RBI Governor Sanjay Malhotra Discusses Economic Implications of Potential India-US Trade Deal Failure
India’s Reserve Bank Governor Sanjay Malhotra stated on Wednesday that the country’s trade agreements with other nations could help cushion the impact of potential US tariffs if the India-US trade deal fails to materialize. Malhotra acknowledged that while the extent of any negative impact from tariffs is uncertain, it would likely be detrimental to the economy. He emphasized that recent trade agreements and the diversification of Indian exports would mitigate some of these effects.
Malhotra made these remarks during a post-monetary policy press conference, where he discussed the current state of trade negotiations. He noted that several trade agreements have been operationalized recently, with more in the pipeline, which would support Indian industries in the face of possible additional tariffs.
Status of India-US Trade Deal Negotiations
Finance Minister Nirmala Sitharaman recently indicated that discussions regarding the India-US bilateral trade agreement have reached a standstill. Her comments followed US Trade Representative Jaimeson Greer’s statement that an agreement is not imminent, although both sides are working on identified sticking points.
During a phone conversation last week, Prime Minister Narendra Modi and US President Trump addressed bilateral trade, alongside discussions on defense and energy. Sitharaman remarked that while negotiations are ongoing, both parties may have reached a plateau that complicates further concessions.
Sitharaman also mentioned the US’s intention to reduce its trade deficit with India, which was approximately $34 billion last year. This deficit has decreased from $41 billion in 2024-25, partly due to India’s increased energy purchases from the US. Negotiations continue, but the US is pushing for lower tariffs on its agricultural products, while India’s recent law imposing duties on Russian oil imports presents an additional challenge.
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