New Delhi, Aug 13, 2025
The new US tariffs announced by President Donald Trump will not hurt India’s economic growth or affect its positive sovereign rating outlook, S&P Global Ratings said on Wednesday.
In May last year, S&P had upgraded its outlook on India’s sovereign rating of ‘BBB-’ to positive — citing strong and steady economic growth.
On August 6, President Trump announced an additional 25 per cent tariff on all Indian imports, on top of an existing 25 per cent duty.
This will take the total tariff to 50 per cent from August 27. The White House said the move was in response to India’s continued purchase of Russian oil.
Speaking at a webinar on Asia-Pacific Sovereign Ratings, S&P Global Ratings Director YeeFarn Phua said India will not be impacted much because it is not a trade-driven economy.
He explained that India’s exports to the US account for only about 2 per cent of its GDP.
He also noted that major export sectors such as pharmaceuticals and consumer electronics are exempt from these tariffs.
“Over the longer term, we don’t think this will be a big hit on India’s economy, and therefore, the positive outlook on India remains,” he said.
S&P expects India’s GDP to grow by 6.5 per cent in the current financial year, the same as last year.
YeeFarn further pointed out that many global companies are setting up operations in India under the ‘China plus one’ strategy, but mainly to serve the large domestic market rather than relying on exports to the US.
He said India’s growing middle class is a big attraction for investors. The US is currently India’s largest trading partner.
In 2024-25, bilateral trade between the two countries stood at USD 186 billion. India exported goods worth USD 86.5 billion to the US, while imports were valued at USD 45.3 billion.
India also maintained a trade surplus with the US of USD 41 billion during the year.(Agency)
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