Reserve Bank of India Governor Sanjay Malhotra stated on Wednesday that the increase in US tariffs is unlikely to significantly affect the Indian economy unless retaliatory tariffs are imposed.

During a press conference following the monetary policy announcement, the RBI Governor remarked, “The ongoing uncertainty regarding US tariffs may not have a substantial impact on India’s economy, provided that retaliatory tariffs do not come into play, which we do not anticipate.”

When asked about the escalating trade tensions between India and the US, he expressed optimism, saying, “We are hopeful for a mutually agreeable resolution.”

Malhotra also highlighted that the RBI has revised its GDP growth forecast down to 6.5 percent from 6.7 percent to account for certain global uncertainties.

He further assured that the RBI’s foreign exchange reserves are sufficient to cover 11 months of imports. “We are confident in our ability to meet our external sector needs,” he noted.

Regarding the potential effects on domestic inflation if India reduces its imports of Russian oil, Malhotra emphasized that India sources oil from various countries, not solely from Russia.

“It is important to remember two things: we are not exclusively reliant on Russian oil; we import from multiple nations. If the composition of our imports changes, we must consider its effect on prices. Additionally, global crude commodity prices will play a role. The extent of the impact, whether upward or downward, will also depend on how the government manages excise duties and other tariffs. Therefore, we do not foresee any significant impact on inflation at this time, as we believe the government will make appropriate fiscal decisions should any price shocks occur,” he concluded.

RBI Deputy Governor Poonam Gupta stated, “The effect on inflation is expected to be quite minimal. Almost fifty percent of our inflation basket is made up of food, which is not directly influenced by global events.”