Prime Minister Narendra Modi’s chief economic advisor, V Anantha Nageswaran, has stated that the 50 percent tariff imposed by US President Donald Trump on Indian goods could be cushioned by strong domestic consumption and growing rural demand.

Nageswaran noted that the adverse impact on employment would be largely restricted to export-oriented sectors with significant exposure to the US market.

“There will be offsetting effects also. Yes, job loss will be contained to those export-oriented units that are very highly exposed to the United States. Second, some of them will be able to find alternative markets, and some of them may also decide to take a medium to long-term view that if the ongoing uncertainties related to the tariffs are going to be contained and temporary, they may choose to look beyond that and not necessarily let go of their workers,” he told news agency ANI.

He further highlighted that any losses stemming from the US tariffs might be balanced out by robust domestic demand, particularly driven by a good monsoon and the resultant increase in agricultural and rural consumption.

“But apart from that, I would also like to point out to you that there could be compensation coming from higher domestic demand. We have had a very good monsoon season. Agriculture and rural demand will be rising… So it is not necessary that job losses, if they happen, will be of a significant nature,” he added.

Earlier this month, President Trump announced a 25 percent base tariff on Indian imports to the US, followed by an additional 25 percent tariff linked to India’s continued purchase of Russian oil, amid the ongoing war in Ukraine.

The Trump administration has warned that India could face secondary sanctions if it fails to reduce its reliance on Russian energy. White House economic advisor Peter Navarro remarked that “the road to peace in Ukraine goes through Delhi.”

India has condemned the tariffs, calling them “unjustified.”