According to V Anantha Nageswaran, the Chief Economic Advisor to Prime Minister Narendra Modi, the 50 pc tariff imposed by US President Donald Trump on Indian goods can be counterbalanced by strong domestic demand and an increase in rural consumption.
Nageswaran stated that any job losses resulting from the US tariffs would be primarily contained to export-orientated businesses that are heavily reliant on the American market. He explained that these businesses have options to mitigate the impact.
Some may be able to identify new international markets for their products. Additionally, others might choose to take a long-term perspective, assuming the tariffs are a temporary measure, and therefore opt to retain their workforce.
He also highlighted that the potential negative effects of Trump’s tariffs could be compensated by a surge in domestic demand. He noted that India has experienced a favourable monsoon season, which is expected to boost the agriculture sector and, in turn, increase rural demand. Based on these factors, Nageswaran expressed confidence that any job losses would not be significant.
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Details on Donald Trump's Tariffs on India
Earlier this month, US President Donald Trump announced a 25 pc baseline tariff on Indian goods imported into the United States. Subsequently, he imposed an additional 25 pc tariff, specifically citing India's purchase of Russian oil amidst the ongoing conflict in Ukraine.
The Trump administration has warned that India could face secondary tariffs if it does not cease buying oil from Russia. White House economic advisor Peter Navarro reportedly stated that "the road to peace in Ukraine goes through Delhi."
In response, India has officially characterised the tariff as "unjustified".
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