The growth of India holds as Rates Cloud Global Trade Outlook: SBI Capital Markets

The global economy is experiencing another period of uncertainty due to high trading tariffs, increasing fiscal tribes in developed markets and signs of fragile capital flow. Yet the growth course of India is resilient, supported by domestic consumption and government spending, SBI Capital Markets said in a report on Tuesday. The report, titled ‘Rates is made in the US, but resilience is made in India,’ said that the US’s aggressive tariff regime has become an important flash point. However, the legal status of the rates is uneasy: An American Court of Appeals recently ruled them unconstitutionally, which asked the administration to raise the case to the Supreme Court, it states. “The administration escalated the case to the Supreme Court, which left three broad outcomes: Rates that were maintained, renegotiated or deleted. Until the brightness of the trade policy emerged, the volatility of the trade policies continued to increase, with key pressure points in cars, electronics and textiles,” he added. The US reciprocal rates, which were set at the end of August, hit Indian exports especially hard and imposed duties of up to 50% – including a 25% extra levy associated with the import of crude oil from Russia – on key sectors such as cars, Agri products and textiles. Although the legal validity of these levies in US courts is still disputed, the uncertainty already affects trade flow and investor sentiment. Exporters are facing higher costs and margin pressure, which requests firms to re -evaluate supply chains and pricing strategies. For India, the rates underline the vulnerability of its external geopolitical shocks sector, even if the domestic consumption and the expenses of the government are helping the economy against the global fall. Alternative alliances The report pointed out that alternative alliances to counteract the US are likely to strengthen the domestic economy. “Global growth is more resilient than expected, with PMI readings at a high-year highlight indicating sustained expansion. Commodity markets also find support, are helped by China’s anti-development measures that combat the excess competition and improve the profitability of the industry,” the report states. “At geopolitical level, alternative alliances such as the Shanghai cooperation organization traction, trade reform and investment flow. Together, these trends indicate a firmer growth impulses despite the prolonged global uncertainties,” he added. To be sure, Prime Minister Narendra Modi attended the 25th SCO Summit in Tianjin, China, from August 31 to September 1, during which he focused on strengthening the collaboration on safety, connectivity and opportunities, and a bilateral meeting with Chinese President Xi Jinping and Russian President Vladimir Putin. In the Tianjin summit in 2025, India also took a bold stand against terrorism and indicated a strategic foreign policy shift. SBI Capital Markets said fiscal tension in the US and the UK adds another layer of complexity, with rising debt tax pushing the yield curves of the bonds, which underlines the investor Onease. In contrast, softer US work data raised expectations of a rate reduction in September, reflecting the delicate Balance Act between growth and guilt sustainability. “At the same time, weaker work data in the US has lifted the likelihood of a rate reduction in the policy review in September. In India, the curve remains steep as the increased borrowing of the state government still weighs in the long end,” it states. “The divergence highlights how global growth signals are tempered by fiscal and monetary dynamics,” he added. Interestingly, India began 2025-26 on a solid foot, with the gross domestic product (GDP) grown by 7.8% in the first quarter, continued by private consumption, continued expenses of government capital and a revival in revenue spending. “Although high-frequency indicators show a mixed trend and trade tariff uncertainty, the prospects of the government’s prospects to simplify the GST structure are released about £ 50,000 in the economy, which increases domestic consumption,” the report states. “Collectively, these measures help cushion the economy against softer export prospects and external windwinds,” he added. However, vulnerabilities remain. “Indian equity have underperformed emerging market peers as sustained FPI (Foreign Portfolio Investor) Outflows Reflect Stretched Valuations and Steeper Tariff Headwinds. Despite a Weaker US Dollar, The Indian Rupee Hit A Record Low, Down About 5% Year Bank of India (RBI) Limiting Intervention and Unwinding Forward Positions to Preserve Reserves while Letting Depreciation Aid Exports, ”according to the report. “Capital flow remains muted, while the current account remains manageable despite poorer export of merchandise from tariff pressure,” he added.