Chief Economic Advisor V Anantha Nageswaran on US Tariffs: Why India Must Focus on Long-Term Structural Strength
New Delhi, August 2025 – India’s Chief Economic Advisor (CEA) V Anantha Nageswaran has reassured businesses and policymakers that the economic impact of steep US tariffs on Indian exports will not linger beyond one or two quarters. However, in his candid assessment on Wednesday, Nageswaran emphasized that the real challenge lies in long-term structural issues, which demand urgent attention. His remarks are a timely reminder that while short-term shocks can be managed, sustainable growth depends on deep reforms, resilience, and adaptability.
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US Tariffs on Indian Exports: Short-Term Pain, Long-Term Lessons
The recent decision by the United States to impose steep tariffs on a wide range of Indian exports — from textiles and steel to pharmaceuticals and IT services — sent ripples through trade and industry. Initial reactions from exporters suggested concern over reduced competitiveness and shrinking margins. However, according to Nageswaran, India’s economy is well-positioned to absorb these shocks within one or two quarters.
> “The immediate impact of US tariffs will create some discomfort, but the Indian economy has shown remarkable resilience in the past. We expect this phase to stabilize within a short time frame,” Nageswaran noted.
This statement provides relief to many exporters who were bracing for long-term setbacks. Yet, the CEA did not downplay the seriousness of global trade disruptions. Instead, he used the moment to push for forward-looking reforms.
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Preparing for Long-Term Structural Challenges
While the current tariff crisis may be temporary, Nageswaran stressed the need to confront deeper structural issues. These include:
1. Boosting Manufacturing Competitiveness – India must enhance productivity, reduce logistics costs, and improve ease of doing business to compete globally.
2. Diversifying Export Markets – Heavy reliance on the US and EU makes India vulnerable. Expanding trade with Africa, Latin America, and Southeast Asia is crucial.
3. Strengthening Supply Chains – Building resilient domestic supply chains will help India withstand global shocks.
4. Investing in Innovation and R&D – Long-term growth depends on India’s ability to move up the value chain, especially in high-tech, green energy, and digital industries.
5. Workforce Reskilling – With AI, automation, and Industry 4.0 disrupting jobs, India’s workforce must be re-trained to stay competitive.
Nageswaran’s message was clear: tariffs are temporary, but structural weaknesses can hold back India for decades if left unaddressed.
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Private Sector Must Adopt a Strategic, Forward-Looking Approach
Another key takeaway from Nageswaran’s address was his call to the private sector. Instead of reacting defensively to short-term global developments, businesses must anticipate long-term trends and align strategies accordingly.
He urged companies to:
Invest in technology and innovation rather than relying solely on cost advantages.
Expand globally, especially into emerging markets that offer new demand.
Adopt sustainable practices, since climate-conscious trade policies are reshaping global commerce.
Collaborate with government initiatives such as Make in India, PLI schemes, and Digital India to enhance competitiveness.
> “India’s private sector must stop seeing itself as a passive victim of global events. Instead, it should become an active shaper of India’s future growth story,” he said.
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India’s Economic Resilience: A Global Case Study
Despite multiple global shocks in recent years — from the COVID-19 pandemic to the Russia-Ukraine war, volatile energy prices, and now US tariffs — India’s economy has repeatedly demonstrated resilience and adaptability.
GDP Growth: India remains the world’s fastest-growing major economy, with projections of 6–6.5% growth this fiscal year.
Export Growth: Even amid trade tensions, India’s exports have diversified into services like IT, fintech, and pharmaceuticals.
Foreign Investment: Global investors continue to see India as a long-term growth destination, attracted by its large market and demographic dividend.
Digital Transformation: With initiatives like UPI, ONDC, and India Stack, the country is leapfrogging in financial inclusion and e-commerce.
This track record supports Nageswaran’s confidence that short-term tariff shocks will not derail India’s momentum.
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The Global Context: Shifting Trade Dynamics
The US decision to impose tariffs is part of a broader trend of geopolitical realignments and protectionist trade policies. From Washington to Brussels, governments are increasingly using tariffs, subsidies, and trade barriers to secure domestic industries and reduce dependence on foreign supply chains.
For India, this creates both challenges and opportunities:
Challenge: Losing preferential access to the US market could hurt exports.
Opportunity: Rising global distrust of China gives India a chance to position itself as a reliable alternative manufacturing hub.
Thus, while tariffs may temporarily squeeze profits, they also highlight the urgency for India to seize the “China+1” opportunity.
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Policy Measures India Could Consider
Experts believe India may take the following steps in response to US tariffs and long-term structural needs:
1. Negotiating Trade Agreements – Accelerating Free Trade Agreements (FTAs) with the EU, UK, and Gulf countries to reduce dependency on US markets.
2. Export Incentives – Providing temporary relief packages for affected exporters.
3. Logistics and Infrastructure Push – Lowering transport costs through Gati Shakti and port modernization.
4. Strengthening MSMEs – Supporting small businesses that form the backbone of India’s export sector.
5. Encouraging FDI in Manufacturing – Attracting global giants to set up supply chains in India.
These steps align with Nageswaran’s vision of long-term resilience rather than short-term firefighting.
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Why Resilience and Adaptability Are Key
Global trade is entering a new era defined by uncertainty, fragmentation, and strategic rivalries. Countries can no longer assume a stable, rules-based order where globalization guarantees open markets.
For India, resilience and adaptability are no longer optional — they are survival strategies. This means:
Building economic buffers against shocks like tariffs, oil price spikes, or currency volatility.
Developing flexible business models that can pivot when one market closes.
Fostering a culture of innovation and problem-solving at every level — government, business, and workforce.
Nageswaran’s remarks underline this philosophy. India cannot control external shocks, but it can control how it prepares for and responds to them.
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Expert Reactions
Industry leaders and economists broadly welcomed the CEA’s assessment.
Export Associations said his reassurance will calm markets worried about prolonged disruptions.
Economists agreed that India’s structural reforms must accelerate to withstand future shocks.
Private Sector CEOs acknowledged the need for a strategic pivot toward technology and sustainability.
Some experts, however, cautioned that the one-to-two-quarter timeline may be optimistic, especially for small exporters who lack financial cushions. They stressed the importance of government support to ensure that MSMEs survive the tariff turbulence.
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Conclusion: India’s Path Forward
Chief Economic Advisor V Anantha Nageswaran’s remarks serve as both a reassurance and a warning. While US tariffs will not cripple India’s economy, the episode is a wake-up call to confront long-term structural weaknesses.
India’s growth story is still robust, but to sustain it, the country must:
Enhance competitiveness.
Diversify trade.
Build resilient supply chains.
Encourage innovation and technology adoption.
Empower the private sector to take bold, future-oriented steps.
In a rapidly changing global economy, India’s success will depend not on avoiding shocks but on turning them into opportunities for transformation. Nageswaran’s message is clear: short-term pain is manageable, but only long-term vision will secure India’s place in the global economic order.
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