RBI Governor Sanjay Malhotra Warns of Negative Impact of Unfinalised India-US Trade Deal

India's trade agreements with other countries. This includes those with the European Union and the Association of Southeast Asian Nations (ASEAN). Are expected to help mitigate the impact of possible US tariffs on its economy.

According to RBI Governor Sanjay Malhotra, the impact of an unfinalised India-US trade deal largely depends on the severity of tariffs imposed. While Malhotra acknowledged that the deal's non-finalization would have some negative effects, he noted that these would be offset by the diversification of Indian exports and the operationalization of existing trade agreements.

US Trade Representative Jaimeson Greer has indicated that an agreement is not close, stating that the negotiations have reached a plateau. Commerce and Industry Minister Piyush Goyal has also confirmed that talks are ongoing, despite the lack of progress. The Indian government is seeking assurance on the potential for further tariffs on its own exports.

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Which could exacerbate the trade deficit between the two countries.

India's efforts to secure a deal are complicated by a new Russian oil import duty that could reach as high as 100%. The move is seen as a significant obstacle.

The Trump administration had imposed an additional 18% tariff on Indian exports as part of a bilateral trade agreement, but the arrangement was put on hold after the Supreme Court ruled that the "reciprocal tariffs" were illegal.

Prime Minister Narendra Modi and US President Trump discussed bilateral trade during a phone conversation last week. Along with defence, energy, and other matters. The ongoing trade negotiations between the two nations are expected to have a significant impact on India's economy.

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Particularly in the wake of the ongoing global economic uncertainty. As the 2024 elections approach, the Indian government is keen to finalize a trade deal with the US to narrow the trade deficit and boost economic growth.

The Indian government has increased its purchases of energy from the US. Which could help narrow the trade deficit between the two countries. However, the impact of an unfinalised India-US trade deal will depend on various factors.

This includes the severity of tariffs imposed and the diversification of Indian exports.