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Informist, Monday, Oct. 20, 2025

 

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--RBI paper: Data points to revival in urban demand, robust rural demand 
--CONTEXT: Remarks from RBI's monthly State of the Economy article 
--RBI paper: High US tariffs on India not major concern for overall growth 
--RBI paper: Most Indian pharma exports to US seen shielded from tariff hit 
--RBI paper: Festive demand, GST cut to boost production, up affordability 

 

NEW DELHI – The Indian economy remains resilient amidst global uncertainty and weak external demand with domestic demand likely to help keep the broader impact of 50% US tariffs in check, according to the Reserve Bank of India's staff. "As India's economy remains majorly powered by domestic sources, high US tariffs on India's exports do not pose a major concern for the overall growth," the central bank's staff said in the monthly State of the Economy article released Monday.

 

Domestic demand is also seen improving with high-frequency data pointing to a revival in urban demand and rural demand staying robust, the staff said in the article, which is part of the RBI's monthly bulletin. Comments in the article do not represent the views of the central bank. 

 

The RBI staff noted that while the Indian economy is not immune to global headwinds, it has remained resilient so far. Low inflation, robust balance sheets of banks and corporate, adequate foreign exchange reserves, and a credible monetary and fiscal framework have supported this resilience, the staff said.

 

Manufacturing activity picked up, as reflected in high-frequency indicators for September such as the Purchasing Managers' Index and vehicle sales, the staff said. "Stable domestic demand, coupled with a sharp rise in exports sustained the sector's strong momentum. Going forward, festive demand impulse and the GST (goods and services tax) rate cut are expected to further boost production and enhance affordability," the staff said.

 

Earlier this month, the RBI raised the GDP growth forecast for the current financial year to 6.8% from 6.5%, reflecting the higher-than-expected growth of 7.8% in the June quarter. RBI Governor Sanjay Malhotra had said that demand is expected to get a further boost from the cut in GST rates.

 

The staff paper said that most Indian pharmaceutical exports to the US are likely to be protected from the tariff impact even as the US remains the largest export destination for Indian pharmaceutical products. On Sept. 25, the US announced 100% tariff on the pharmaceutical sector, effective Oct. 1. "This tariff will be applicable on branded or patented pharmaceutical products, except on companies building their manufacturing plants in the US. Out of the total pharma exports from India to the US, generic medicines constitute the most," the staff paper said. "Hence, majority of India's pharmaceutical exports to the US is expected to remain shielded from the tariff impact."  End

 

Reported by Shubham Rana

Edited by Ashish Shirke

 

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