RBI Policy
Comfortable with external sector position, CAD, says Malhotra
This story was originally published at 14:15 IST on 5 December 2025
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--RBI Malhotra: Tariff impacted sectors to see moderate growth
--RBI Malhotra: Export-oriented sectors may see growth slowdown on US tariffs
--RBI Malhotra: Have sufficient reserves, current account very manageable
--RBI Malhotra: India should get good capital flows going ahead
--RBI Malhotra: In very comfortable position with respect to external sector
--RBI Malhotra: We are very comfortable about CAD
--RBI Malhotra: Should be able to come out of tariff situation stronger
NEW DELHI – Despite global uncertainties and the 50% tariff imposed on Indian goods by the US, the Reserve Bank of India is very comfortable with respect to its external sector position and the level of India's current account deficit, Governor Sanjay Malhotra said. His comments came after data showed that India's CAD fell to $12.3 billion or 1.3% of GDP in the September quarter.
"I do not expect the CAD to be as high as 2% (of GDP). So, on the external sector side, we are very comfortably positioned," Malhotra said at the post-policy press conference. The central bank holds enough reserves to manage the CAD, Malhotra mentioned. The RBI held $686.20 billion of foreign exchange reserves as of Nov. 28, which can provide a robust import cover of more than 11 months, the governor announced in his policy statement.
"Given the strong fundamentals of our country, we should get good capital flows going forward," Malhotra said. While India had a net outflow of $5.7 billion in foreign portfolio investments in Jul-Sept, there was a net inflow of $2.9 billion in foreign direct investment in the same period.
The 50% tariff by the US will impact sectors like textiles, leather, gems & jewellery, and shrimp, Malhotra said. But these sectors have a very small component in our total economy, the governor added. End
US$1 = INR 90.04
Reported by Krity Ambey
Edited by Akul Nishant Akhoury
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