S&P Assures India’s Progress Unaffected by US Tariffs; Optimistic Sovereign Score Outlook Stays, ETCFO
New Delhi, Trump tariffs won’t have any impression on India’s development, as it isn’t a trade-oriented economic system, and its sovereign scores outlook will proceed to stay optimistic, S&P International Scores Director YeeFarn Phua mentioned on Wednesday.
In Might final 12 months, S&P had upgraded the outlook on India’s sovereign score of ‘BBB-‘ to optimistic, citing strong financial development.
On August 6, US President Donald Trump introduced an extra 25 per cent tariff on all Indian imports, on high of an present 25 per cent obligation, taking the full to 50 per cent from August 27.
The White Home mentioned the measure responds to India’s continued buy of Russian oil.
Replying to a question on whether or not the tariff imposition poses draw back dangers to the optimistic outlook on India, YeeFarn mentioned, “I do not assume the tariffs imposed on India will have an effect when it comes to financial development, largely as a result of India will not be a really trade-oriented economic system. And if you happen to take a look at India’s publicity to the US when it comes to exports to GDP, it’s nearly 2 per cent”.
S&P estimates India’s GDP development within the present fiscal 12 months at 6.5 per cent, the identical because it was within the earlier monetary 12 months.
YeeFarn additional mentioned main sectors, like prescription drugs and shopper electronics, which export to the US, are exempted from tariffs.
“Over the long term, we do not assume this (increased tariffs) shall be an enormous hit (on India’s economic system), and subsequently, the optimistic outlook on India stays,” YeeFarn mentioned at a Webinar on Asia-Pacific Sovereign Scores.
To a question on whether or not US tariffs would impression funding flows into India, he mentioned the ‘China plus one’ technique has performed out for companies over the previous couple of years, and corporations are establishing companies in India primarily to cater to home demand.
“Many (companies) are going there not as a result of they wish to export simply to the US. A lot of them are going there due to the massive home market as properly. An rising center class is getting bigger…So, even for individuals who wish to make investments extra in India and seeking to export, it may not essentially be the US market,” YeeFarn mentioned.
In 2021-25, the US was India’s largest buying and selling companion. The US accounts for about 18 per cent of India’s whole items exports, 6.22 per cent in imports, and 10.73 per cent in bilateral commerce.
With America, India had a commerce surplus (the distinction between imports and exports) of USD 35.32 billion in items in 2023-24. It was USD 41 billion in 2024-25.
In 2024-25, bilateral commerce between India and the US reached USD 186 billion. India exported items value USD 86.5 billion whereas imports stood at USD 45.3 billion. PTI>
