duties to 50 percent. Washington has justified the move as a response to India’s continued purchase of Russian crude oil, while New Delhi has countered that such imports have helped stabilise global energy markets.
Malhotra said that while some export-oriented sectors — including textiles, apparel, and gems and jewellery — may face pressure, the broader economy is cushioned by strong domestic demand. Pharmaceuticals, smartphones and steel are likely to remain resilient due to exemptions and existing tariff structures, he noted.
The Governor underscored that India’s foreign exchange reserves, at $695 billion, provide significant protection against external shocks. “We have very robust foreign exchange reserves, sufficient to cover 11 months of merchandise imports,” he said. Drawing a parallel with the nation’s journey since independence, he added: “Generations of freedom fighters gave us a ‘Swatantra Bharat,’ a free India. Now we must work for a ‘Samriddh Bharat,’ a prosperous India.”
Economists have said that while the higher U.S. tariffs pose challenges, India’s growth trajectory is unlikely to be derailed. Analysts argue that resilient domestic consumption and policy buffers place India in a better position to absorb external headwinds than many emerging markets. (Source: IANS)
