Is India’s Economy Safe From US Tariff Hike? Here’s What RBI Governor Says

New Delhi: RBI Governor Sanjay Malhotra said on Wednesday that the recent US tariff hike is unlikely to have any major effect on India’s economy. Speaking after the monetary policy announcement, he said, “There might not be a major impact of the ongoing uncertainty over the US tariffs on India’s economy. This is subject to retaliatory tariffs coming into the picture, which we do not foresee.”

When asked about the growing trade tensions between India and the US, RBI Governor Sanjay Malhotra said, “We are hopeful that we will have an amicable solution.” He added that the RBI had already revised its GDP growth forecast to 6.5 per cent from 6.7 per cent, taking global uncertainties into account. Malhotra also assured that India’s foreign exchange reserves are sufficient to cover 11 months of imports, saying, “We are confident of meeting our needs from the external sector.”

Trump Warns of Higher Tariffs on India Within 24 Hours

US President Donald Trump has hinted at a steep hike in tariffs on India, which could go beyond the current 25 per cent. In an interview on Tuesday, he said the move could be announced within a day, blaming India’s continued import of Russian crude oil. His administration claims these purchases are indirectly funding Russia’s war in Ukraine.

Malhotra noted that even if India cuts back on Russian oil, the impact on domestic inflation may not be severe since the country sources oil from several other nations as well.

“Let’s keep two things in mind: it’s not only Russian oil that we are taking. We are taking oil from many other countries. If the mix changes, what is its impact on prices? What are the global commodity prices of crude? It will depend on all that. And the other thing it will depend on is how much of its impact, downwards or upwards, is taken by the government in the form of excise duties and other tariffs. So, we don’t see any major impact, as of now, because of this on inflation because I think the government will take an appropriate decision on the fiscal side in case there is any price shock,” he added.

RBI Deputy Governor Poonam Gupta said, “The impact on inflation is likely to be very limited. Nearly half of our inflation basket consists of food, which does not get impacted directly by global developments.” (With IANS Inputs)