Chief Economic Adviser (CEA) V Anantha Nageswaran on Thursday expressed confidence that the penal tariff on certain Indian imports to the US could be withdrawn after November 30, hinting at a possible easing of trade frictions.
Speaking at an event organised by the Merchants’ Chamber of Commerce & Industry in Kolkata, Nageswaran said:
“Yes, the original reciprocal tariff of 25% plus the penal tariff of 25% were not anticipated. I believe geopolitical circumstances may have led to the second 25%. But given recent developments, it is my intuition that the penal tariff will not be there after November 30.”
He added that continued discussions between India and the US could also resolve reciprocal tariff issues in the coming months.
India’s exports on track
Highlighting India’s resilience, Nageswaran said annual exports have already touched $850 billion and are on course to reach $1 trillion, accounting for 25% of GDP — a sign, he stressed, of a “healthy, open economy.”
Tariff background
The higher duties stem from a move by former US President Donald Trump, who invoked the International Emergency Economic Powers Act (IEEPA) to impose reciprocal tariffs. India initially faced a 25% duty, which was doubled to 50% effective Wednesday.
According to a US Customs notification:
- The 50% tariff broadly applies to Indian imports entering the US market.
- Exemptions cover iron and steel products (and derivatives), aluminium products, passenger vehicles and parts, and certain copper goods.
- Roughly 30.2% of India’s exports to the US ($27.6 billion) remain duty-free despite the hike, according to the Global Trade Research Initiative (GTRI).
The road ahead
The CEA stressed that the current tariff situation is temporary and linked to broader geopolitical shifts, but struck an optimistic note that trade barriers would ease in the coming months as talks progress.