US tariff impact will Short-Lived, think beyond the next quarter: CEA

Chief Economic Advisor (CEA) V. Anantha Nageswaran has said the impact of recent US tariffs on Indian exports will be short-lived, easing within one or two quarters. Speaking in Mumbai on Wednesday, he noted that sectors such as gems and jewellery, shrimps, and textiles are facing the initial brunt, but the long-term impact on the economy will be limited. Urging patience, he stressed that the government is aware of the situation and has already begun conversations with impacted sectors. Nageswaran attributed the FY25 growth slowdown - down to 6.5 per cent from FY24’s 9.2 per cent - to "tight credit conditions and liquidity issues," adding that "the right agriculture policies can add 25 per cent to real GDP growth." On tariffs, he noted that while gems and jewellery, shrimps, and textiles have faced the first blow from the 50 per cent US duties, "it is the second and third order impacts...that will be more difficult to tackle."

He added that the outcome of ongoing India-US trade dynamics may also be influenced by the upcoming meeting between US President Donald Trump and Russian President Vladimir Putin in Alaska later this month. Nageswaran noted that overall resource mobilisation in the economy remains robust, citing strong bank credit growth, commercial paper issuances, and IPO fundraising.

He urged the private sector to focus on long-term strategic goals, strengthen supply chain resilience, assuring that public policy will play a facilitating role. He also stressed that India must diversify import sources and exercise caution in adopting Artificial Intelligence (AI) to mitigate labour displacement.Highlighting societal issues, he warned of "physical and health issues arising from excess screen use, consumption of ultra-processed food," which are leading to “anxieties and even suicidal thoughts among people,” and sought private sector help to address them.