'Job losses will be limited to...': CEA Nageswaran plays down US tariff impact on India

Chief Economic Advisor (CEA) V. Anantha Nageswaran said on Friday that the impact of fresh US tariffs on India would have a mixed effect, with potential job losses largely restricted to export-oriented industries heavily reliant on the American market.

Earlier this month, US President Donald Trump announced a 25 per cent base tariff on Indian goods, along with an additional 25 per cent levy on imports tied to Russian oil purchases, arguing that such trade indirectly funds the Ukraine war. Washington also warned that India could face secondary tariffs if it does not scale back crude imports from Moscow.

Speaking to ANI, Nageswaran noted that India’s strong domestic demand, bolstered by a good monsoon and rising rural consumption, would cushion the impact of tariffs. He added that any job losses that might occur are unlikely to be significant.

The CEA also said that some affected firms could explore new markets, while others may choose to retain workers in anticipation that tariff-related disruptions will be temporary.

High tariffs, he stressed, are expected to be "short-lived" as both countries are negotiating the removal of the 25 per cent penal levy and working towards a bilateral trade deal.

On India’s economic outlook, Nageswaran highlighted that the economy grew 7.8 per cent in Q1 2026, supported by robust expansion in manufacturing and services. Government consumption, which had been negative in the same quarter last year, also provided a boost this time due to a favourable base effect, while easing inflation helped through a lower GDP deflator.

“Despite the reciprocal tariffs and penal tariffs (imposed by the US), and after seeing the resilience of Q1 growth, we are retaining the growth rate projections for the current fiscal at 6.3-6.8 per cent,” Nageswaran told reporters in Delhi.

He cautioned, however, that subsequent quarters may see some impact on the external sector as tariffs weigh on exports, which in turn could affect domestic production and capital formation.

Still, he emphasised that any slowdown in the second or third quarter would likely be contained and temporary, as tariff-related uncertainties are not expected to last long.

When asked about job losses due to US tariffs on Indian goods, Nageswaran stated that any job losses, if they occur, will be limited to those export-oriented units that are highly exposed to the United States. "Some of them will be able to find alternative markets, and some of them may also decide to take a medium to long-term view, that if the ongoing uncertainties related to the tariffs are going to be contained and temporary, they may choose to look beyond that, and not necessarily let go of their workers," he said.