US Tariff Storm Hits India — Experts Say Economy Will Weather the Blow

New Delhi (The Uttam Hindu): The recent 50% tariff imposed by the United States on Indian imports has stirred concern among exporters, but global rating agency S&P Global Ratings has assured that the move will not significantly dent India’s economic momentum. According to Yifarn Phua, Director at S&P Global Ratings, India’s sovereign rating outlook remains positive, despite the tariff blow.

The tariffs, seen as a penalty for India’s oil imports from Russia, are being implemented in two phases — 25% effective from August 7 and the remaining 25% from August 28. While industry insiders worry about the impact, experts believe India’s economy is resilient enough to absorb the shock.

Phua explained during a webinar on Asia-Pacific sovereign ratings that India’s dependence on the US market is relatively low. The US accounts for only 2% of India’s GDP through exports, limiting the impact of these new tariffs.

Last year in May, S&P upgraded India’s sovereign rating outlook to positive based on strong economic growth. The agency expects India’s GDP growth to remain steady at 6.5% in the current fiscal year — matching last year’s performance. Furthermore, key export sectors like pharmaceuticals and consumer electronics are exempt from the tariff hike.

On the investment front, Phua added that the “China Plus One” strategy continues to drive global companies to expand operations in India. These investments are primarily fueled by India’s fast-growing middle class and booming domestic demand, rather than an over-reliance on the US market. “Investors see India not just as an export hub for America, but as a market with immense internal consumption potential,” Phua concluded.