V. Anantha Nageswaran highlighted that India’s strong domestic demand, bolstered by a favorable monsoon season and an increase in rural consumption, could serve as a cushion against the negative impact of higher tariffs. He explained that while the recent tariff measures announced by the United States might create challenges, their overall effect would be somewhat balanced. Job losses, he emphasized, would be limited primarily to export-oriented industries that rely heavily on the American market.
Earlier in the month, U.S. President Donald Trump announced a steep tariff hike, imposing a 25 percent base tariff on Indian goods, along with an additional 25 percent penalty on purchases of Russian oil. Trump justified this move by arguing that India’s continued imports of Russian crude indirectly supported the Ukraine war. The U.S. further warned that if India did not halt these purchases, additional secondary tariffs could soon follow.
In an interview with ANI, Nageswaran reassured that the resilience of domestic consumption would help soften the blow. A stronger rural economy, supported by better rainfall, could offset much of the pressure. He stated that the potential job losses arising from tariffs were not expected to be substantial, given that domestic growth drivers remain strong.
He also underlined that companies currently facing the brunt of these tariffs may explore alternative overseas markets to reduce their dependency on the United States. At the same time, many firms could adopt a more strategic approach by retaining workers, even in the face of uncertainty, if they believe the tariff issues will be resolved in the medium to long run.
On Friday, Nageswaran added that the tariff hikes might not last long, noting that both governments were engaged in discussions aimed at removing the 25 percent penal duties. These talks, he said, could eventually pave the way for a new bilateral trade deal that would stabilize the relationship and reduce the uncertainty weighing on exporters.
Turning to India’s economic performance, he referred to the country’s 7.8 percent GDP growth in the first quarter of 2026. He attributed this strong showing to rapid expansion in both manufacturing and services, coupled with higher government consumption. Unlike the previous year’s first quarter, which saw government spending in the negative zone, this year benefited from a more favorable base effect. Additionally, a lower GDP deflator, reflecting easing inflation, further supported the growth momentum.
Despite the pressures from the reciprocal tariffs imposed by the U.S., Nageswaran said that India’s growth trajectory remains resilient. Based on the current data, he confirmed that the government is maintaining its growth projection for the fiscal year between 6.3 and 6.8 percent.
At the same time, he cautioned that the months ahead could present challenges, especially in the external sector, where tariff barriers could drag down export growth. A slowdown in exports, he warned, might also affect domestic production and capital formation. Even so, he stressed that such effects would most likely be contained and temporary. Any slowdown expected in the second or possibly third quarter would be short-lived, as tariff uncertainties were unlikely to persist for too long.
