India–US Trade Talks: 25 Per Cent Penal Tariff May End After 30 November, Says CEA Nageswaran

Chief Economic Adviser (CEA) V. Anantha Nageswaran on Thursday (18 September) voiced optimism that the penal tariff on certain Indian imports may be lifted after 30 November, hinting at possible relief in trade restrictions amid ongoing India–US negotiations, NDTV reported.

Speaking at an event organised by the Merchants' Chamber of Commerce & Industry in Kolkata, Nageswaran said, "All of us are already at work, and I will take some time to talk about the tariff here. Yes, the original reciprocal tariff of 25 per cent plus the penal tariff of 25 per cent both were not anticipated. I still believe that geopolitical circumstances may have led to the second 25 per cent tariff, but considering recent developments in the last couple of weeks and so on, I do believe that and I have no particular reason to say so it is my intuition that I do believe the penal tariff will not be there after 30 November."

The CEA added that he believes a resolution on the penal tariff, and possibly on the reciprocal tariffs, could be reached in the next couple of months, referring to the ongoing talks between India and the US.

India’s exports, currently at $850 billion annually, are on track to reach $1 trillion, representing 25 per cent of GDP, he noted, reflecting a robust, open economy.

The US tariffs were imposed under the International Emergency Economic Powers Act (IEEPA), with India initially facing 25 per cent duties, which were later increased to 50 per cent.

These higher duties apply broadly to Indian products entering the US, though certain items are exempt.

Exemptions include iron, steel, aluminium, passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans, light trucks) and their parts, as well as semi-finished copper products and some copper derivatives.

According to the Global Trade Research Initiative (GTRI), about 30.2 per cent of India’s exports to the US, valued at $27.6 billion, will continue to enter duty-free despite the higher tariffs.

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