Exports may not be an effective engine for growth in the near future because global trade is projected to slow and US tariffs may make it more challenging, Nageswaran said at the SBI Banking and Economics Conclave.
“At this stage, it is difficult to give quantifiable answers on Trump tariffs. We know that India has a bilateral trade surplus with the United States – both in goods and services – so there will be pressure, but some of it also works to our advantage because in some of those areas, we may have to reduce some duties to be competitive as well,” Nageswaran said.
He held out hope for India as tariffs get recalibrated and the trade map becomes more predictable.
“So, I don’t think it would be necessary for us to assume that it will be negative for India and right now, we don’t have orders of magnitude. I don’t think we should be too exercised about various scenarios and building theoretical constructs as to how much it will impact export growth,” he said.
The US is among the six countries that India has a trade surplus with. India’s trade surplus with the US was $21 billion during the first half of calendar 2024.Nageswaran said India has to anyway be prepared for slower trade with Europe and China as growth in both countries is expected to moderate.”Exports per se may not be the most effective growth engine of India in any case because it is going to be a hard grind due to the new tariffs that may or may not come. This presidency may also be important in keeping energy prices affordable and we need that to be able to grow and generate the resources to fund our energy transition to invest in new technology and R&D, so the positives may end up being better than the negatives,” he said referring to President-elect Trump’s stance on forced energy transition.
On pollution
Nageswaran also said that India’s dual policy focus on promoting private transport and incentivising specific crops, like paddy and wheat, has significantly contributed to exacerbating air quality challenges.
“The massive encouragement we have given to private modes of transport and the policies with respect to the farm sector, which have incentivised only foodgrains – paddy and wheat – and not other forms of agricultural products, have combined to play this role in terms of keeping our air quality somewhat on the lower side,” he said.