Ever since the American President imposed additional tariffs on Indian products, disquiet has intensified among Indian exporters. Recently V Anantha Nageswaran, Chief Economic Adviser, Government of India, indicated that the tariff dispute between the two countries is likely to be resolved soon.
Nageswaran, who attended as guest-in-chief to mark the 125th anniversary celebrations of Bharat Chamber of Commerce (BCC) for an exclusive session on ‘India: The Making of a Miracle’ in Kolkata, said: “India is a large, complex, and diverse nation; summarising the Indian economy in a nutshell is never easy.”
He picked up the hot issue of US-India trade tariffs. “In the last month, much attention has been captured by discussions around tariffs and trade flows. Beneath the headlines, however, continuous and constructive conversations are ongoing between governments. While I do not have a crystal ball or inside information, my personal assessment is that the penal tariff of 25 per cent may not be there post November.”
In the coming months he expects to see progress towards a resolution, possibly reducing some of the tariff barriers that have created uncertainty. According to him, a resolution on US tariffs would not only lift sentiment but also unlock growth potential, even as India’s exports to the US are not “a very big sum”.
The US imposed a 25 per cent reciprocal tariff on India on 31 July and then followed it up with another 25 per cent tariff as a penalty for buying Russian crude oil, which came into effect from 27 August. The latest ministry data showed India’s exports to the US declined to $6.86 billion in August from $8 billion in July.
A dream wish list
Today, the country’s total exports are close to $1 trillion in size, of which merchandise exports account for around $450 billion, and services about $380 billion. For a $4 trillion economy, that means roughly one-fourth of GDP comes from exports, a significant contribution.
Welcoming Nageswaran, BCC president Naresh Pachisia applauded his bold statement in the Economic Survey of India 2024-25, which suggested that “Lowering the cost of business through deregulation will make a significant contribution to accelerating economic growth and employment amidst unprecedented global challenges”.
“This is a dream wish list for India’s business fraternity that even it could not have communicated better. In my 43-year career in the capital market, following the Economic Survey each year religiously, perhaps this was the finest,” explained Pachisia.
The BCC president was also referring to Prime Minister Narendra Modi’s call for the use of ‘swadeshi’ products, describing it as a déjà vu moment for BCC as it celebrates its 125th anniversary. It was founded in 1900, the first by native businessmen, to have a voice of their own at a time when colonial voices dominated business life. Bengal was the hub of the ‘Swadeshi Movement’. The interactive session with the Chief Economic Adviser was joined by some key industrialists, including HM Bangur, who is the chief patron of the anniversary celebrations.
NG Khaitan, chairman of the 125th anniversary celebrations of the Chamber, introduced the theme of the session. While charting out several economic miracles he did not hesitate to stress the importance of liberalising regulations, citing the example of FDI, which has dropped significantly. Similarly, the paucity of land for industrial purposes is a great concern. Seeking the attention of the Chief Economic Adviser, Khaitan said: “Today the youth and social media are strongly connected with each other. What we have seen in Nepal is an eye-opener. We must take care of our young population and provide them not just with employment, but meaningful employment.”
Nageswaran explained: “India’s growth numbers remain robust by global standards. In the first quarter of this fiscal year, growth came in at 7.8 per cent year-on-year. This growth is led by manufacturing and services. Agriculture typically does not contribute significantly in the April-June quarter, given seasonal patterns.”
On the composition of our economy, private consumption remains the largest component, at around 60 per cent of GDP. Exports account for between 20.9 per cent and 22.8 per cent. He stated that reforms remain central to sustaining this growth story.
“I remain confident. India’s track record shows that, with the right reforms, strong private sector participation, and a focus on efficiency, innovation, and resilience, we can overcome these constraints and continue on a high-growth path,” Nageswaran concluded.