April 14, 2025 – New Delhi: Chief Economic Adviser (CEA) V Anantha Nageswaran has cautioned that the recently announced US tariffs under President Donald Trump’s administration could exert a three-round impact on India’s economic growth, even though reciprocal duties have been paused for 90 days.
Speaking to The Indian Express, Nageswaran detailed how these tariffs could ripple through the Indian economy:
- Direct Impact on the US and Its Consumers: As India’s largest trading partner, a slowdown in the United States driven by high tariffs could dampen demand for Indian exports.
- Relative Trade Positioning: If other countries face economic strain due to US tariffs, India’s export prospects to those markets may weaken, especially if American duties shrink their GDP.
- Financial Market Volatility: Market sentiment and investor confidence may decline due to global uncertainty, affecting consumption and domestic investment activity in India.
“These are all factors that will, in some combination or the other, have an impact on the growth outcomes this year,” said Nageswaran.
President Trump announced the tariffs—26% on Made-in-India goods—on April 2, during his “Liberation Day” speech, targeting a broad range of trading partners, with China receiving the steepest duties. The announcement led to sharp declines across global stock markets, including India’s Sensex and Nifty indices.
While Trump later announced a temporary pause on tariffs for most nations (excluding China), and even dropped some levies on electronics like chips and mobile phones, the uncertainty remains high, especially with China maintaining a firm stance in ongoing trade disputes.
Despite the turbulence, lower global energy prices were identified as a silver lining. Nageswaran emphasized that private sector companies should use this opportunity to expand and support growth, taking advantage of India’s large domestic market.
He also highlighted the importance of government reforms focused on reducing the cost of doing business and improving ease of operations within India. These steps, he said, would help cushion the economy against global trade headwinds.
On the monetary front, the Reserve Bank of India (RBI) recently cut the repo rate by 25 basis points on April 9 and shifted its stance to “accommodative” from “neutral”. While this opens the door to more rate cuts, Nageswaran pointed out that the impact of lower interest rates on capital formation is limited.
“Interest rate cuts primarily boost real estate investment and household consumption, rather than long-term business investment,” he noted.
Source: “Trump tariffs can have three-round impact on India’s growth: CEA V Anantha Nageswaran”, Moneycontrol News, April 14, 2025. Read the original article
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