RBI chief warns pending US trade pact could dent growth but new FTAs and export diversity may soften blow

RBI Governor Sanjay Malhotra warned that a failure to seal a trade pact with the United States could weigh on India’s economy. He said the impact is uncertain because the sectors and tariff levels are not yet known, but some negative effect is likely. Malhotra added that India’s recently signed and pending free‑trade agreements should blunt any shock, and the growing spread of export markets and product lines adds another layer of protection. The remarks came as talks between New Delhi and Washington remain stalled, with Finance Minister Nirmala Sitharaman saying further concessions to the U.S. are hard to grant and that negotiations have hit a plateau. The deadlock has taken on added urgency after the U.S. Congress passed the Lindsey Graham Sanctioning Russia and Iran Act, which authorises President Donald Trump to levy tariffs of up to 100 % on countries, including India, over purchases of Russian or Iranian oil and gas. Trump has signed the bill but the extra tariffs have not yet been applied. Malhotra also noted that the RBI’s recent 25‑basis‑point repo‑rate hike is unlikely to curb bank credit growth immediately, as policy transmission usually takes several quarters, though borrowing costs will rise over time. ## Context The export‑diversification push and new FTAs are part of a broader strategy to reduce reliance on any single market, while the pending U.S. tariffs reflect heightened geopolitical tension that could affect trade flows.