RBI Governor upbeat on India-US trade talks

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday expressed confidence that the ongoing trade talks between India and the United States would move towards a positive outcome.

“We are hopeful that negotiations on tariffs will play out and there will be minimal impact,” Malhotra said while speaking at an event in Mumbai.

His remarks come at a time when the sixth round of India-US Bilateral Trade Agreement (BTA) negotiations, originally scheduled for August 25, has been postponed.

The RBI Governor highlighted that India’s strong foreign exchange reserves serve as a robust cushion against global uncertainties. “We have very robust foreign exchange reserves of $695 billion, sufficient to cover 11 months of merchandise imports. 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 added.

Malhotra noted that while the overall tariff impact is expected to remain limited, certain labour-intensive sectors such as gems and jewellery, textiles, and apparel may face pressure.

The US recently announced a steep tariff hike on Indian imports. From August 7, President Donald Trump imposed a 25 per cent duty, with an additional 25 per cent levy set to take effect on August 27, effectively raising tariffs to 50 per cent.

Washington has justified its move as a response to India’s continued import of Russian crude oil, arguing that it undermines efforts to pressurize Moscow amid the Ukraine conflict. The Indian government, however, has countered this claim, stating that Russian oil purchases have helped stabilise global energy markets.

Economic experts believe that despite the high tariffs, India’s growth momentum is unlikely to be significantly dented due to strong domestic demand. While textiles and gems and jewellery exports could face moderate challenges, sectors like pharmaceuticals, smartphones, and steel are expected to remain resilient owing to exemptions, existing tariff structures, and robust local consumption.

[Except for the headline, this article has not been edited by the Benefit News editorial team and is published directly from the IANS news feed.]