Reserve Bank Governor makes BIG statement amid Trump’s Tariff war, Sanjay Malhotra says India’s growth likely to witness…, GST cuts not enough to…

RBI governor said that the recent GST rate cuts will not be sufficient to fully offset the impact of the 50 percent US tariffs.

New Delhi: Sanjay Malhotra, Reserve Bank of India (RBI), has expressed concern over the risks related to trade and tariffs for India’s growth journey. In his monetary policy review statement, Malhotra said that the current global uncertainties and tariff-related developments could slow down the pace of growth in the second half of FY 2025-26 and beyond.

However, he also voiced confidence in the strength of the country’s economy. It is important to note that currently, US President Donald Trump’s administration has imposed a 50 percent tariff on Indian exports to America. Of this 50 percent tariff, 25 percent is a “reciprocal tariff,” while the remaining 25% is an additional tariff imposed in response to India’s purchase of crude oil from Russia.

Ongoing Talks Between the Two Countries

Notably, India and US are still negotiating on a trade agreement. However, a deadlock persists on certain issues. These include India’s trade in crude oil with Russia and the “red line” India has drawn on opening up its agriculture and dairy sectors for US exports. No consensus has been reached on these matters so far.

Here are some of the key details:

• The Reserve Bank on Wednesday did not make any changes to the repo rate
• RBI governor said that the recent GST rate cuts will not be sufficient to fully offset the impact of the 50 percent US tariffs.
• Sanjay Malhotra mentioned that talks on a trade agreement are ongoing and tariffs could be reduced.
• Malhotra clarified that the Reserve Bank has based its calculations on the assumption of a 50 percent tariff rate on Indian exports.
• Malhotra said that the downward revision in GDP growth estimates for the second quarter is due to the potential impact of the US tariffs.