What will happen to economy if India-US FTA doesn't happen? RBI Governor reveals
"The impact depends on to what extent tariffs are going to be applied. So, it's premature to answer. But obviously it will have some negative impact," Malhotra said during the post-monetary policy press conference in response to a query on the impact on the economy if the trade deal with the US fails to materialise. However, India has concluded or implemented a series of trade agreements in…
RBI Governor Sanjay Malhotra warned that the failure to finalize the India-US bilateral trade deal could negatively impact the Indian economy, although he acknowledged that trade agreements with other nations might help alleviate the consequences. The extent of the impact depends on the level of tariffs imposed, so it is premature to provide a definitive answer.
Malhotra made these remarks during a post-monetary policy press conference in response to a question about the economic repercussions of the US trade deal not materializing.
Nevertheless, India has recently concluded or implemented several trade agreements, which could diversify its export markets and mitigate the potential negative effects of the US trade deal. Malhotra highlighted that various trade agreements, some officially finalized while others are still in the pipeline, will support the industry and help diversify exports. This diversification, he believes, will counteract the impact of any additional tariffs on certain sectors.
US Trade Representative Jamie Presson Greer stated on October 1 that an India-US trade agreement was not imminent. An interim trade agreement with the US was announced in February 2026, with ongoing negotiations dating back to April. However, after Finance Minister Nirmala Sitharaman's October 5 statement at New Delhi, it became clear that India-US bilateral trade discussions had reached a standstill, rendering further concessions increasingly difficult.
India has signed trade agreements with the UK and New Zealand, and several other deals are in the pipeline. Around ten trade agreements are currently under discussion, including negotiations with the Eurasian Economic Union, Peru, Chile, Israel, Canada, and the Maldives. Existing agreements, such as the India-Korea Comprehensive Economic Partnership Agreement (CEPA) and the India-Sri Lanka Economic Cooperation Agreement (ETCA), are also being upgraded.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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