The Reserve Bank of India (RBI) has announced that it will respond with policy measures to support economic growth, particularly in sectors impacted by the new U.S. tariffs. RBI Governor Sanjay Malhotra stated that while the central bank is hopeful that trade negotiations will limit the negative fallout, it is prepared to provide support. He noted that while 45% of Indian exports are outside the U.S. tariff net, the remaining 55% could be impacted in sectors like gems, jewelry, textiles, auto parts, shrimp, and MSMEs.
Malhotra urged companies and banks to boost investments despite the tariff uncertainties and geopolitical concerns. The article notes that the 50% tariff, which combines a reciprocal 25% tariff with an additional 25% penalty for purchasing Russian oil, makes India the “most heavily taxed US trading partner in Asia”. Economists estimate that India’s economic growth rate could decline by 20-30 basis points in 2025-26 because of the tariffs.