RBI Governor Sanjay Malhotra (File Image)
Reserve Bank of India (RBI) Governor Sanjay Malhotra, on Wednesday, said that the recent tariff measures announced by the United States are unlikely to significantly impact the Indian economy in their current form. “We don’t see a major impact of the US tariff unless there is a retaliatory tariff,” he said, addressing concerns around global trade tensions.
On August 1, Trump signed an Executive Order titled ‘Further Modifying The Reciprocal Tariff Rates’, raising tariffs for over five dozen countries, including a steep 25 per cent for India. Reiterating his warning on Tuesday, Trump announced plans to “substantially” raise tariffs on Indian imports within the next 24 hours. “India has not been a good trading partner because they do a lot of business with us, but we don’t do business with them. So we settled on 25 per cent, but I think I’m going to raise that rate quite substantially in the next 24 hours,” said Trump in a telephonic interview with CNBC. “They’re buying Russian oil and fueling the war machine. And if they are going to do that, I’m not going to be happy,” he added.
Speaking on the Indian economy, Sanjay Malhotra said, “…Over the medium term, the Indian economy holds bright prospects in the changing world order, drawing on its inherent strengths.” The Governor’s remarks came days after Trump took a swipe at India and Russia by calling their economies “dead.”
Pushing back against Trump’s warnings, India’s Ministry of External Affairs had called the targeting of New Delhi “unjustified and unreasonable”. Like any major economy, India will take all necessary measures to safeguard its national interests and economic security,” the MEA had said.
Further, the RBI Governor on Wednesday said that the central bank will continue to do whatever is necessary to support economic growth. “We will continue to do whatever is required to be done in such a scenario. Of course, trade negotiations are still continuing. We are hopeful that we will have an amicable solution,” he said during a post-monetary policy media interaction.
The RBI has taken a number of measures to support growth not only on monetary policy or liquidity side but on prudential regulation side as well steps have been taken, he said. Malhotra also India has comfortable foreign exchange reserves, which can take care of 11 months of import.
He also announced central bank’s decision to keep policy rate unchanged at 5.5 per cent and retained the neutral stance. He said that the Monetary Policy Committee (MPC) unanimously decided to keep the short-term lending rate or repo rate unchanged at 5.5 per cent with neutral stance.
Announcing the third bi-monthly monetary policy of the current fiscal, RBI Governor Sanjay Malhotra said that the growth rate projection for FY26 has been retained at 6.5 per cent.