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Key Points

S&P Global Ratings reassured that India’s economic growth remains resilient despite new US tariffs. The agency highlighted India’s limited trade exposure to the US, with key export sectors unaffected. Domestic demand and foreign investment continue to drive India’s expansion, supporting its positive sovereign outlook. The US remains India’s largest trading partner despite recent trade tensions.

Key Points: S&P Says US Tariffs Won't Impact India Growth Outlook

  • S&P maintains India’s positive sovereign outlook despite US tariff hike
  • India’s US exports form just 2% of GDP, limiting economic impact
  • Pharma and electronics sectors exempt from new 50% US duties
  • Domestic demand and ‘China plus one’ strategy boost investor confidence
2 min read

US tariffs won't hurt India's growth, says S&P Global Ratings

S&P Global affirms India’s positive rating despite Trump’s new tariffs, citing limited trade exposure and strong domestic demand.

"Over the longer term, we don’t think this will be a big hit on India’s economy – YeeFarn Phua, S&P Global Ratings"

New Delhi, Aug 13

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.

New Delhi, Aug 13 (IANS) 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.

- IANS

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Reader Comments

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Priya S
While the tariffs may not hurt much economically, we should be careful about our diplomatic relations. The US is still our largest trading partner. Maybe we need to balance our oil imports better between Russia and other countries.
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Arjun K
This shows how strong our fundamentals are! 6.5% growth despite global headwinds is impressive. The middle class boom is real - just look at how many new smartphones and cars are selling. America needs us as much as we need them.
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Sarah B
As an American working in India, I can see why companies are shifting operations here. The talent pool is excellent and costs are competitive. These tariffs might actually accelerate the shift of more manufacturing to India!
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Vikram M
The government should use this as an opportunity to push for more FTAs with other countries. Why depend so much on US market? We have huge potential in Africa, Latin America and our own neighborhood.
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Kavya N
I'm relieved pharma sector is exempt! So many jobs depend on it. But we must diversify our exports - too much reliance on any single sector or market is risky in the long run. Time to boost agri-exports maybe?

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