US Midterms Unlikely To Ease Near-Term Trade And Tariff Pressures On India: CareEdge Ratings

New Delhi, Nov 5 (KNN) The outcome of the US midterm elections is expected to provide limited near-term economic relief to India, as crude oil prices, potential tariffs linked to Russian oil purchases and uncertainty over US trade policy continue to pose challenges, according to a report by CareEdge Ratings.

The report said that greater Democratic control of both chambers of the US Congress could encourage diplomatic engagement over the Iran conflict and provide some support to the Indian rupee and foreign portfolio investor (FPI) inflows.

 However, it noted that the immediate impact on India's economy is likely to remain limited, as major policy decisions continue to rest largely with US President Donald Trump and the White House, reported by ANI.

The report described the election outcome as a shift in the balance of risks rather than a major turning point for India.

Crude Oil Prices Remain a Key Concern

CareEdge identified crude oil prices as the most immediate channel through which developments in the US could affect India. Changes in oil prices have implications for domestic inflation, the current account deficit, fiscal deficit and financial markets.

Following the midterm election results on Wednesday, Brent crude prices declined 8.7 percent to settle at USD 94.62 per barrel. Prices continued to ease on Thursday, trading at USD 93.81 per barrel at the time of reporting, down 0.86 percent.

However, the report cautioned that crude prices remain sensitive to developments around the Strait of Hormuz and potential disruptions to energy supplies. The outlook for India will therefore depend partly on the evolving situation in West Asia.

Trade Policy and Russian Oil Tariffs Remain Uncertain

On trade, CareEdge said the change in congressional composition is unlikely to result in immediate tariff relief for India, as the US President retains significant authority over tariff policy. India's merchandise exports to the US stood at approximately USD 90 billion in FY26.

The report also highlighted the continuing risk of tariffs of up to 100 percent on major buyers of Russian crude oil, including India. It noted that the waiver issued on October 16 under the Lindsey O. Graham Sanctioning Russia and Iran Act does not have a fixed expiry date and could be withdrawn.

Rupee and Foreign Investment May Receive Some Support

CareEdge assessed the potential impact on the Indian rupee and foreign portfolio investment flows as mildly positive. A weaker US dollar and a possible slowdown in global artificial intelligence (AI) investment could encourage foreign investors to diversify their portfolios towards markets such as India.

However, the report expects the impact on H-1B visa regulations and India-US strategic relations to remain broadly neutral, as these areas are largely influenced by the White House and the courts.

It also cautioned that the new US Congress could increase scrutiny of India's purchases of Russian oil and defence equipment.

Overall, the report suggests that while the election outcome could create some opportunities for diplomatic engagement and financial market stability, uncertainty surrounding energy prices, trade measures and geopolitical developments is likely to remain a key consideration for India's economic outlook.

(KNN Bureau)