By Swetha Anil Kumar
The penal tariff imposed on certain Indian imports will likely be withdrawn after November 30, signalling a potential easing of trade restrictions amid ongoing economic discussions, Chief Economic Adviser (CEA) V Anantha Nageswaran said on Thursday.
The reciprocal duty, currently at 25%, may be reduced to a band of 10–15%, the CEA indicated. Though he stressed this was his personal assessment and not based on a formal assurance, he added that the overall tariff dispute could see resolution within the next 8–10 weeks.
The top officials said developments were underway to improve the tariff tensions between India and the US.
The comments come just days after the meeting between India’s chief trade negotiator, Commerce Ministry’s Special Secretary Rajesh Agrawal and US Trade Representative for South and Central Asia Brendan Lynch in New Delhi.
Nageswaran, while speaking at an event organised by the Merchants’ Chamber of Commerce & Industry in Kolkata, said “All of us are already at work, and I will take some time to talk about the tariff here. The original reciprocal tariff of 25% along with an additional 25% penalty tariff came unexpectedly. In my view, the second 25% may have been influenced by geopolitical factors. However, given recent developments over the past few weeks, my instinct tells me-though I can’t cite a specific reason-that the penal tariff might no longer apply after November 30.”
He further added saying, “I do believe that there will be a resolution in the next couple of months on the penal tariff and hopefully on the reciprocal tariffs”, referring to the ongoing dialogue between India and the US.
To impose reciprocal tariffs on dozens of countries, President Donald Trump had invoked the International Emergency Economic Powers Act (IEEPA), a 1977 law crafted for sanctions and financial controls in times of foreign emergencies.
Trump had imposed 50 per cent tariffs, out of which 25% was reciprocal tariff and 25% for buying oil from Russia.
Analysts say that even a partial rollback could ease cost pressures and restore predictability in bilateral trade as the tariff regime has left some Indian products facing duties as high as 50%, squeezing margins for exporters in labour-intensive sectors such as textiles, engineering goods, and certain food products.