RBI to support sectors impacted by US tariffs: Governor

New Delhi: The Reserve Bank of India (RBI) will take policy measures to support sectors like gems and jewellery, textiles, apparel, shrimps and MSMEs, which are likely to be impacted due to the imposition of high US tariffs, Governor Sanjay Malhotra said on Monday.

“The government is looking into it. We, on the part of RBI, have been on an easing cycle. We had cut repo rate by 100 bps to provide ample liquidity to the economy,” Malhotra said while replying to a question about the government’s readiness to help the impacted sectors.

“Whatever support is required from us for the growth of the economy and including those of the sectors which are impacted more, if it so happens, we would not be found wanting in our job,” he added while speaking at a banking conference in Mumbai.

US President Donald Trump has announced the imposition of 50% tariffs on Indian goods, including a 25% secondary tariff for India’s continued purchase of Russian oil. The secondary tariff is slated to come into force from August 27. Following the announcement about high tariffs by the Trump administration, the relationship between New Delhi and Washington has deteriorated and it has created a high degree of uncertainty among Indian exporters.

The RBI Governor expressed hope that the ongoing trade negotiations will lead to better results. "We are hopeful that negotiations on tariffs will play out and there will be minimal impact,” he added.

On internationalisation of rupee, Malhotra said it will take decades for international trade to happen in the Indian currency. He stressed that internationalising a currency requires both time and sustained efforts.

 “It’s an important area on which the RBI has been working for many years and it is important for the country to develop trade in local currency. It cushions us from the volatility of foreign exchange,” he said.

In his inaugural address at the FIBAC 2025 conference organised jointly by FICC and Indian Banks' Association, Malhotra said India’s external sector has strengthened considerably over the last decade. The current account deficit (CAD) has remained well within the sustainable limit in recent years - it was 0.6% of GDP in 2024-25. This is due to robust services exports and strong remittance receipts despite higher merchandise trade deficit, he said.

Capital flows have generally exceeded the CAD, adding to our foreign exchange reserves which stood at $695 billion as on August 15, 2025, providing merchandise imports cover of over 11 months, the RBI Governor added.

Malhotra also highlighted the significant improvement in India’s fiscal situation post-COVID. The central government’s fiscal deficit to GDP ratio is budgeted to moderate from a high of 9.2% of GDP in 2020-21 to 4.4% of GDP in 2025-26.

“Quality of expenditure has improved. Central government’s effective capital expenditure which includes capital grants-in-aid to the states is budgeted at 4.3% of GDP for 2025-26. Corporate balance-sheets are healthy. Banks are well capitalised, with sufficient liquidity buffers, robust asset quality and reasonable profitability,” he added.