'US tariff impact will fade in 6 months, think beyond the next quarter': CEA to India Inc 

Chief Economic Advisor V Anantha Nageswaran on Wednesday said the economic impact of steep US tariffs on Indian exports will ease within one or two quarters, but warned that the country must prepare for deeper, long-term challenges, calling on the private sector to act with a strategic outlook.

"I do believe that the current situation will ease out in a quarter or two. I don't think that from a long-term picture, the India impact will be that significant but in the short run, there will be some impact," he said. 

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 said the government is aware of the situation and has begun conversations with impacted sectors. "One will hear from the policymakers in the coming days and weeks but people have to be patient," he added.

Amid speculation of a potential India-US trade meeting later this month, Nageswaran pointed to the upcoming Alaska summit between US President Donald Trump and Russian President Vladimir Putin as a possible influence. Declining to reveal negotiation details, he said, "Things are very fluid at the world stage right now with relations swinging from cooperation to stalemate." 

However, he warned against letting tariff disputes overshadow "more important challenges," including AI-driven labour displacement, dependence on a single country for critical minerals, and unstable supply chains. Without naming China, he cautioned, "We cannot go from crude oil import dependence to critical minerals and ladders import dependence. Understand that crude oil (sources) at least is more diversified." He stressed that "Indian policymakers must choose between accepting permanent strategic dependence on adversaries or committing the resources necessary for genuine support to independence."

Addressing India Inc, Nageswaran urged the private sector to "do more as we navigate these longer-term challenges," and to think beyond "the next quarter." "The private sector also has to think about the long-term rather than the next quarter, which is what might have led to many of the challenges we are currently beginning to face," he said.

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.

On the economy, he said consumption remains "quite healthy," citing strong UPI usage, though urban services data is lacking. He cautioned against using only listed company earnings as a gauge, as consumption is shifting to unlisted players. He said overall resource mobilisation shows no slackening, with bank credit growth, commercial paper issuance, and IPO fundraising all strong.

Welcoming private capital expenditure in FY26, he said the February data will confirm the trend. On AI, he called for “caution” in adoption, choosing deployment areas carefully and pacing integration. India, he said, must create at least "80 lakh new jobs per annum in the next 10–12 years."

(With inputs from PTI)