US may remove 25 percent penal tariff on India after Nov 30, says Chief Economic Advisor

Nageswaran made the remark at an event which was organised by Merchants' Chamber of Commerce & Industry in Kolkata.

The advisor said as quoted by NDTV, "All of us are already at work, and I will take some time to talk about the tariff here. Yes, the original reciprocal tariff of 25 per cent plus the penal tariff of 25 per cent both were not anticipated.

"I still believe that geopolitical circumstances may have led to the second 25 per cent tariff, but considering recent developments in the last couple of weeks and so on, I do believe that and I have no particular reason to say so it is my intuition that I do believe the penal tariff will not be there after November 30."

"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," he added.

Over the last few days, US President Donald Trump made a number of outreaches to India's Prime Minister Narendra Modi, who held his ground firm even when the White House slapped New Delhi with a 50 percent tariff on Indian goods.

After a number of press and social media statements, Trump dialled PM Modi on Tuesday on the eve of the Indian leader's 75th birthday.

The call undoubtedly was not restricted to only birthday wishes but the patch-up of the two countries.

Modi thanked Trump for extending wishes ahead of his 75th birthday, using the occasion to reaffirm India’s commitment to deepening ties with Washington and voicing support for American efforts to resolve the Ukraine conflict peacefully.

"Like you, I am also fully committed to taking the India–US Comprehensive and Global Partnership to new heights. We support your initiatives towards a peaceful resolution of the Ukraine conflict," PM Modi said in a post on X.

Washington has imposed a 50 per cent duty on Indian imports, along with an additional 25 per cent levy on New Delhi’s purchase of Russian oil — among the highest tariffs faced by any country.

Tensions escalated further last week when US Commerce Secretary Howard Lutnick warned that India risked losing access to the American market if it did not step up imports of US-grown corn.

Amid these strains, the two sides on Tuesday resumed talks on a long-pending bilateral trade agreement, the first substantive engagement since the punitive tariffs were imposed.

The discussions, held in New Delhi between Assistant US Trade Representative Brendan Lynch and Commerce Ministry Special Secretary Rajesh Agrawal, were described by Washington as “positive.”

Officials on both sides said the talks signalled an intent to narrow differences and revive momentum in the economic partnership, even as both governments grapple with disagreements on tariffs, energy trade, and agricultural access.

US-India tariff war

The Trump administration, which was earlier viewed as India-friendly, has slapped a 25 percent tariff on the South Asian country for its high tariffs on American exports and another 25 percent for purchasing oil from Russia, which is fighting a war against Ukraine.

Since the conflict in Ukraine began in early 2022, India significantly increased its imports of discounted Russian crude oil—now comprising over 30 percent of its total crude imports.

Indian refineries then export refined petroleum products globally, which critics, especially in the U.S., argue indirectly supports Russia’s war effort by funneling money into its economy.

In response, the US proposed tariffs and trade measures targeting India’s exports to discourage this behavior.

India said that, like any major economy, it will take all necessary measures to safeguard its national interests and economic security.

Modi unequivocally said India won't compromise on the interests of farmers, fishermen and livestock rearers.