US President Donald Trump may not be aware of how strong the Indian economy is, but US investment banks and economic agencies understand very well the market that India currently has. That market is as much needed by the US as it is needed by Europe. That is why when US President Trump reiterates the point of imposing tariffs on India, another voice also comes from his own country that it will not affect India as much as is being estimated.
This time this voice or rather the prediction has been made by S&P Global Ratings, one of the world’s biggest rating agencies. Rating agencies believe that the American reciprocal tariff will not have as much impact on India as is being thought. The agency estimates that India’s trade surplus may be slightly affected. Let us tell you what kind of prediction the American ratings agency has made.
what was the prophecy
S&P Global Ratings on Thursday said India’s limited trade with the US reduces tariff risk, but indirect effects such as business redirection in the country could hit the steel and chemicals sectors. India’s exposure to a 25 per cent US tariff on aluminium and steel is 4.5 per cent, lower than South Korea’s 4.7 per cent risk, the highest among Asia-Pacific economies, the agency said in its report. India’s exports to the US account for 2.3 per cent of total GDP.
Why will the effect not be read
Nevertheless, India’s growing trade surplus with the US could make it vulnerable to tariffs, as the US has announced reciprocal tariffs on its trading partners. However, the indirect effects of these tariffs, such as a slowdown in global growth, are likely to have minimal impact on India. The report said that India’s export sector accounts for just over 10 per cent of the country’s total GDP. The rating agency also said that most rated Indian firms are able to withstand a temporary income slowdown. The country’s firms also benefit from a growing economy supported by strong infrastructure and consumer spending.
Economy and inflation forecast
According to S&P Global Ratings, India’s economic growth is projected to decline by 10 basis points to 6.7 per cent in FY25 from 6.8 per cent last year, but will remain the fastest growing in Asia-Pacific. Growth is expected to accelerate to 7 per cent in FY27. India’s average inflation will also decline to 4.4 per cent in FY25 from 4.6 per cent in FY24, before rising again to 4.6 per cent in FY26. The rating agency said the reduction in inflation is likely to lead to a 75 basis point cut in the policy rate to 5.5 per cent in the fourth quarter of FY25.
