India anticipates a breakthrough regarding the additional 25% tariffs imposed by the United States within the next two months, according to Chief Economic Adviser (CEA) V. Anantha Nageswaran. Nageswaran expressed optimism that trade relations between the two countries would improve significantly. He believes the penal tariff imposed on Indian imports by the U.S. government may be withdrawn after November 30.
The additional tariffs, which took effect on August 27, were levied on Indian goods on top of already existing 25% reciprocal tariffs, bringing the total to 50%. These tariffs were initially imposed due to the U.S.'s disapproval of India's oil trade with Russia. Nageswaran stated that these tariffs were unanticipated. However, he believes that geopolitical circumstances may have led to the second 25% tariff.
Despite the tensions, Nageswaran indicated that "underneath the surface, conversations are going on between the two governments". He anticipates a resolution to the tariff issues within the next eight to ten weeks. He also hopes that the reciprocal tariffs will also be addressed. Nageswaran suggested the reciprocal duty, currently at 25%, may be reduced to a band of 10–15%.
The CEA's optimism comes as ties between India and the U.S. appear to be thawing. There has been positive exchange between President Trump and Prime Minister Modi. Trump hailed Modi for doing “a tremendous job”.
The double-layered tariff regime has put pressure on Indian exporters, particularly in labor-intensive sectors like textiles, engineering goods, and certain food products. A rollback of the tariffs, even partially, could ease cost pressures and restore predictability in bilateral trade.
In the financial year 2025, India's exports to the United States reached $86.51 billion, making the U.S. India's primary export destination. The ongoing discussions aim to reduce the reciprocal tariff from 25 percent to approximately 15 percent, which would be positive news for the export sector.
Nageswaran emphasized that resolving the tariff issue is significant beyond trade considerations, extending to its impact on capital formation. India's economy continues its growth trajectory, with a projected second-quarter GDP growth of around 7%. India's export growth is on track to reach USD 1 trillion, representing 25 per cent of GDP, indicating a healthy, open economy.
Days after the additional duties on India took effect, the President's imposition of reciprocal tariffs on India and other countries was deemed unlawful by the US Appeals Court. Trump had invoked the tariffs under the International Emergency Economic Powers Act (IEEPA), a 1977 law. However, the court held that by imposing these tariffs, Trump overstepped his authority.
