New Delhi – Chief Economic Advisor (CEA) Anantha Nageswaran said the government is working closely with stakeholders to soften the blow of the additional 25% tariff imposed by the United States on Indian exports, which has pushed overall duties to 50%.

Speaking at an event hosted by the Indian Chamber of Commerce, Nageswaran said ministries, export promotion agencies, and industry bodies have been in continuous discussions since the tariffs took effect. He described the government’s approach as providing both a “time cushion” and a “financial cushion” to help exporters withstand the disruption.

India–US Trade Tensions

The CEA noted that a nearly finalized trade agreement with the US was delayed due to “unexpected developments,” though he expressed hope the situation would be temporary. He also criticised the penal tariffs linked to India’s purchase of Russian crude, calling them unreasonable. “We hope the larger strategic importance of the India-US relationship will eventually prevail,” he said.

Strong Domestic Fundamentals

Despite the tariff shock, Nageswaran pointed to positive domestic indicators. India’s real GDP grew 7.8% year-on-year in Q1, while nominal GDP rose 8.8%. Manufacturing Gross Value Added grew 10.1% in nominal terms and 7.7% in real terms, reflecting resilience in the sector.

He also highlighted:

• A tax cut for households earning up to ₹26.7 lakh annually, boosting advance tax payments.
• Potential relief through GST simplification and rationalisation.
• A new employment-linked incentive scheme designed to support job creation while maintaining competitiveness in the AI-driven economy.

Fiscal and Global Outlook

India recently secured a credit rating upgrade from Standard & Poor’s — its first in 30 years — with expectations that Fitch may follow. Fiscal deficit has been reduced to 4.4% this year, down from 9.2% in 2021, lowering borrowing costs across the economy.

On the trade front, Nageswaran said India is diversifying through free trade agreements with the UAE and UK, alongside talks with Oman and Bahrain that could conclude by year-end.

Call for Industry Action

The CEA urged businesses to treat the current challenges as an opportunity. “Each one of us has an obligation to improve the way we do business, invest in innovation, and strive for excellence,” he said, adding that the government will continue efforts on deregulation, ease of doing business, and job creation while engaging the US to resolve the tariff dispute.

Source: Times of India (TOI Business Desk)
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