The US may withdraw 25 per cent penal tariff imposed on Indian goods and reduce the reciprocal duty from 25 per cent to 10 per cent-15 per cent within eight to ten weeks, Chief Economic Adviser V Anantha Nageswaran claimed on Thursday.
He also said the issue could be resolved in the coming weeks as talks between New Delhi and Washington progress. “Beneath the surface, a lot of conversation has been happening between the two Governments,” he added.
The additional 25 per cent tariff imposed by the US on Indian products for the country’s purchases of Russian oil came into effect in August, bringing the total amount of levy imposed on New Delhi to 50 per cent. Nageswaran said, “My hunch is that in the next eight to ten weeks, we will likely see a solution to the tariffs imposed by the US on Indian goods.”
He said if the tariffs stayed on, there would be a drop in exports to the US. “I hope that the penal tariff would possibly be removed by the end of November,” Nageswaran said at an event in Kolkata. He, however, clarified that it is his intuition. Terming India as an aspirational lower-middle-income economy, Nageswaran said real GDP growth in the first quarter of the current financial year was 7.8 per cent. Post the COVID pandemic, the Indian economy grew faster than many countries, he said.
The growth in manufacturing, services and agriculture will contribute to economic progress in a great way in the next two years, Nageswaran said, adding that consumption and investments will continue to anchor growth for the country.
According to him, the debt-to-GDP ratio in India is good. With per USD of debt, the country generated more GDP than other countries, which shows efficient utilisation of capital in the economy. He said rural demand remains resilient in the economy, and urban demand is gaining traction.
The recent relief in GST rates will give more disposable income in the hands of consumers, and urban consumption is likely to go up, the chief economic adviser said. Credit to the MSME sector is rising while advances to the large industry are undergoing a structural change, he said, adding that in the present day, avenues of resource mobilisation are ample.
According to him, the external sector of the economy remains resilient, despite the global headwinds. “Trade continues to be robust in the current financial year”, he said, adding that the foreign exchange reserves are healthy.
The current account deficit is benign and narrowed down to 0.2 per cent of the GDP in the first quarter of the 2025-26 fiscal, he said. “The rupee is depreciating against the US dollar. Given the underlying strength of the economy, I am more inclined to believe that in the longer run, the rupee is likely to hold its value and become stronger,” the chief economic adviser said.
Delineating the policy priorities of the government, Nageswaran said that there is a continued emphasis on government capital expenditure, incentives to boost private investment and systemic deregulation.
He said the supply of physical infrastructure, like ports and airports, has increased, which will not “overheat the economy when growth takes place”. Referring to India’s trade with China, he said that mostly capital and intermediate goods are imported from the neighbouring country.