CEA Nageswaran expects US-India tariff dispute to be resolved by November; warns export hit if duties persist.
India posted 7.8 per cent GDP growth in Q1 FY26; economy seen resilient with strong urban demand and low CAD.
Growth outlook supported by manufacturing, services, agriculture, and government capital spending; private sector urged to boost R&D.
Chief Economic Advisor V Anantha Nageswaran stated that he anticipates a resolution to the tariff problems with the United States over the next eight to 10 weeks.
In August, the United States implemented an extra 25 per cent tariff on Indian goods in connection with the nation's purchases of Russian oil, increasing the overall levy imposed on New Delhi to 50 per cent.
According to PTI, speaking at an interactive session organised by Bharat Chamber of Commerce here, Nageswaran said, "Underneath the surface, conversations are going on between the two governments. My hunch is that in the next eight to ten weeks, we will likely see a solution to the tariffs imposed by the US on Indian goods." He said that if the tariffs stayed on, there would be a drop in exports to the US.
"I hope that the penal tariff would possibly be removed by the end of November," Nageswaran said at an event organised by the Merchants Chamber of Commerce and Industry here later in the day.
But he made it clear that it's his instinct.
According to Nageswaran, who described India as an aspirational lower-middle-income country, real GDP growth in the first quarter of the current fiscal year was 7.8 per cent.
He added that the Indian economy grew more quickly than many other nations after the COVID outbreak.
PTI reported he said that the expansion of manufacturing, services, and agriculture would significantly boost economic development over the next two years. He also stated that investments and consumption will continue to serve as the nation's growth pillars.
He claims that India's debt-to-GDP ratio is favourable. The nation produced a higher GDP than other nations per USD of debt, demonstrating effective use of capital in the economy.
According to him, urban demand is growing, but rural demand is still strong in the economy.
According to the chief economic adviser, consumers would have more discretionary income as a result of the recent reduction in GST rates, and urban spending is anticipated to increase.
He added that there are many ways to mobilise resources these days and that credit to the MSME sector is growing, while advances to the huge business are going through a structural transformation.
According to him, the external sector of the economy remains resilient, despite the global headwinds.
"Trade continues to be robust in the current financial year", he said, adding that the foreign exchange reserves are healthy.
The current account deficit is benign and narrowed down to 0.2 per cent of the GDP in the first quarter of the 2025-26 fiscal, he said.
"The rupee is depreciating against the US dollar. Given the underlying strength of the economy, I am more inclined to believe that in the longer run, the rupee is likely to hold its value and become stronger," the chief economic adviser said.
Nageswaran outlined the administration's policy aims, stating that systemic deregulation, incentives to increase private investment, and government capital expenditure are still prioritised.
According to him, there is now more physical infrastructure available, such as ports and airports, which won't "overheat the economy when growth takes place."
According to PTI, he referenced India's trade with China, stating that the majority of the country's imports are capital and intermediate commodities.
"The Indian private sector needs to do more on innovation and increase spending on R&D," he said.
On the impact of artificial intelligence (AI), he said that it has been marginal so far.
"Coding-level jobs will be under threat, but not bad from an employment perspective. People have to upskill themselves," he said.
