RBI Engages Industry to Counter US Tariffs, Safeguard India’s Growth
Despite tariff challenges, India’s growth outlook remains steady at 6.5%, signaling cautious optimism from the central bank.
The Reserve Bank of India (RBI) will meet with industry stakeholders in September 2025 to assess the impact of the 50% tariffs recently imposed by the United States on Indian exports. The consultation aims to evaluate sectoral challenges and provide inputs for the upcoming monetary policy committee review. The tariffs affect around 55% of India’s $48 billion in annual shipments to the US, putting exporters at a 30–35% pricing disadvantage compared to competitors such as China, Vietnam, Cambodia, and the Philippines.
Labor-intensive sectors, including textiles and apparel, gems and jewellery, and marine products, are expected to bear the brunt of the levies. The RBI has indicated its readiness to mitigate adverse effects on these sectors and explore measures to cushion the broader economy. Discussions during the meetings are also expected to cover the India-UK Comprehensive Economic and Trade Agreement (CETA), highlighting the central bank’s proactive approach to global trade developments.
Despite the tariff-related challenges, the RBI has maintained India’s growth projection at 6.5% for the fiscal year 2025–26. Its August monetary policy review noted that while inflation expectations have moderated, persistent global trade uncertainties pose downside risks. Domestic industrial activity shows a mixed trend, with mining and electricity remaining subdued, whereas the manufacturing and services sectors continue to display momentum.
The central bank also highlighted a widening merchandise trade deficit of $27.3 billion in July 2025, up from $24.8 billion the previous year, driven primarily by higher oil imports. Equity markets have been affected by weak corporate earnings and tariff-related concerns, prompting foreign portfolio investors to turn net sellers, though inflows from domestic institutional investors have helped buffer the impact.
India’s recent sovereign rating upgrade by S&P, reinforced by steady economic expansion and sound fiscal policies, is expected to enhance investor confidence, lower financing costs, and encourage increased foreign capital inflows. The RBI’s planned consultations with industry players reaffirm its commitment to navigating global trade uncertainties and fostering resilient economic growth.