S&P Global Ratings stated on Tuesday that the recent hike in US tariffs is unlikely to impact India’s long-term economic growth prospects. The agency highlighted that India’s government remains committed to economic reforms and improving citizens’ living standards. After 18 years, S&P upgraded India’s sovereign credit rating to ‘BBB’ with a stable outlook, citing strong economic growth, fiscal consolidation efforts, and favorable monetary policy as key drivers behind the upgrade.

S&P expects India’s growth to average around 6.8% over the next three years, supported by infrastructure development and improved connectivity, which will help eliminate structural bottlenecks and enhance long-term growth potential. According to S&P Global Ratings Director YeeFarn Phua, India has consistently outperformed regional peers in growth over the past three to four years, remaining one of the world’s strongest economies.

Addressing concerns about high US tariffs, S&P Asia-Pacific Economist Vishrut Rana noted that India’s economy is primarily domestic-driven, with only 15% dependent on external demand, limiting the overall impact of tariffs. Additionally, the 50% tariff is not applicable to all goods, and exemptions exist for sectors like pharmaceuticals and consumer electronics. Rana acknowledged that while short-term confidence may be affected, structural factors such as infrastructure investment and business-friendly policies will continue to support India’s growth trajectory in the medium to long term.

Currently, the US has imposed a 25% tariff on Indian goods effective August 7, with an additional 25% to be implemented on August 27, taking the total tariff to 50%. However, Phua reiterated that India’s focus on reforms, fiscal discipline, and infrastructure development will ensure the economy remains resilient despite external challenges. Exposure to the US in terms of exports accounts for just 1% of India’s GDP, minimizing the broader impact of tariffs on growth.