Failure to finalise US trade deal may hurt India, but new FTAs can cushion tariff blow: RBI chief
RBI Governor Sanjay Malhotra stated that while a failed trade deal with the U.S. could negatively impact India's economy, export diversification and new trade agreements provide a buffer. He noted that the impact of potential U.S. tariffs remains uncertain as negotiations have reached a plateau.
Why it matters
The potential for high U.S. tariffs on India due to geopolitical tensions over Russian and Iranian energy imports poses a significant risk to global trade stability.
A failure to finalise a trade deal between India and the U.S. could have “some negative impact” on the Indian economy, but a string of recent trade agreements and diversification of exports could cushion the fallout from any additional U.S. tariffs, Reserve Bank of India (RBI) Governor Sanjay Malhotra said on Wednesday.
“We do not know, first of all, which sectors will be impacted and to what extent these tariffs are going to be applied. So, it is premature. But it will obviously have some negative impact,” Mr. Malhotra said in response to a question from The Hindu.
However, India’s recent trade agreements, including those already operationalised and those in the pipeline, would help mitigate the impact, he said.
The governor also pointed to the diversification of India’s export markets and products as another buffer against a potential tariff shock.
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