Is India’s Growth at Risk Because of Trump Tariffs? RBI Governor Answers

Key Takeaways 
 

• RBI Governor Sanjay Malhotra said that US tariffs may not hurt India’s economy much, as long as India does not respond with its own tariffs.
   
• However, after the US imposed a 26% tariff, RBI slightly reduced India’s FY26 growth estimate from 6.7% to 6.5% due to global trade uncertainty.
   

Donald Trump started a trade war that has made many economies, including India, uncertain. RBI lowered India’s FY26 growth estimate, and exporters may face short-term pressure after the US imposed a 26% tariff on imports from India.

Sanjay Malhotra said that uncertainty slows down growth because businesses invest and spend less, and higher tariffs reduce exports. Goods exports may be affected, but services exports are still stable.

Will Your Daily Life Change Because of Trump Tariffs?

The main concerns are jobs, prices, and overall economic stability for Indians. India’s economy grew by 8.2% in the July-September quarter, performing better than all 38 estimates in a Bloomberg survey.

Private consumption, which makes up about 60% of the economy, increased by 7.9% during this time. This shows that demand inside the country is strong and is helping reduce the impact of tariffs.
 
Read More : Tariffs Not a Big Worry for India’s Growth

Here are India’s key economic numbers during this period:
 

India sells its goods to many regions, such as Europe, the Middle East, and ASEAN countries. So, it is not fully dependent on the US for trade. This spread helps protect the economy from the impact of higher tariffs.

India’s basic economic strength is still stable for now, even though global tensions are high.

Also Read : Tariffs May Slow Corporate Loan Growth

What Top Economists and the RBI Are Saying About India Surviving the Trade War?

Economists largely agree that India is better placed than most to handle this pressure. 

The IMF forecasts 6.5% growth for India in 2025 and 2026. It says India’s strengths, like a young population, digital growth, and focus on manufacturing, are stronger than short-term challenges.

However, the IMF has also lowered its projection for India’s growth in the next financial year to 6.2%, on the assumption that high US tariffs will remain in place.

At FIBAC 2025, Governor Malhotra said that even if the proposed tariffs are implemented, the overall impact on India’s economy is expected to be minimal. He also expressed hope that ongoing negotiations will succeed in limiting any negative fallout. 

The solution, according to Malhotra, is to avoid a tit-for-tat tariff response and let trade diplomacy do the work.

Conclusion  

India is handling the global situation carefully, and the Reserve Bank of India is cautious but not worried. Growth may slow a bit, but the domestic economy is still strong.

If India avoids a trade war and continues talks with the US, long-term growth should remain stable. The outcome of US-India trade discussions in the coming months will be important.

Frequently Asked Questions 

1. Will Trump’s tariffs affect India’s economic growth?
Yes, tariffs can slightly slow growth because exports may be reduced, and global uncertainty can affect investment. However, strong domestic demand in India helps balance this impact.

2. Have Trump’s tariffs reduced overseas shopping?
Tariffs can make imported goods more expensive, so some people may shop less from overseas. However, the overall impact depends on price changes and consumer preferences.