US tariff hike may reduce India's exports & domestic demand: RBI

While India still has some tariff advantages compared to others, the central bank noted that global commodity prices have become unstable since the US announcement.

As prices of energy and metals have fallen sharply, while gold prices have been highly volatile, it has added uncertainty to India’s inflation outlook, which has otherwise seen sharper than-expected decline in food inflation, said the central bank.

"Growth is improving after a weak performance in the first half of the financial year 2024-25, although it still remains lower than what we aspire for," it noted in the bulletin.

In a volatile environment, distinguishing clear economic signals from background noise has become increasingly difficult, complicating the task of policymaking, the central bank observed.

But RBI acknowledged that India is poised to benefit from supply chain realignments, diversified foreign direct investment sources and engagement with global investors seeking resilience and scale.

Fibre2Fashion News Desk (DS)