Global ratings agency S&P Global Ratings has reaffirmed its positive outlook on India, stating that recently announced US tariffs are unlikely to cause any significant dent to the country’s economic growth.
The agency’s sovereign ratings team explained that India’s economy is less trade-oriented compared to many other Asian nations, and its effective exposure to US tariffs is only about 1% of GDP. This figure also takes into account exemptions granted for critical sectors such as pharmaceuticals and consumer electronics.
S&P’s assessment comes at a time when concerns are rising over the impact of US protectionist measures on Asian economies. However, the agency noted that credit risks from tariffs across the Asia-Pacific region have been less severe than initially feared.
In fact, US imports from several Asian economies surged in the first half of the year as buyers rushed to place orders before the tariffs kicked in. China, however, was the exception, witnessing a slowdown in exports. Meanwhile, other Asian exporters, including India, have stepped in to fill the gap — with smartphone exports from India seeing a notable increase.
While S&P acknowledged that the global operating environment has become more challenging, it also signaled optimism, suggesting that positive trends in sovereign ratings could continue. That said, the agency cautioned that fundamental economic improvements may take longer to translate into an actual ratings upgrade.
