NEW DELHI – The lack of an immediate trade agreement between India and the United States will not negatively affect India's economic expansion, according to Arvind Panagariya, Chairman of the Sixteenth Finance Commission and former Vice Chairman of NITI Aayog. While acknowledging that a deal would offer additional benefits, Panagariya emphasized that its absence merely maintains the status quo rather than worsening India’s economic position.
No Adverse Impact on India's Economy
Speaking to Business Today on the sidelines of the Kautilya Economic Conclave 2026, Panagariya remarked, “It’s status quo. It's an advantage which would have accrued, which will not accrue. It doesn't make things worse but the deal would make it better. On economic growth, I sense no adverse impact.” This statement comes after US Trade Representative Jamieson Greer indicated that a trade deal between the two nations is not imminent, despite ongoing bilateral negotiations.
Concerns Over Potential US Tariffs
Adding to the trade landscape uncertainty, Panagariya addressed concerns regarding the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026. This US legislation, passed by the House of Representatives on September 16, empowers the US President to impose tariffs of up to 100% on goods from the five largest buyers of Russian crude oil and natural gas – a group that includes India.
Panagariya expressed hope that US President Donald Trump would not activate these tariffs against India, citing India's crucial strategic relationship with the US. “The US also knows that if Russian oil supplies were drawn, you know, that would have serious implications for the United States itself as well,” he noted.
Tariff History and Future Outlook
The prospect of new tariffs adds to a recent history of US duties on Indian exports. In July, the US imposed a 10% tariff on certain Indian goods, citing concerns over forced labor, after the US Supreme Court struck down previous reciprocal tariffs. India remains the largest export destination for the US, and exporters are closely monitoring how the US administration will proceed on these critical trade issues.