Posted on 08/13/2025 9:30:23 PM PDT by cold start
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.
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 larger...So, 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.
Some of the stuff I was once trying to sell in India faced duties of plus 200%. I genuinely like India and Indians, but no sympathy here. Nothing personal. Just business.
India called Trump’s bluff...
India is the fastest growing economy in the world, and it’s oil consumption increased 5% last year.
World’s sewer.
I’m guessing scam call centers in India don’t pay tariffs...
“I’m guessing scam call centers in India don’t pay tariffs”
Shutting down those call centers would do great economic harm to India.
Ok, let’s end the h1-b scam program and boot all those currently on it.
H1-B scam is entirely creation by powerful American corporations who control the politicians with huge campaign donations. You won’t be able to get rid of the scam because you do not contribute enough to the politicians. Read my tag line.
Writing an article on global tariffs where it begins with “I think” invalidates the entire article. But then again, it is Armstrong.
They can just pay it, that’s all we ask. Bottom line is they pay it.
What India will do is to work with Russians to see that the Russian oil goes to countries that export little to the USA or need not export to the USA at all.
These countries might be Iran, Iraq, Egypt, Burma, Nepal, Morocco, Bolivia, Syria, etc.
Iran and Iraq can refine the Russian oil and use the refined products domestically and step up their exports.
“let’s end the h1-b scam program and boot all those currently on it.”
Software can be developed anywhere. The former H-1B workers will simply live, work for a subsidiary of their old employer, and pay income tax in their native lands.
My neighbor Nick manages software development teams around the world. His first phone call is around 7am and his last phone call is around 11pm.
What bluff would that be?
India ceased purchasing Russian oil.
The industrial differences and related tariffs will take some time to be sorted out.
The tariff Billy club as they do not seem worried about it.
Time that Trump does not have. I heard Trump say a few days ago he needs another term as it is iffy if the GOP winds in 2028 so whomever wins in 2028 these tariffs will go out the window especially if the Demonrats win.
Only the customer pays. Not the exporting country. If such exports still have takers at that tariff level.
Not so far.It would be noticeable if India stopped buying Russian oil. Considering the amount India buys, oil prices would immediately increase 10-20%.
The facts remain though. Global trade is a low percentage of India's economy and trade with US constitutes less that 2% of India's GDP. Other economists have said that the effect might be around 40-60 basis points, not insignificant but not catastrophic. The Indian stock market has not reacted to the tariffs at all, mostly ignoring it.
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