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Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday expressed hope that India-US trade talks will reach a positive conclusion. "We are hopeful that negotiations on tariffs will play out and there will be minimal impact," the central bank's governor said during an event here. Malhotra's remarks come at a time when the sixth round of India-US Bilateral Trade Agreement (BTA) talks, originally scheduled for August 25, has been postponed.

The governor also said India's strong foreign exchange reserves are enough to cover 11 months of imports and provide a strong buffer against external shocks.

"We have very robust foreign exchange reserves of $695 billion, sufficient to cover 11 months of merchandise exports. Generations of freedom fighters gave us a 'Swatantra Bharat', a free India, and now we must work for a 'Samriddh Bharat', a prosperous India," Malhotra noted.

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He said the overall impact of the tariff would be minimal, but there are sectors like gems and jewellery, textiles, apparel, where it could have a potential impact.

US President Donald Trump has imposed a 25 per cent tariff on imports from India from August 7. Apart from this, an additional penalty of 25 per cent has also been imposed, which will come into effect from August 27. In this way, the total tariff will become 50 per cent.

The United States justified its decision as a response to India's continued purchase of crude oil from Russia. The US claimed that this oil purchase had undermined its efforts to pressure Russia to resolve the Ukraine crisis. The central government has refuted US claims, arguing that Russian oil imports have stabilised global energy markets.

According to analysts, the overall 50 per cent tariff is unlikely to have a significant impact on India's growth due to strong domestic demand. While labour-intensive textiles and gems and jewellery sectors are expected to be moderately impacted, pharmaceuticals, smartphones and steel are relatively safe for the time being due to exemptions, existing tariffs and strong domestic demand.

With the inputs of IANS

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