Solution to US tariff issues in 8 to 10 weeks: Govt

Chief Economic Adviser V Anantha Nageswaran on Thursday (September 18) said he anticipates that ongoing discussions between the Indian and US governments over the tariff issues are likely to yield a solution within the next eight to ten weeks.

Also read | US team in Delhi for trade talks, first after Trump's 50 pc tariffs on India

The additional 25 per cent tariff imposed by the US on Indian products for the country's purchases of Russian oil came into effect in August, bringing the total levy imposed on New Delhi to 50 per cent.

India eyes economic growth

Speaking at an interactive session organised by Bharat Chamber of Commerce here, Nageswaran said, "Underneath the surface, conversations are going on between the two governments. My hunch is that in the next eight to ten weeks, we will likely see a solution to the tariffs imposed by the US on Indian goods." He said that if the tariffs stayed on, there would be a drop in exports to the US.

Terming India as an aspirational lower-middle-income economy, Nageswaran said real GDP growth in the first quarter of the current financial year was 7.8 per cent.

Post the COVID pandemic, the Indian economy grew faster than many countries, he said.

The growth in manufacturing, services and agriculture will contribute to economic progress in a great way in the next two years, Nageswaran said, adding that consumption and investments will continue to anchor growth for the country.

Rural, urban demand strong

According to him, the debt-to-GDP ratio in India is good. With per USD of debt, the country generated more GDP than other countries, which shows efficient utilisation of capital in the economy. He said that rural demand remains resilient in the economy, and urban demand is gaining traction.

The recent relief in GST rates will give more disposable income in the hands of consumers, and urban consumption is likely to go up, the chief economic adviser said.

Credit to the MSME sector is rising while advances to the large industry are undergoing a structural change, he said, adding that in the present day, avenues of resource mobilisation are ample.

According to him, the external sector of the economy remains resilient, despite the global headwinds. "Trade continues to be robust in the current financial year", he said, adding that the foreign exchange reserves are healthy.

Focus on investment, infra

The current account deficit is benign and narrowed down to 0.2 per cent of the GDP in the first quarter of the 2025-26 fiscal, he said.

"The rupee is depreciating against the US dollar. Given the underlying strength of the economy, I am more inclined to believe that in the longer run, the rupee is likely to hold its value and become stronger," the chief economic adviser said.

Also read | India-US trade talks: Both sides call 'in-person' meeting in Delhi 'positive'

Delineating the policy priorities of the government, Nageswaran said that there is a continued emphasis on government capital expenditure, incentives to boost private investment and systemic deregulation.

He said the supply of physical infrastructure, like ports and airports, has increased, which will not "overheat the economy when growth takes place".

AI impact limited so far

Referring to India's trade with China, he said that mostly capital and intermediate goods are imported from the neighbouring country.

"The Indian private sector needs to do more on innovation and increase spending on R&D," he said.

On the impact of artificial intelligence (AI), he said that it has been marginal so far. "Coding-level jobs will be under threat, but not bad from an employment perspective. People have to upskill themselves," he said.

(With agency inputs)