Mumbai– Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday voiced confidence that ongoing trade negotiations between India and the United States would reach a positive outcome despite rising 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. His remarks came as the sixth round of India-U.S. Bilateral Trade Agreement (BTA) negotiations, originally scheduled for August 25, was postponed.
Malhotra also underscored India’s strong external position, noting that the country’s foreign exchange reserves stand at $695 billion — enough to cover 11 months of imports and act as a buffer against global shocks. “Generations of freedom fighters gave us a Swatantra Bharat, a free India, and now we must work for a Samriddh Bharat, a prosperous India,” he said.
The governor acknowledged that some sectors, such as textiles, apparel, and gems and jewelry, could face challenges from U.S. tariffs. But he added that the overall economic impact would likely remain limited.
On August 7, U.S. President Donald Trump imposed a 25 percent tariff on Indian imports, with an additional 25 percent penalty scheduled to take effect on August 27, bringing the total to 50 percent. Washington has justified the move as retaliation for India’s continued imports of Russian crude oil, arguing that the purchases undermine its efforts to pressure Moscow over the Ukraine conflict.
New Delhi has pushed back against the claim, maintaining that its Russian oil purchases have helped stabilize global energy markets.
Analysts agree that India’s large domestic market will cushion the blow from higher tariffs. While labor-intensive industries such as textiles and gems and jewelry may feel the pinch, sectors like pharmaceuticals, smartphones, and steel are relatively insulated by exemptions, existing tariffs, and strong domestic demand. (Source: IANS)
