India’s Chief Economic Adviser hints at a hopeful breakthrough in the ongoing US-India tariff dispute, with potential relief expected within eight to ten weeks as diplomatic talks gain momentum amidst declining exports and market gains.
India’s Chief Economic Adviser, V. Anantha Nageswaran, has expressed cautious optimism that the ongoing tariff dispute between India and the United States may be resolved within the next eight to ten weeks. Speaking at separate events in Kolkata, Nageswaran conveyed his “hunch” that a solution could be reached soon regarding the 25% penal import tariff the US imposed on Indian goods, a move that had significantly strained bilateral trade relations.
These tariffs, originally enacted in response to India’s continued purchase of Russian oil amid the Ukraine conflict, have led to a sharp decline in India’s exports to the US. Official data shows exports dropped from $8.01 billion in July to $6.86 billion in August, contributing to a notable trade contraction that has raised concerns among Indian exporters. The tariffs effectively doubled the duty burden on Indian goods to 50%, one of the highest rates imposed by the US on any trading partner.
Nageswaran indicated a hopeful outlook that the US might remove the punitive 25% tariff while simultaneously lowering the existing reciprocal tariff imposed by India, potentially reducing it to a band of 10% to 15% from the current 25%. He stressed that these views were his personal assessment but reflected positive underlying discussions between the two governments.
This diplomatic thaw follows recent “forward-looking” trade talks, including a meeting on September 15 in New Delhi between Indian officials and Brendan Lynch, the chief negotiator for the India-US Bilateral Trade Agreement. The talks come after a period of heightened tension, with US President Donald Trump previously enforcing punitive tariffs linked not only to oil purchases but also to broader trade grievances. However, a phone conversation between Trump and Indian Prime Minister Narendra Modi reportedly helped ease tensions, with Trump expressing appreciation for Modi’s role in efforts to ease the Ukraine war conflict that influences global trade dynamics.
Market reactions to these developments have been favourable, with the Indian stock market’s Nifty 50 index marking its highest close since early July, reflecting investor optimism about improving trade relations and the potential easing of tariffs.
While no official timelines have been confirmed by either government, Nageswaran suggested the possibility of penal tariffs being lifted by the end of November, signalling a window for substantial progress within two months. This anticipated resolution could significantly bolster India’s export sector, restore trade momentum, and strengthen the broader economic partnership between the US and India.
Overall, these developments suggest a gradual diplomatic recalibration aimed at mitigating trade disruptions while balancing geopolitical and economic considerations. The coming weeks will be critical as both countries work towards a mutually acceptable agreement that could set the stage for deeper cooperation going forward.
Source: Noah Wire Services
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