Could the tariffs imposed on India by US President Donald Trump negatively affect its economy? Yee-Farn Phua, Director of Sovereign and International Public Finance Ratings at S&P Global Ratings, contends otherwise. This unconventional view is noteworthy, though time will tell whether his outlook proves accurate or overly optimistic.
According to Phua’s assessment, Trump’s tariffs are unlikely to have a serious effect on India’s economic growth, as the country is not solely dependent on trade. In this context, India has the capacity to withstand tariff pressure without significant losses. He also highlighted that India’s credit rating outlook remains positive. In 2024, the country’s rating was upgraded from BBB- to BBB amid steady economic growth. For the current fiscal year, India’s GDP growth is expected to reach 6.5%, in line with last year’s performance. Moreover, key sectors such as pharmaceuticals and consumer electronics, which are exported to the US, remain exempt from tariffs — another factor supporting India’s resilience.
However, these conclusions sharply contrast with findings from a Bank of America survey. According to recent reports, fund managers in the Asian securities market now view India as the least attractive option. This deterioration is attributed specifically to tariff pressures from the United States.
