India-US Trade Deal Optimism Despite Tariff Hurdles: RBI Governor Sees Minimal Impact

Malhotra's comments come as the sixth round of India-US Bilateral Trade Agreement (BTA) negotiations, originally set for August 25, has been postponed.

The Governor also said that India's robust foreign exchange reserves are sufficient to cover 11 months of imports and provide a strong buffer against external shocks.

Source : PTI

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday expressed optimism about the ongoing India-US trade negotiations reaching a positive conclusion.

"We are hopeful that negotiations on tariffs will play out and there will be minimal impact," the central bank's governor said during an event here.

Malhotra's comments come as the sixth round of India-US Bilateral Trade Agreement (BTA) negotiations, originally set for August 25, has been postponed.

The Governor also said that India's robust foreign exchange reserves are sufficient to cover 11 months of imports and provide a strong buffer against external shocks.

"We have very robust foreign exchange reserves of $695 billion, sufficient to cover 11 months of merchandise exports. Generations of freedom fighters gave us a 'Swatantra Bharat', a free India, and now we must work for a 'Samriddh Bharat', a prosperous India," Malhotra noted.

He said that the overall impact of tariffs will be minimal, but there are sectors like gems and jewellery, textiles, apparel, where there could be potential impact.

From August 7, US President Donald Trump imposed a 25 per cent tariff on imports from India. An additional 25 per cent penalty was also announced, scheduled to take effect on August 27, resulting in a total tariff of 50 per cent.

The United States justified its decision as a reaction to India's continued purchase of Russian crude oil. The US claimed that the oil purchase weakened its attempts to apply pressure on Russia to resolve the Ukraine crisis. The Central government has rebutted US claims, arguing that Russian oil imports stabilised global energy markets.

According to analysts, a total of 50 per cent tariff is unlikely to significantly impact India’s growth due to a robust domestic demand. While labour-intensive textiles and gems and jewellery segment are expected to see a moderate impact, pharmaceuticals, smartphones and steel are currently relatively insulated because of exemptions, existing tariffs and strong domestic demand.

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)