India’s exposure to US tariffs of 25% on aluminium and steel is 4.5%, less than South Korea’s exposure of 4.7%, which is the highest among Asia-Pacific economies, it said.
Exports to the US represent 2.3% of India’s gross domestic product (GDP), it added.
Despite this, India’s growing trade surplus with the US could make it vulnerable to tariffs, as the US aims to impose reciprocal tariffs on its trading partners, the report titled ‘Tariff hit among Asia-Pacific firms’ said.
Although the indirect effect of these tariffs, such as a slowdown in global growth, are likely to have minimal impact on India, the report explained, as the export sector accounts for just over 10% of its GDP.
The ratings agency also pointed out that most of the rated Indian firms are capable of bearing temporary earnings slowdown. “Firms in the country also benefit from a growing economy, supported by strong infrastructure and consumer spending.”India’s economic growth is projected to slow by 10 basis points to 6.7% in FY25 from 6.8% in the year before, but will remain the fastest growing in Asia-Pacific, according to S&P Global Ratings. Growth is expected to rise to 7% in FY27.India’s average inflation will also moderate to 4.4% in FY25 from 4.6% in FY24, before rising again to 4.6% in FY26. Easing of inflation will likely lead to a policy rate cut of 75 basis points to 5.5% in Q4FY25, the ratings agency said.
Content Source: economictimes.indiatimes.com