S&P Global Ratings has stated that even if the United States imposes a 50% tariff on Indian imports, the impact on the country’s long-term growth prospects will be minimal. The agency noted that while the US remains India’s largest trading partner, the scale of exposure is relatively small in GDP terms.
According to S&P, India’s exports to the US account for around 2% of GDP. Once sectoral exemptions—particularly for pharmaceuticals and consumer electronics—are factored in, the share of exports that could be subjected to tariffs drops to 1.2% of GDP. This, the agency said, could lead to a short-term hit to growth but would not have a lasting effect on the country’s economic trajectory.
S&P further highlighted that despite potential revenue losses and slower gains from trade, India is on track to meet its FY26 fiscal deficit target. The government’s commitment to fiscal consolidation, coupled with robust domestic demand and infrastructure spending, is expected to help offset any external shocks.
The agency maintained its view that India’s economic fundamentals—driven by strong investment momentum, policy stability, and resilient domestic consumption—remain intact, ensuring that the country’s growth outlook stays positive in the medium to long term.
