25% US Penal Tariff on India Likely Removed After Nov 30: Top Official

Chief Economic Adviser V Anantha Nageswaran on Thursday expressed hope that the penal tariff on certain imports could be lifted after November 30, indicating a possible easing of trade restrictions amid ongoing economic talks.

Speaking at an event organized by the Merchants' Chamber of Commerce & Industry in Kolkata, CEA V Anantha Nageswaran said, "We are already at work, and I will take some time to discuss the tariff here. The original reciprocal tariff of 25% along with the additional 25% penal tariff were not anticipated. While geopolitical factors may have prompted the second 25% tariff, considering recent developments over the past few weeks, my assessment is that the penal tariff is likely to be withdrawn after November 30."

He expressed confidence that a resolution on the penal tariff, and potentially on the reciprocal tariffs, could be reached in the next few months, citing ongoing India-US discussions.

Highlighting India’s export performance, he noted that exports, currently at USD 850 billion annually, are on track to reach USD 1 trillion, accounting for 25% of GDP and reflecting a robust, open economy.

Earlier, former US President Donald Trump had used the International Emergency Economic Powers Act (IEEPA) of 1977, originally designed for sanctions and financial controls during foreign emergencies—to impose reciprocal tariffs on several countries. India initially faced 25% tariffs, which were later raised to 50%.

The higher duties now apply to all Indian products entering the US for consumption or withdrawn from warehouses, bringing the 50% tariffs on India’s imports into effect.

However, the US Customs notification clarified that while most Indian goods will face the increased tariffs along with any other applicable charges such as antidumping or countervailing duties, certain products are exempted.

Exemptions include items specifically listed in the US tariff schedule. Products made of iron and steel, along with some of their derivatives, will not incur the additional duty. The same exemption applies to aluminium products and their derivatives.

Passenger vehicles, including sedans, SUVs, crossovers, minivans, cargo vans, and light trucks—and their spare parts are also excluded. Semi-finished copper products and some copper-intensive derivatives are similarly exempted.

In summary, although the 50% tariff broadly affects Indian imports, key categories such as iron, steel, aluminium, vehicles, vehicle parts, and copper products are not subject to the higher duties.

According to the Global Trade Research Initiative (GTRI), around 30.2% of India’s exports to the US, valued at USD 27.6 billion, will continue to enter duty-free despite the tariff hike.

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