United States tariffs impact: India’s Chief Economic Adviser (CEA) V Anantha Nageswaran believes that the United States’ tariffs on India will be “short-lived” and reach a resolution “sooner rather than later”, PTI reported.
Acknowledging that continuation of the US tariffs (with duties hiked to 50 per cent from August 27) will have some impact on the Indian economy in the second quarter, Nageswaran felt that there are “lots of conversations” that could result in a resolution soon.
The US imposed a combined 50 per cent tariffs on imports from India, effective from August 27, up from the previous 25 per cent duties, as “punishment” for buying Russia oil amid its invasion of Ukraine.
CEA Nageswaran on Trump tariffs impact on the economy
“There were two parts of the US tariffs. Both will have an impact in the second quarter and possibly a little bit into the beginning of the calendar fourth quarter or the fiscal third quarter,” he told the news agency on August 30.
He was however, optimistic, adding, “I think some of these tariff measures will be short-lived and there are a lot of conversations going on between India and the US government. And I do believe that a resolution will be found sooner rather than later.”
He also felt confident that impact of the tariffs on Indian economy growth in Q2 will be “contained”, and maybe at most a part of the third quarter.
Besides, he said “they will also be compensated for by the GST tax relief that is coming up and the impact of the very good monsoon we have had and agricultural production should start doing better than what we saw in the fiscal first quarter.”
CEA Nageswaran on the Indian economy
Pinning hopes on underlying resilience of the Indian economy, he said the high growth momentum exhibited in the first quarter of the current fiscal (Q1FY26) is expected to continue in the coming quarter as well, with a downward bias emanating from high US tariffs.
The Indian economy reported a stronger-than-expected 7.8 per cent growth in April-June, its fastest pace in five quarters.
“I think the first quarter numbers for the fiscal year were definitely better than expected. A lot of people attributed the fact that the GDP deflator was much weaker this year compared to last year… in some sense, the GDP deflator being on the weaker side was a good thing and was not an unknown aspect. That was factored into the consensus expectations of Indian economists in the private sector,” he stated.
Adding, “Yet the GDP growth number for the first quarter in the current fiscal year was much better than expected…it attests the underlying resilience of the Indian economy in general and the lagged effects of various initiatives that the government has been undertaking since its beginning in 2014 and more so in the last two Budgets continued its momentum in the second fiscal quarter as well.”