India-US ‘unsettled relations’, energy prices and lack of ‘AI play’ pose economic headwinds: CEA Nageswaran

India’s economy is facing near-term headwinds from “unsettled relations” with the United States, global energy prices and the lack of an “AI play” in the country, Chief Economic Adviser V. Anantha Nageswaran said on Friday, according to Reuters.

Additionally, speaking at the State Bank of India’s Banking and Economics Conclave in Mumbai on Thursday, Nageswaran described India-US relations as being in an “uneasy equilibrium” as trade-related differences between the two countries persist.

Also Read: India must boost manufacturing, FDI and AI-ready jobs to become developed nation: CEA Nageswaran


“There is this issue of unsettled relationship with the United States, starting from the tariff-related issues last year, which are still continuing,” Nageswaran said.

His remarks come as uncertainty continues to hang over India-US trade ties despite New Delhi and Washington reaching an interim trade agreement earlier this year.

India now faces a fresh tariff risk after a new US law gave President Donald Trump the authority to impose tariffs of as much as 100% on countries that purchase Russian oil and gas. The measure adds another layer of uncertainty as India and the US continue negotiations over a final tariff rate.

Also Read: India scores high on latest WEF standings: Growth outlook strongest, but some ground lost with MNCs

Nageswaran also linked the trade and energy pressures facing India to a broader shift in the global economic and geopolitical landscape, where countries are increasingly being pushed to choose between competing blocs.

“India, given its geography and its size, cannot obviously belong to any bloc,” Nageswaran said.

Maintaining that independence, however, could come with economic costs, including higher energy prices and periodic disruptions to supplies, he said.

Alongside uncertainty over India-US ties and energy prices, Nageswaran identified the absence of a significant “AI play” in India as another near-term challenge for the economy.

With inputs from Reuters and Bloomberg