Sign In
By signing in or creating an account, you agree with Associated Broadcasting Company's Terms & Conditions and Privacy Policy.
By signing in or creating an account, you agree with Associated Broadcasting Company's Terms & Conditions and Privacy Policy.
Kolkata: The punitive tariffs US President Donald Trump has imposed on India will not impact India's growth and won't make any difference to the positive ratings outlook of India, S&P Global Ratings has asserted. Robust economic growth was offered as the key driver when S&P upgraded the outlook on India's sovereign rating from 'BBB-' to positive in May 2024. S&P Global Ratings Director YeeFarn Phua has said that India's economy is not heavily dependent on trade, and therefore, they perceive no threat to India's sovereign rating.
In a different context V Anantha Nageswaran, India's chief economic adviser, also remarked that the challenges to the Indian economy arising out of the retaliatory tariffs of Donald Trump will pass over in three to six months. Nageswaran said that sectors such as gems and jewellery, textiles and shrimps could bear the brunt but after that things would gradually settle down.
The S&P Global Ratings clearly said that India's huge domestic market is a great attraction for companies investing in the country. "Many (businesses) are going there not because they are looking to export just to the US. Many of them are going there because of the huge domestic market as well. An emerging middle class is getting larger...So, even for those who are looking to invest more in India and looking to export, it might not necessarily be the US market," YeeFarn said. He said the China plus one strategy seems to working fine with many businesses and the domestic demand was a huge attraction.
The S&P official was speaking at a Webinar on Asia-Pacific Sovereign Ratings. "Over the longer term, we don't think this (higher tariffs) will be a big hit (on India's economy), and therefore, the positive outlook on India remains," YeeFarn added.
The GDP growth rate projected for India in the current financial year (FY26) is 6.5%, which is the highest among all major economies. The growth rate was at the same level in FY25.
After Trump announced a punitive tariff of 25% on goods imports from India, he piled up another 25% on it on the pretext that India is buying "massive amounts" of Russian crude oil, that he interpreted as an indicator of New Delhi funding the Moscow's military aggression in Ukraine.
S&P is one of the three global ratings major and the sovereign credit rating it assigns for India (or for that matter any country) is significant since it offers an independent assessment of India's creditworthiness. Investors look forward to these ratings and these ratings impact the flow of global capital movement and also foreign direct investment. A higher rating not only boost investor confidence but also decreases borrowing cost.
Incidentally, the US is the largest trading partner of India. Shipments to the US accounts for nearly 18% India's total goods exports and 6.22% in imports. In FY25, India enjoyed a trade surplus of $41 bn with the US.
