US-India Tariff row: CEA predicts short-term impact; urges focus on AI, critical minerals
Commenting on the Trump administration's decision to levy high tariffs on India, Chief Economic Advisor Anantha Nageswaran hoped for a short-term impact and predicted resolution within a couple of quarters. He attributed the 2024-25 GDP slowdown to tight credit and liquidity issues, advocating for agricultural policy reform to boost growth.
Mumbai: Amid the ongoing US-India tariff row, Chief Economic Advisor (CEA) V Anantha Nageswaran on Wednesday said the challenges emanating from the tariffs imposed by the United States will dissipate in the next one or two quarters.
The CEA appealed to the private sector players to do more as India navigates through other longer-term challenges. He opined that the GDP growth slowdown in 2024-25 was a result of tight credit conditions and liquidity issues. He advocated for new good agriculture policies as it can add 25 per cent to real GDP growth.
CEA's Assessment of US Tariff Impact on India
Commenting on the tariffs levied by the Trump administration, Nageswaran warned of the real impact of the tariffs once sectors like gems and jewellery, shrimps and textiles are hit first, which would be "more difficult" to tackle.
The CEA, however, urged people to maintain patience as the government was having talks with the impacted sectors and soon the policymakers would address the concerns.
When asked to comment on whether US officials will visit India for trade talks later in August 2025, the CEA said the upcoming meeting in Alaska between US President Donald Trump and his Russian counterpart Vladimir Putin is likely to influence the outcome.
While maintaining that at present things are very fluid at the world stage in regards to US-India trade talks, Nageswaran declined to divulge any details on the trade negotiations between the two countries.
"I do believe that the current situation will ease out in a quarter or two. I don't think that from a long-term picture, the India impact will be that significant but in the short run, there will be some impact," he was quoted by PTI as saying.
The CEA said it is very hard to guess the exact reasons why President Trump imposed the high tariffs on India, wondering if it's the fallout of Operation Sindoor or something even more strategic.
Nageswaran emphasised on keeping the focus on more "important challenges", like artificial intelligence, critical minerals, and their processing and strengthening of supply chains.
"Private sector also has a lot of thinking to do, given the massive strategic challenges we face in the coming years... the private sector also has to think about the long-term rather than the next quarter, which is what might have led to many of the challenges we are currently beginning to face," the CEA said in the comments aimed at India Inc.