India likely to resolve tariffs issue with US within two months: CEA

Chief Economic Adviser CEA V Anantha Nageswaran on Thursday expressed optimism that a resolution to the tariffrelated issues with the United States could be reached within the next eight to ten weeks reported the PTISpeaking at an interactive session hosted by the Bharat Chamber of Commerce Nageswaran said ldquoUnderneath the surface conversations are going on between the two governments My hunch is that in the next eight to ten weeks we will likely see a solution to the tariffs imposed by the US on Indian goodsrdquo according to the PTIThe United States had imposed an additional 25 per cent tariff on Indian goods from August in response to Indiarsquos purchase of Russian oil bringing the total levy on certain products to 50 per centThe CEA warned that if these tariffs remain in place Indian exports to the US could declineDescribing India as an aspirational lowermiddleincome economy Nageswaran highlighted that the real GDP growth for the first quarter of the current financial year stood at 78 per cent He added that postpandemic India has outpaced many other economies in terms of recovery and growth as per the PTIHe expects the manufacturing services and agriculture sectors to play a key role in driving economic progress over the next two years Consumption and investment he said will continue to be the main pillars of growthNageswaran noted that India has a strong debttoGDP ratio generating more GDP per US dollar of debt compared to many other countries a sign of efficient capital utilisationHe pointed out that rural demand remains resilient while urban demand is improvingThe recent reduction in GST rates he said will result in more disposable income in the hands of consumers potentially boosting urban consumption the news agency reportedThe CEA also highlighted that credit to the MSME sector is on the rise while lending to large industries is undergoing structural change He remarked that resource mobilisation today is well supported by various financial channelsIndias external sector also remains solid despite global headwinds with robust trade activity and healthy foreign exchange reserves The current account deficit has eased to just 02 per cent of GDP in the first quarter of FY 202526Regarding the rupee Nageswaran said ldquoThe rupee is depreciating against the US dollar But given the underlying strength of the economy I believe the rupee is likely to stabilise and strengthen in the long termrdquo as per the PTIOutlining the governmentrsquos policy priorities he stressed continued emphasis on capital expenditure incentives for private investment and systemic deregulationInfrastructure development particularly in ports and airports has improved ensuring that economic growth does not lead to overheating he saidTouching upon Indiarsquos trade with China he noted that imports are largely composed of capital and intermediate goods He urged the Indian private sector to increase investment in innovation and RampDOn the artificial intelligence AI Nageswaran remarked that its impact has been limited so far He cautioned that entrylevel coding jobs may be at risk but overall employment effects are manageable provided that workers upskill and adapt the PTI reportedwith PTI inputs