Tariff war create opportunity for India in some of sectors: CEA Nageswaran

Ongoing tariff war triggered by reciprocal tariff by the Trump Administration provides an opportunity for India in some sectors, Chief Economic Adviser V Anantha Nageswaran said on Thursday.

Addressing the CII Annual Business Meet here, he said India actually has a few silver linings which include low energy prices at the moment.

Besides, he said, "regardless of how the tariff numbers will play out after 90-day expiration from the Liberation Day on April 2, or the 90 days given to China from May 12, etc, there will be some sectors where India did not enjoy an advantage before, it may enjoy an advantage later. That's also an opportunity from tariff perspective".

The US on April 2 imposed an additional 26 per cent reciprocal tariff on Indian goods, but later suspended it for 90 days till July 9. However, Indian goods still attract the 10 per cent baseline tariff imposed by America.

Meanwhile, both India and the US are in discussions to close a bilateral trade agreement.

Both sides are looking at an interim trade deal before the first tranche of the proposed bilateral trade agreement (BTA) as the US's 26 per cent reciprocal tariff on India is suspended till July 9 this year.

In the interim trade deal, New Delhi is pushing for full exemption from the 26 per cent reciprocal tariff on domestic goods.

Both countries have fixed a deadline to conclude the first phase of the proposed bilateral trade agreement by the fall (September-October) of this year.

The US remained India's largest trading partner for the fourth consecutive year in 2024-25, with bilateral trade valued at $131.84 billion. The US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in the country's total merchandise trade.

With America, India had a trade surplus (the difference between imports and exports) of $41.18 billion in goods in 2024-25. It was $35.32 billion in 2023-24, $27.7 billion in 2022-23, $32.85 billion in 2021-22 and $22.73 billion in 2020-21. The US has raised concerns over this widening trade deficit.

The two trading partners look to more than double bilateral trade to $500 billion by 2030.

Quoting IMF projection, Nageswaran India would become a $5 trillion economy by 2027-28 and touch $6.8 trillion by 2030-31.

He also said that the ultra-processed foods combined with screen time are the biggest risk to India's demographic dividend.

Commenting on the increasing trend of brand leveraging celebrity endorsement to push for ultra-processed foods, CEA reminded the industry that their corporate social responsibility extends beyond just giving 2 per cent of profits to CSR funds.

"So therefore, the kind of offerings we give to the Indian youth is something that we need to think about very seriously, keeping the medium term in mind, because otherwise you are not going to have an economically productive population on the policy front," he said.

Nageswaran highlighted several unique challenges impacting India's economic growth.

"The labour-rich economy contrasts with the global capital-intensive growth model, complicating manufacturing and industrialization. Energy transition requires substantial investments, posing hurdles for capital-led growth," he said.

Steady growth in household incomes and savings is crucial, but AI and robotics threaten job stability, he said.