'US tariffs won't impact India's growth'

Wed, 13 August 2025

16:27

Trump tariffs will not have any impact on India's growth, as it is not a trade-oriented economy, and its sovereign ratings outlook will continue to remain positive, S&P Global Ratings Director YeeFarn Phua said on Wednesday.

In May last year, S&P had upgraded the outlook on India's sovereign rating of 'BBB-' to positive, citing robust economic growth. On August 6, US President Donald Trump announced an additional 25 per cent tariff on all Indian imports, on top of an existing 25 per cent duty, taking the total to 50 per cent from August 27. The White House said the measure responds to India's continued purchase of Russian oil.

Replying to a query on whether the tariff imposition poses downside risks to the positive outlook on India, YeeFarn said, "I don't think the tariffs imposed on India will have an impact in terms of economic growth, largely because India is not a very trade-oriented economy. And if you look at India's exposure to the US in terms of exports to GDP, it is just about 2 per cent". S&P estimates India's GDP growth in the current fiscal year at 6.5 per cent, the same as it was in the previous financial year. YeeFarn further said major sectors, like pharmaceuticals and consumer electronics, which export to the US, are exempted from tariffs.

"Over the longer term, we don't think this (higher tariffs) will be a big hit (on India's economy), and therefore, the positive outlook on India remains," YeeFarn said at a Webinar on Asia-Pacific Sovereign Ratings. To a query on whether US tariffs would impact investment flows into India, he said the 'China plus one' strategy has played out for businesses over the last few years, and companies are setting up businesses in India mainly to cater to domestic demand. -- PTI

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