Chief Economic Adviser V Anantha Nageswaran on Thursday signalled that the steep penal tariff on Indian exports to the United States could be rolled back after November 30, raising hopes of relief for trade ties strained by Washington’s protectionist turn.
Speaking at an event organised by the Merchants’ Chamber of Commerce and Industry in Kolkata, Nageswaran said recent developments gave him reason to believe that the additional duty would not last beyond the stipulated period.
“All of us are already at work, and I will take some time to talk about the tariff here. Yes, the original reciprocal tariff of 25 per cent plus the penal tariff of 25 per cent both were not anticipated. I still believe that geopolitical circumstances may have led to the second 25 per cent tariff, but considering recent developments in the last couple of weeks and so on, I do believe that and I have no particular reason to say so it is my intuition that I do believe the penal tariff will not be there after November 30,” he said.
Nageswaran added, “I do believe that there will be a resolution in the next couple of months on the penal tariff and hopefully on the reciprocal tariffs,” pointing to continuing talks between India and the United States.
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The US had invoked the International Emergency Economic Powers Act (IEEPA), a 1977 law designed for sanctions and financial controls during foreign emergencies, to double tariffs on several countries. For India, this meant an increase from 25 per cent to 50 per cent on a wide range of products entering the American market.
The higher duties, which came into effect on Wednesday, cover all Indian imports either entered for consumption or withdrawn from warehouses in the US. The Customs notification, however, spared critical categories. Iron and steel products, aluminium goods, certain passenger vehicles, spare parts, semi-finished copper and related derivatives were excluded from the additional levy.
According to the Global Trade Research Initiative (GTRI), about 30.2 per cent of India’s exports to the US, worth $27.6 billion, would still enter duty-free, despite the broader hike.
The CEA highlighted India’s export growth trajectory, noting that annual exports of $850 billion were on course to touch $1 trillion. He underlined that exports already represented a quarter of India’s GDP, a sign, he said, of a “healthy, open economy”.
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