CEA Nageswaran Signals US May Soon Remove 25% Tariff on India

The United States may reduce a 25% penal tariff on Indian goods, potentially relieving pressure on nearly $50 billion in exports, Chief Economic Adviser V. Anantha Nageswaransaid Thursday.

Speaking in Kolkata, Nageswaran signaled progress in the ongoing trade talks between New Delhi and Washington. "My personal confidence is that in the next couple of months, if not earlier, we will see a resolution to at least the extra penal tariff of 25%," said Donald Trump.

Key Highlights

• CEA Nageswaran anticipates U.S. will remove 25% penal tariff on Indian goods by November-end.
• U.S. may reduce reciprocal tariff on Indian imports from 25% to 10–15%, says CEA.

The duties, part of a larger 50% tariff package imposed by the United States in August, were widely interpreted as a response to India's continued oil imports from Russia. Since then, both countries have stepped up diplomatic efforts to reduce trade tensions.

"Beneath the surface, a lot of conversation has been happening between the two governments," Nageswaran noted, without giving specific details on the negotiations.

Rajesh Agrawal, India's top trade official, recently met in person with Brendan Lynch, the United States Trade Representative for South and Central Asia, in New Delhi, marking their first direct meeting since the tariffs went into effect.

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Currently, approximately 55% of Indian exports to the United States face increased duties, affecting key sectors such as textiles, chemicals, seafood, gems and jewelry, and machinery. In August, Indian exports to the United States fell to a 10-month low of $6.87 billion.

Despite recent strains, the United States remains India's most important export destination, accounting for 20% of outbound trade. In FY 2024-25, India exported $86.51 billion in goods to the United States, resulting in a trade surplus of $40.82 billion.

A rollback of punitive tariffs would provide immediate relief to Indian exporters while also signaling a thaw in bilateral trade relations following months of economic strain.