India can weather global challenges: RBI chief

India’s economic fundamentals remain strong and its foreign exchange reserves, low inflation and a narrow current account deficit are buffers against risks from US tariff hikes, its central bank chief said on Friday.

Reserve Bank of India Governor Sanjay Malhotra told a conference that countries around the world were experiencing fiscal stress. In comparison, and despite external challenges, “India stands as an anchor of stability in a volatile world,” he said.

US President Donald Trump doubled tariffs on Indian goods to as much as 50% from August 27 over New Delhi’s continued imports of Russian oil.

The levy is among the highest on US trading partners alongside Brazil, and economists say the move could hurt exports including textiles, leather goods and chemicals.

Malhotra said that flexibility and swift policy responses will be crucial as global uncertainties linger. “You can’t control the storm, but you can certainly steer the ship,” he told the Economic Conclave in New Delhi, an annual economic conference organised by the finance ministry.

The RBI kept its policy rate unchanged at 5.5% on Wednesday, while signalling room to cut rates in December as it gauges the impact of tariffs on growth.

The central bank had cut the repo rate by a total of 100 basis points in the first half of 2025, but paused at its previous meeting in August.

The RBI expects inflation in the current financial year to come in at 2.6%, lower than its previous estimate of 3.1%.

Malhotra also flagged rising fiscal stress across other economies.

“Fiscally, almost every country is quite stretched. It is not apparent how the situation could be normalised, especially if the world enters a phase of lower growth,” Malhotra said.

While equity markets remain buoyant, he cautioned that fiscal risks are not fully priced in. “Equity markets do seem a bit complacent... a correction might be in the offing,” he said.

Despite these uncertainties, Malhotra said India stands out. “This is quite a feat for a large emerging market and makes India an anchor of stability in a volatile world.”

Finance Minister Nirmala Sitharaman, speaking at the same event, said the government is committed to increasing capital spending to support economic growth, but also said the economy remained resilient despite global challenges.

As part of the federal budget, in February India announced plans to spend a record 11.21 trillion rupees ($126.3 billion) on infrastructure for the fiscal year ending March 2026, slightly higher than the previous year.

Separately, non-bank lender Tata Capital has raised 46.42 billion rupees ($523.18 million) from anchor investors including LIC and Norway’s wealth fund, as part of its $1.75 billion IPO that is set to be among India’s largest public offerings this year.

LIC invested 7 billion rupees, while Norway’s wealth fund was allotted shares worth 1.25 billion rupees, an exchange filing showed late on Friday. The shares were allotted at the upper end of the price band of 310-326 rupees per share.

Anchor investors are high-profile institutional investors that are allotted shares before the subscription opens for retail and other investors, and have to commit to holding their shares for a certain period after listing.

The three-day share sale opens for other investors on October 6. Tata Capital’s stock is set to list on October 13.

Tata Capital’s IPO comes at a busy time for India’s primary market. The October-December quarter is expected to see $8 billion worth of fundraises, with several large-ticket issuances such as LG Electronics India and WeWork India Management on the anvil.

These large issuances will likely help India’s total IPO fundraise in 2025, which has already reached $10.5 billion in the first nine months, inching closer to the record $20 billion IPO tally seen in the previous year.

Domestic mutual funds including ICICI Prudential, HDFC funds, Motilal Oswal and Nippon Life were allotted about 36% of the Tata Capital’s anchor book.

Together, anchor investors will buy about 30% of the 475.8 million shares on offer at the IPO.

Tata Capital’s IPO includes a fresh issue of up to 210 million shares, while existing shareholders Tata Sons and International Finance Corporation will offload up to 265.8 million shares.

Agencies