RBI Governor Warns of Economic Impact From US Trade Deadlock

Reserve Bank of India Governor Sanjay Malhotra warned on Wednesday that the Indian economy could face negative impacts if a trade deal with the United States is not finalized. The warning comes as negotiations between the two nations have reached a deadlock, with Union Finance Minister Nirmala Sitharaman stating that talks have reached a "plateau" and further concessions to Washington would be difficult.

The tension follows the passage of the Lindsey Graham Sanctioning Russia and Iran Act by the U.S. Congress. This legislation grants President Donald Trump the authority to impose tariffs of up to 100% on countries that continue to purchase oil and gas from Russia and Iran.

Malhotra noted that while the specific sectors and extent of the tariffs remain unknown, India's recent free trade agreements and the diversification of its export markets and products should serve as buffers to mitigate the potential economic fallout.