CEA Nageswaran Warns: Prolonged Tariffs Threaten India's Growth and Employment Future

India's Chief Economic Advisor (CEA) V Anantha Nageswaran has issued a stern warning regarding the continuation of additional tariffs, particularly the 25% levy on specific imports, beyond the current fiscal year. Speaking at the prestigious Express Adda, Nageswaran underscored the potential for significant challenges to the nation's employment generation and overall economic growth if these tariffs persist into the next fiscal.

His insights offer a crucial perspective on the delicate balance India must strike between protecting domestic industries and fostering a competitive, growth-oriented economy.

Nageswaran meticulously explained that while such tariffs are often implemented with the noble intention of safeguarding local manufacturing and employment, their prolonged application can inadvertently become a double-edged sword.

The core of his concern lies in the inflationary pressures that these additional duties exert. By increasing the cost of imported raw materials and intermediate goods, these tariffs inevitably push up production costs for a vast array of domestic industries, especially hitting the Micro, Small and Medium Enterprises (MSMEs) disproportionately.

The CEA highlighted that for every industry benefiting from tariff protection, there are several others that use those protected goods as inputs.

When input costs surge, these dependent industries face reduced competitiveness, both domestically and in international markets. This not only stifles their capacity for expansion and innovation but also directly impacts their ability to create new jobs or even sustain existing ones. The ripple effect can be substantial, hindering India's ambitious growth targets and its aspiration to become a global manufacturing hub.

Addressing the broader economic landscape, Nageswaran acknowledged India's robust growth trajectory, projecting a healthy expansion for the current fiscal year.

However, he cautioned against complacency, pointing to persistent global uncertainties, geopolitical tensions, and the escalating challenge of climate change as significant headwinds. He emphasized that sustained, high-quality growth demands continuous structural reforms and a policy environment that encourages competitiveness rather than merely protecting specific sectors in isolation.

His remarks at the Express Adda serve as a vital call for policymakers to carefully re-evaluate the long-term implications of trade protectionist measures.

The dialogue he initiated stresses the importance of fostering an environment where Indian industries can thrive not just through protection, but through enhanced productivity, innovation, and global competitiveness. The challenge, as Nageswaran articulated, is to find that sweet spot where domestic industries are supported without inadvertently stifling the broader economic engine of growth and employment that India so desperately needs to continue its upward ascent.