India-US Tariff Talks Likely to Conclude With Resolution on 25% Additional Levies in Couple of Months, Says CEA

Amid the trade tensions between India and US, Chief Economic Advisor V Anantha Nageswaran said on Thursday that he is confident that the tariff discussions between the two counties will conclude in the next couple of months and with a resolution most likely on the penal tariff.

While addressing the Bharat Chamber of Commerce, the CEA said, “I don’t have any inside information, but my personal confidence is that in the next couple of months, if not earlier, we will see resolution at least to the extra penal tariff of 25 per cent.”

He further mentioned that the reciprocal tariff of 25 per cent may also come down to the levels anticipated earlier—between 10 and 15 per cent. “If that happens, it will be an even bigger occasion for celebration,” he added.

India’s exports to the US touched about $86.5 billion last year but suffered a setback when the Trump administration on August 6 imposed an additional 25 per cent levy on Indian goods in retaliation for India’s continued purchase of Russian oil. This additional tariff came on top of the 25 per cent reciprocal tariff announced on August 1 and enforced from August 7.

Nageswaran further pointed out that resolving the matter was important not only from a trade perspective but also for sentiment and capital formation. He further stated that many conversations were happening beneath the surface.

Talking about the Indian economy, he said that the numbers indicated stronger growth momentum than what was anticipated ahead of the tariff. “We won’t be surprised if the growth rate is again 7 per cent year-on-year in the second quarter,” he added.

India’s GDP grew 7.8 per cent Y-o-Y in the first quarter and this growth, Nageswaran said, was not simply driven by low inflation but also supported by contributions from the manufacturing and services sectors.

Additionally, agriculture would play a significant role n the next two quarters, “We know this from tractor sales, sowing area, area under cultivation, reservoir levels, and the monsoon rains,” he added.

The Chief Economic Advisor also talked about urban consumption, which has been an area of concern. He highlighted that it was likely to improve compared to last year, supported by recent tax reforms.

He explained that the direct tax relief in the Budget, combined with benign food inflation and GST rate rationalisation are creating a huge improvement in disposable income or purchasing power for urban consumers.

However, he further cautioned that perceptions of weak urban consumption might be based on selective indicators. “If you look at the bigger picture, urban consumption is not doing badly,” he said

Nageswaran also explained that FMCG volumes were often drawn from listed company data, but much of the consumption had shifted to unlisted companies. “Also, digital spend at a kirana shop through QR code is not captured,” he noted. He further mentioned that this indicated a structural shift in consumption patterns, which is not fully captured in FMCG volume sales.