US Tariff Fix Coming Soon – India Wins Big?

Chief Economic Adviser V Anantha Nageswaran announced today that a resolution to the contentious US tariffs on Indian goods could be just eight to ten weeks away. Speaking at an interactive session hosted by the Bharat Chamber of Commerce, Nageswaran revealed that behind-the-scenes diplomatic talks between New Delhi and Washington are progressing steadily.

The optimism comes amid heightened friction, as the US slapped an additional 25 percent tariff on Indian products in August, citing India's purchases of discounted Russian oil amid the ongoing geopolitical standoff. This has jacked up the total levy to a punishing 50 percent, squeezing exporters in key sectors like textiles, pharmaceuticals, and electronics. "Underneath the surface, conversations are underway between the two governments," Nageswaran said. "My hunch is that in the next eight to ten weeks, we'll likely see a solution to these tariffs." He cautioned, however, that prolonged delays could lead to a sharp dip in India's exports to its largest trading partner.

Nageswaran painted a broadly positive picture of India's economic trajectory, positioning the nation as an "aspirational lower-middle-income economy" on the cusp of accelerated growth. He highlighted a robust 7.8 percent real GDP expansion in the first quarter of FY 2025-26, outpacing many global peers in the post-COVID recovery phase. "India's economy has rebounded faster than most," he noted, crediting balanced contributions from manufacturing, services, and agriculture to fuel progress over the next two years. Consumption and investments, he added, will remain the bedrock of this sustained momentum.

Also Read: GTRI: India Faces Export Nightmare After US Tariff Hikes

On the fiscal front, Nageswaran praised India's prudent debt management, pointing to a favorable debt-to-GDP ratio that outperforms many peers. "For every USD of debt, India generates more GDP, showcasing efficient capital utilization," he explained. Rural demand continues to show remarkable resilience, while urban consumption is picking up steam, bolstered by recent GST rate cuts that promise to boost disposable incomes and spur spending.

The MSME sector is another bright spot, with credit flows surging and large industries undergoing necessary structural shifts. Resource mobilization options abound in today's landscape, Nageswaran observed. Externally, India's economy stands tall against global headwinds: trade volumes remain vigorous, forex reserves are ample, and the current account deficit has slimmed to a negligible 0.2 percent of GDP in Q1 FY26.

Addressing currency concerns, Nageswaran dismissed short-term rupee depreciation against the dollar as transitory. "Given the underlying economic strength, I'm confident the rupee will hold firm and strengthen over the long haul," he asserted.

Outlining government priorities, the CEA emphasized sustained capital expenditure, private investment incentives, and regulatory easing to unlock potential. Infrastructure ramp-ups in ports and airports, he said, will absorb growth without inflationary spikes. On China trade, Nageswaran noted that imports are largely capital and intermediate goods, urging the private sector to ramp up innovation and R&D spending to reduce dependencies.

Finally, touching on artificial intelligence's ripple effects, Nageswaran downplayed immediate job disruptions. "AI's impact has been marginal thus far—coding jobs may face pressure, but it's an opportunity for upskilling," he advised. As India navigates these dynamics, Nageswaran's tariff timeline offers a glimmer of hope, potentially unlocking billions in trade and reinforcing bilateral ties just as global uncertainties loom large.

Also Read: Comprehensive Support Package Underway For Exporters Hit By US Tariffs: FM Sitharaman