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NDTV
3 days ago
- Business
- NDTV
Why Trump's 50% Tariffs May Not Hurt India's Growth, S&P Rating Explains
New Delhi: US President Donald Trump's punitive tariffs on Indian imports will not impact India's economic growth, and its sovereign ratings outlook will remain positive, according to S&P Global Ratings Director YeeFarn Phua. New Delhi is facing a 50 per cent US tariff--comprising 25 per cent that kicked in on August 7 and another 25 per cent due to come into force on August 28 as a penalty for buying Russian oil. Speaking at a webinar on Asia-Pacific sovereign ratings on Wednesday, Phua explained that India is not a trade-oriented economy and the nation's exposure to the US in terms of exports to GDP (gross domestic product) is just about 2 per cent. Why US Tariffs May Not Impact India's Growth "I don't think the tariffs imposed on India will have an impact in terms of economic growth, largely because India is not a very trade-oriented economy. And if you look at India's exposure to the US in terms of exports to GDP, it is just about 2 per cent," he said, replying to a query on whether the tariff imposition poses downside risks to the positive outlook on India. In May last year, S&P had upgraded the outlook on India's sovereign rating of 'BBB-' to positive, citing robust economic growth. S&P's latest projections show India's GDP growth will remain steady at 6.5 per cent in the ongoing fiscal year, matching the previous financial year's performance. YeeFarn further noted that major sectors which export to the US, including pharmaceuticals and consumer electronics, are exempted from tariffs. "Over the longer term, we don't think this (higher tariffs) will be a big hit (on India's economy), and therefore, the positive outlook on India remains," he said. To a query on whether US tariffs would impact investment flows into India, the S&P Director said the 'China plus one' strategy has played out for businesses over the last few years, and companies are setting up businesses in India mainly to cater to domestic demand. "Many (businesses) are going there not because they are looking to export just to the US. Many of them are going there because of the huge domestic market as well. An emerging middle class is getting even for those who are looking to invest more in India and looking to export, it might not necessarily be the US market," YeeFarn said. India-US Trade In 2021-25, the US was India's largest trading partner. The US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade. With America, India had a trade surplus (the difference between imports and exports) of USD 35.32 billion in goods in 2023-24. It was USD 41 billion in 2024-25. In 2024-25, bilateral trade between India and the US reached USD 186 billion. India exported goods worth USD 86.5 billion while imports stood at USD 45.3 billion.
Time of India
3 days ago
- Business
- Time of India
‘Don't think US tariffs will…': S&P confident Donald Trump's tariffs won't impact India's growth; here's why
S&P projects India's GDP growth to remain steady at 6.5% in the ongoing fiscal year. (AI image) The Donald Trump administration's move to impose a total of 50% tariffs (25% base tariff + 25% additional tariff for India's crude oil trade with Russia) are unlikely to have any significant impact on the Indian economy, believes S&P Global Ratings. In fact, S&P has even said that the US tariffs pose no threat to the positive sovereign outlook for India. S&P had enhanced its outlook on India's 'BBB-' sovereign rating to positive in May 2022, attributing it to strong economic performance. Trump declared on August 6 that all Indian imports would face an additional 25% tariff, supplementing the existing 25% duty, resulting in a total tariff of 50% effective from August 27. The White House attributed this decision to India's ongoing procurement of Russian oil. Also Read | 'Can't cross some red lines': Government officials tell Parliamentary Panel on India-US trade talks; focus on export diversification amidst Trump tariffs Why US tariffs are unlikely to hit India's growth story The S&P Global Ratings Director YeeFarn Phua said on Wednesday that India's growth would remain unaffected by Trump's tariffs, given its limited trade-oriented economic structure, whilst maintaining a positive sovereign ratings outlook. According to a PTI report, when questioned about potential risks to India's positive outlook due to US tariffs, YeeFarn explained that India's economy would remain stable, noting that its export exposure to the US represents merely 2% of GDP, indicating minimal trade dependence. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Victoria Principal Is Almost 75, See Her Now Boite A Scoop Undo "I don't think the tariffs imposed on India will have an impact in terms of economic growth, largely because India is not a very trade-oriented economy. And if you look at India's exposure to the US in terms of exports to GDP, it is just about 2%,' YeeFarn Phua was quoted as saying. S&P projects India's GDP growth to remain steady at 6.5% in the ongoing fiscal year, matching the previous financial year's performance. YeeFarn noted that significant export sectors to the US, including pharmaceuticals and consumer electronics, remain unaffected by Trump's tariff moves. Also Read | Donald Trump tariffs: How much will India's fuel bill rise if it stops Russian crude oil imports & where would it buy from? Explained "Over the longer term, we don't think this (higher tariffs) will be a big hit (on India's economy), and therefore, the positive outlook on India remains," YeeFarn said at a Webinar on Asia-Pacific Sovereign Ratings. Addressing concerns about US tariffs affecting investment flows into India, he explained that businesses have implemented the 'China plus one' strategy in recent years, establishing operations in India primarily to serve the local market. "Many (businesses) are going there not because they are looking to export just to the US. Many of them are going there because of the huge domestic market as well. An emerging middle class is getting even for those who are looking to invest more in India and looking to export, it might not necessarily be the US market," YeeFarn said. India-US trade facts In 2021-25, the United States emerged as India's leading trading partner. The US contributed approximately 18% to India's overall goods exports, whilst accounting for 6.22% of imports and 10.73% of bilateral trade. India maintained a favourable trade balance with the United States, recording a surplus of $35.32 billion in goods during 2023-24. This figure increased to $41 billion in 2024-25. The bilateral trade between India and the United States totalled $186 billion in 2024-25. During this period, India's exports to the US amounted to $86.5 billion, whilst imports were valued at $45.3 billion. The ongoing trade negotiations between India and the US have hit a bump over the former's clear stance of not opening its agricultural and dairy sectors to American products. Additionally, Trump's desire to end the Russia-Ukraine conflict has led to India feeling the heat of 25% additional tariffs for its crude oil imports as a pressure tactic on Russian President Vladimir Putin. Also Read | Donald Trump's 50% tariffs on India spark outrage: Calls for boycotting US-based brands grow on social media; self-reliance in focus Stay informed with the latest business news, updates on bank holidays , public holidays , current gold rate and silver price .
Economic Times
3 days ago
- Business
- Economic Times
US tariffs not to impact India's growth; no threat to positive outlook on sovereign rating: S&P
Synopsis S&P Global Ratings believes Trump's tariffs will not significantly impact India's growth or its positive sovereign ratings outlook, as India's economy is not heavily trade-dependent. While the US has imposed additional tariffs on Indian imports in response to oil purchases, S&P anticipates India's GDP growth to remain steady at 6.5%. Agencies US tariffs not to impact India's growth (Representational) New Delhi: Trump tariffs will not have any impact on India's growth, as it is not a trade-oriented economy, and its sovereign ratings outlook will continue to remain positive, S&P Global Ratings Director YeeFarn Phua said on May last year, S&P had upgraded the outlook on India's sovereign rating of 'BBB-' to positive, citing robust economic growth. On August 6, US President Donald Trump announced an additional 25 per cent tariff on all Indian imports, on top of an existing 25 per cent duty, taking the total to 50 per cent from August White House said the measure responds to India's continued purchase of Russian to a query on whether the tariff imposition poses downside risks to the positive outlook on India, YeeFarn said, "I don't think the tariffs imposed on India will have an impact in terms of economic growth, largely because India is not a very trade-oriented economy. And if you look at India's exposure to the US in terms of exports to GDP, it is just about 2 per cent". S&P estimates India's GDP growth in the current fiscal year at 6.5 per cent, the same as it was in the previous financial further said major sectors, like pharmaceuticals and consumer electronics, which export to the US, are exempted from tariffs."Over the longer term, we don't think this (higher tariffs) will be a big hit (on India's economy), and therefore, the positive outlook on India remains," YeeFarn said at a Webinar on Asia-Pacific Sovereign a query on whether US tariffs would impact investment flows into India, he said the 'China plus one' strategy has played out for businesses over the last few years, and companies are setting up businesses in India mainly to cater to domestic demand."Many (businesses) are going there not because they are looking to export just to the US. Many of them are going there because of the huge domestic market as well. An emerging middle class is getting even for those who are looking to invest more in India and looking to export, it might not necessarily be the US market," YeeFarn 2021-25, the US was India's largest trading partner. The US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral America, India had a trade surplus (the difference between imports and exports) of USD 35.32 billion in goods in 2023-24. It was USD 41 billion in 2024-25. In 2024-25, bilateral trade between India and the US reached USD 186 billion. India exported goods worth USD 86.5 billion while imports stood at USD 45.3 billion.
Time of India
3 days ago
- Business
- Time of India
US tariffs not to impact India's growth; no threat to positive outlook on sovereign rating: S&P
New Delhi: Trump tariffs will not have any impact on India's growth, as it is not a trade-oriented economy, and its sovereign ratings outlook will continue to remain positive, S&P Global Ratings Director YeeFarn Phua said on Wednesday. In May last year, S&P had upgraded the outlook on India's sovereign rating of 'BBB-' to positive, citing robust economic growth. Finance Value and Valuation Masterclass - Batch 4 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program Finance Value and Valuation Masterclass - Batch 3 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals By Vaibhav Sisinity View Program Finance Value and Valuation Masterclass - Batch 2 By CA Himanshu Jain View Program Finance Value and Valuation Masterclass Batch-1 By CA Himanshu Jain View Program On August 6, US President Donald Trump announced an additional 25 per cent tariff on all Indian imports, on top of an existing 25 per cent duty, taking the total to 50 per cent from August 27. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now Undo The White House said the measure responds to India's continued purchase of Russian oil. Replying to a query on whether the tariff imposition poses downside risks to the positive outlook on India, YeeFarn said, "I don't think the tariffs imposed on India will have an impact in terms of economic growth, largely because India is not a very trade-oriented economy. And if you look at India's exposure to the US in terms of exports to GDP, it is just about 2 per cent". Live Events S&P estimates India's GDP growth in the current fiscal year at 6.5 per cent, the same as it was in the previous financial year. YeeFarn further said major sectors, like pharmaceuticals and consumer electronics, which export to the US, are exempted from tariffs. "Over the longer term, we don't think this (higher tariffs) will be a big hit (on India's economy), and therefore, the positive outlook on India remains," YeeFarn said at a Webinar on Asia-Pacific Sovereign Ratings. To a query on whether US tariffs would impact investment flows into India, he said the 'China plus one' strategy has played out for businesses over the last few years, and companies are setting up businesses in India mainly to cater to domestic demand. "Many (businesses) are going there not because they are looking to export just to the US. Many of them are going there because of the huge domestic market as well. An emerging middle class is getting even for those who are looking to invest more in India and looking to export, it might not necessarily be the US market," YeeFarn said. In 2021-25, the US was India's largest trading partner. The US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade. With America, India had a trade surplus (the difference between imports and exports) of USD 35.32 billion in goods in 2023-24. It was USD 41 billion in 2024-25. In 2024-25, bilateral trade between India and the US reached USD 186 billion. India exported goods worth USD 86.5 billion while imports stood at USD 45.3 billion.
