RBI To Step-In If 50% Tariffs Kickin
“Now there has been another additional 25 per cent tariff, making it 50 per cent. It’s yet to kick in, and we are hopeful that tariff negotiations will play out and the impact will be minimal”: RBI Governor Sanjay Malhotra
MUMBAI: Ahead of the August 27 deadline when the US President Donald Trump’s additional 25 per cent tariff on Indian goods kick in, India’s central bank on Monday said that it would respond with policy measures to support economic growth including those sectors that would be impacted in case higher tariffs kicks in. The central bank however sounded hopeful that the trade negotiations would be successful, limiting any negative fallout.
“Now there has been another additional 25 per cent tariff, making it 50 per cent. It’s yet to kick in, and we are hopeful that tariff negotiations will play out and the impact will be minimal,” the RBI
Governor Sanjay Malhotra said while answering a question at the FIBAC 2025 conference.
“As you know 45 per cent of Indian exports are outside the US tariff net. On the remaining 55 per cent there will be some potential impact on some of the sectors like Gem and Jewellery, Textiles, Auto Parts, Shrimps and MSMEs.”
“The government is looking into it. We at RBI have been on an easing cycle. We had cut Repo rate by 100 bps to provide ample liquidity to the economy. Whatever support is required from us for the growth of the economy and including those of the sectors which are impacted
more, if it so happens, we would not be found wanting in our job,” Malhotra added.
Earlier this month, Trump doubled US tariffs on India to 50 per cent, up from 25 per cent effective August 27, penalising Delhi for purchasing Russian oil. This makes India the most heavily taxed US
trading partner in Asia and places it alongside Brazil, another nation facing steep US tariffs.
Economists estimate India’s economic growth rate to decline 20-30 basis points in 2025-26 because of the tariffs.
Malhotra urged companies and banks to come together to boost investments amid challenges emanating from tariff uncertainties and geopolitical concerns, stressing that the central bank has not lost sight of growth objectives.