Lack of US-India deal will not have an adverse impact on India’s growth, says Panagariya

The lack of a trade deal with the US will not have an adverse impact on India’s economic growth but the advantages that would have accrued from it will not come through for now, said Arvind Panagariya, Chairman of the Sixteenth Finance Commission.

“It’s status quo. It's an advantage which would have accrued, which will not accrue. It doesn't make things worse but the deal would make it better. On economic growth, I sense no adverse impact,” he told Business Today on the sidelines of the Kautilya Economic Conclave 2026 on Saturday.

US Trade Representative Jamieson Greer has said a trade deal between India and the US is not imminent although officials from both countries are continuing bilateral negotiations.

Panagariya who is also former Vice Chairman of NITI Aayog further expressed hope that the US will not impose new tariffs of up to 100% on India under the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026.

“We don't know in the end what the what they plan to do. That's a concern and we have to wait and see what happens,” he said.
However, he said that he does not expect US President Donald Trump to act on it because India is an important relationship for the US too.  “The US also knows that if Russian oil supplies were drawn, you know, that would have serious implications for the United States itself as well,” Panagariya said.

The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, which was passed by the US House of Representatives on September 16 allows the US president to impose additional tariffs of up to 100% on goods from the five largest buyers of Russian crude oil and natural gas.

The Act, along with a lack of clarity on the signing of the first tranche of the India-US bilateral trade agreement, has led to a lot of uncertainty on US tariffs on Indian exports and the impact on the Indian economy.

The US continues to be India’s largest export destination and exporters have been waiting to understand how the US will proceed on the issue. In July, it had imposed fresh tariff of 10% on Indian exports on charges of forced labour after the US Supreme Court had struck down the reciprocal tariffs it had levied previously.