In the wake of heightened trade tensions and reciprocal tariffs imposed by the United States, Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that India remains relatively insulated compared to other major economies due to its lower export dependency.

Speaking on the broader impact of US tariffs on India’s economy, Malhotra stated, “The impact of these tariffs on India vis-a-vis some of the other countries, including China and some of the smaller countries, is much less.”

The RBI Governor emphasized that India’s exports constitute a smaller proportion of its GDP, which provides a cushion against global tariff shocks. “Our exports overall are about 12% of GDP, I think it is 2% for the US. You compare it with some other countries globally—even China is about 19%, Germany is 37% exports overall, and even EU is 30% plus. To that extent, we are better placed than some of the other countries.”

Malhotra further explained that the relatively low trade surplus India maintains with the US is a key reason why retaliatory tariffs on Indian goods have been modest. “That's why you are seeing that these reciprocal tariffs on India are lower than some of these countries because our surplus vis-a-vis those countries is much less.”

Pointing towards a potential strategic edge, Malhotra concluded by saying, “In some ways, we may have a comparative advantage…”