Chief Economic Adviser V Anantha Nageswaran has said that lower tariffs under the India-US trade agreement could materially improve India's growth prospects, nudging outcomes closer to the upper end of official projections. Speaking to NDTV Profit, Nageswaran noted that tariff reductions from the United States could provide a meaningful boost to both growth sentiment and capital inflows.
Under the India-US agreement, reciprocal tariffs on Indian goods will be reduced to 18% from 25%, while the additional 25% duty linked to purchases of Russian crude oil will be removed. The deal was announced as effective immediately by US President Donald Trump after a phone call with Prime Minister Narendra Modi.
Negotiations between India and the United States have been ongoing since early 2025, with talks facing setbacks after steep tariffs were imposed last August. The latest breakthrough, however, appears to have reopened the door for stronger trade ties-and, potentially, stronger growth.
The comments come even as the Economic Survey has pegged India's real GDP growth for FY27 in the range of 6.8%-7.2%. According to Nageswaran, the recently announced trade deal offers upside to this outlook rather than forming its core assumption.
Growth Projection Not Deal-Dependent
Nageswaran, in a press conference post the Economic Survey on Jan. 29, had stressed that the government's medium-term growth estimate of around 7% has been framed independently of the India-US agreement. "We have factored in tariff uncertainty and yet gone ahead with a medium-term growth rate at 7%," he had said, pointing to domestic reforms, financial system stability, and India's evolving trade strategy as key pillars supporting growth.
That said, he had acknowledged that the successful conclusion of the deal would add comfort. If implemented smoothly, tariff relief would strengthen confidence around the growth numbers, especially at a time when global conditions remain volatile.
Global Volatility Still a Headwind
Placing recent market turbulence in context, Nageswaran had referred to show the after-effects of a decade of ultra-loose global monetary policy. Easy liquidity since the global financial crisis, he argued, has driven up private credit expansion and asset valuations worldwide. The ongoing global financial adjustment, he said, is now putting pressure on emerging market currencies and capital flows, including India's.
Nageswaran had also flagged deregulation efforts in sectors such as insurance and nuclear energy as important steps toward long-term policy clarity. According to him, these reforms are aimed at improving the investment climate and attracting foreign direct investment, reinforcing India's growth story beyond short-term trade developments.
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