Chicago – February 18, 2025
Hours before Indian Prime Minister Narendra Modi’s visit to the White House, President Donald Trump announced that the United States would levy reciprocal tariffs on its trading partners.
It could hardly have come at a tougher time for India, which is already pressed by a slowing economy and sluggish demand.
At a joint news conference, Trump said India would buy F-35 fighter jets and oil and gas from the US. The two countries would also begin negotiations on the US trade deficit with India.
India runs a large trade surplus with the US and such negotiations and military and oil purchases could adversely impact its economy at a time when it is going through a slowdown.
With the Indian economy expected to grow at 6.4 percent in the year ending March, its slowest in four years, the Modi government announced income tax relief for the middle class in the annual budget earlier this month.
Days later, the country’s central bank cut its benchmark interest rate for the first time in nearly five years by 0.25 percent to 6.25 percent with Governor Sanjay Malhotra saying a less restrictive monetary policy was more appropriate in light of the current “growth-inflation dynamics”.
