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There’s ambiguity on the applicable tariffs on several products. India should sort this out before finalising a trade deal with the US.

The US has brought uncertainty into global trade given the announcements, amendments, postponements, legal blockades, and legal backings to reciprocal tariffs imposed on goods imported from across the world. As the largest economy in the world, these tariffs stand to reduce the cost-competitiveness of products exported by the US’s major trading partners. Naturally, all countries are keen to assess the impact these tariffs are likely to have on their exports, and are vying for a bilateral trade deal before the July 9 deadline runs out.

Country specific reciprocal tariffs announced on ‘Liberation Day’ of April 2, and due to take effect from July 9 have taken the limelight, which includes the 26 per cent additional tariff imposed on imports from India. However, tariff orders and proclamations over the last few months list product-specific exceptions which are already in effect. These announcements have listed products that are either exempted from tariffs (including semiconductors), or which attract uniform additional tariffs from most countries, including India, and they have been identified as: automobile, automobile parts, steel, steel derivatives, aluminium, or aluminium derivatives. The latest proclamation, effective June 4, doubled the additional tariff on steel and aluminium products to 50 per cent, from 25 per cent announced previously.

All orders list the product codes to which the tariffs apply. Still, it is difficult to ascertain the tariff applicable on several products. Surely, tariffs are repeatedly changing, but there are also overlapping products in multiple proclamations rendering ambiguity on applicable tariffs on at least 105 US tariff lines. There is overlap of another 54 products in two separate proclamations, although they are exempted from additional tariffs in both.

Additional uncertainly

A detailed analysis of the additional tariffs applied across all product codes (at US’s tariff-line-level) highlights the tariff dilemma and the additional uncertainly brought into global trade, affecting imports into the US from across the world, including from India.

There are 32 products that are announced as being exempted from tariffs (that is, 0 per cent additional tariff), but are also identified as automobile part and aluminium derivative — thereby attracting a 25 per cent tariff for the former; and even a 50 per cent tariff on the value of products’ aluminium content — which can be 0 per cent if the product is made using aluminium articles that are smelted and cast in the US (or 200 per cent if from Russia).

Moreover, 73 products are identified as a combination of aluminium, aluminium derivative, steel derivative, and/or automobile-part — where the same product attracts 25 per cent additional tariff as an automobile part, 50 per cent tariff as an aluminium/steel product, as well as 50 per cent tariff on the value of aluminium/steel, with special conditions applicable for 0 per cent tariff as well.

A supplementary guidance gives precedence to automobile part tariffs over other overlapping tariffs, and suggests that aluminium and steel tariffs stack on each other. However uncertainty continues around automobile parts, with potential for tariffs on more automobile parts, and there even being scope for ‘tariff offsets’ if final automobile assembly occurs in the US.

Subjectivity surrounds steel and aluminium tariffs too — due to tariff applied on the inherent value of metal (conditional on its source), and country-specific reciprocal tariff on the non-metal content of the product. Exporters of certain aluminium/steel products, who may have decided to tweak their supply chains and decided to procure aluminium/steel articles from the US (to be eligible for 0 per cent tariff post March 12), could now be in a fix — since effective June 4, this special condition stands revoked on 62 products.

Under their trade agreement with the US, automobile parts and metal product tariffs may be different for Canada and Mexico. Aluminium and steel imports from the UK remain at 25 per cent, but may increase post July 9.

Serious ramifications

Can we therefore estimate the quantum of US’s imports which are completely exempted from tariffs, what the exact tariffs on products are, and attempt to estimate the impact of tariffs on the trading partner’s exports? Appears tough. However, for businesses, tariff uncertainties can have serious ramifications — uncertainties stemming from how much their product does (and will) cost in the US, how much they should produce, how many people they should employ, and all this in turn having consequences on export performance, growth, and labour-market conditions in the exporting countries.

India is in the process of finalising a trade deal with the US, where such uncertainties should be discussed and avoided, to bring better clarity on the export front — benefiting firms already engaged in exports and those which may be looking to export in the future.

The writer is Fellow at National Council of Applied Economic Research (NCAER). Views expressed are personal.

India’s economic growth over the past few decades has been impressive, but the benefits have not reached everyone equally. While urban areas and formal sectors have prospered, many in rural and informal economies remain excluded. The long-anticipated ‘trickle-down’ effect has not materialized, emphasizing the need for inclusive and employment-oriented policy interventions.

Technological advances, especially Artificial Intelligence and digitalization, are reshaping the job market. These changes demand a workforce that can adapt quickly, highlighting the urgency of robust skilling and reskilling systems. In this context, one of the most promising developments has been the rise of India’s start-up ecosystem. Now the third-largest globally, it has driven innovation, created jobs, and become more inclusive, with increasing participation from women and entrepreneurs beyond metropolitan centers. Yet, while the momentum is encouraging, deeper structural challenges remain.

India’s start-ups symbolize opportunity but can- not address the full scale of the country’s employment needs. Each year, millions of individuals enter the labour force, yet start-ups account for only a small fraction of the jobs required. To bridge this gap, India must also prioritize labour intensive sectors like agriculture, construction, manufacturing, and essential services. These areas hold far greater potential to generate employment for low- and mid- skilled workers.

Another challenge is the disconnect between the skills needed in high-growth sectors and the current capabilities of much of India’s workforce. Participation in digital and innovation-led industries typically requires technical proficiency, digital literacy, and soft skills, all of which remain unequally dis- tributed. The digital divide, coupled with poor-quality education and fragmented skill development pro- grammes, restricts access for many. If these barriers are not addressed, the gains from economic growth risk remaining concentrated among urban, educated, and already advantaged populations.

Beyond the private sec- tor, government efforts to boost employment are also key. Over the years, various policy incentives, funding mechanisms, and public- private partnerships have helped support India’s entrepreneurial landscape. However, these initiatives must be part of a broader, integrated employment strategy. The threat of automation looms large across sectors, especially for routine or manual jobs. This reinforces the need to invest in human capital through quality education, vocational training, and lifelong learning, enabling India’s workforce to remain relevant and resilient.

At the same time, India continues to spend significantly on social welfare and employment schemes. Pro grammes like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) offer crucial income support in rural areas. Yet, challenges such as delayed wage payments and underfunding persist. The National Rural Livelihoods Mission has empowered many rural women through self-help groups, but scaling these efforts to generate sustained, higher-income activities remains difficult.

Skill development schemes, though well-intentioned, frequently struggle with poor industry linkages, limited tracking, and inadequate post-training support. These issues point to a broader gap between the ambition of employment programmes and their actual outcomes. Substantial budgetary al- locations toward employment, agriculture, and food security are encouraging, but without alignment to measurable goals and co- ordinated execution, their transformative potential remains underutilized

Local governance also plays a crucial role in bridging the gap between national policy and grassroots out- comes. The constitutional amendments that created Panchayati Raj Institutions were designed to empower decentralized decision- making. However, many local bodies still operate with limited administrative and financial capacity. Women- led self-help groups, which have shown positive results in promoting economic inclusion, need stronger links to formal markets, digital tools, and skill ecosystems to scale their success and expand opportunity.

India’s young demographic continues to offer a significant opportunity, but it also presents urgent challenges. A large proportion of the workforce remains informally employed in low- productivity sectors. As fertility rates decline and the population ages, India’s demographic dividend is finite. To prepare for this transition, the country needs forward-looking policies that promote job creation in sectors such as agro processing, livestock, textiles, renewable energy, and logistics. These industries not only offer employment at scale but also align with sustainable growth goals.

Tackling the twin challenges of unemployment and underemployment requires a dual-track approach. On one side, India must expand access to quality education and technical training to enable more people to participate meaningfully in the knowledge economy. On the other, it must invest in sectors with high employment elasticity to create widespread job opportunities. This includes targeted infrastructure in- vestments, support for rural enterprises, and promotion of region-specific service sectors.

Such a balanced approach can harmonize short-term job creation with long-term productivity gains. A coherent employment strategy should prioritize inclusive growth, focusing on both economic efficiency and equity.

India has made substantial progress in reducing poverty and expanding economic opportunities, but further strides demand structural reforms and inclusive planning. Outcome-oriented targets—such as reducing poverty incidence to below 10 percent by 2030 and narrowing income inequality—can serve as guiding benchmarks. By aligning national economic strategies with grassroots empowerment, strengthening institutions, and bridging skill gaps, India can ensure that growth becomes a shared experience.

The task ahead is clear: transform economic dynamism into meaningful livelihoods. A future-ready India is not just one that grows rapidly, but one that uplifts all its people through opportunity, resilience, and shared prosperity.

The author is with NCAER, New Delhi. Views are personal.

Although digital means have helped facilitate business transactions, the advent of UPI is yet to make a pronounced change in the manner in which many Indian firms handle their day-to-day transactions, considering that many of them have still continued to rely on petty cash

An active area of research is the cash holding behaviour of firms. Our primary intent is to understand whether firms’ behaviour is changing due to the advent of digital public infrastructure (DPI). To what extent do firms rely on digital transactions for payments and receipts? Has it helped improve their ease of doing business? The question is important, since it has a direct implication on the accessibility and reliability of DPI in the country, which in turn can facilitate expansion of domestic businesses and help propel India’s economic growth.

The NCAER-NSE Business Expectations Survey (BES) is a quarterly survey of firms across six large urban Indian cities: Delhi-NCR in the north, Bengaluru and Chennai in the south, Kolkata in the east, and Mumbai and Pune in the west. It has been conducted since 1991 to assess business sentiments across the four regions of India. In its 127th round (October-December 2023), the BES surveyed 485 firms from the aforementioned six cities. Firms were asked:

1. What percentage of their transactions (payments and receipts) were done through digital means
2. If they kept petty cash in order to manage working capital
3. If extensive use of Unified Payments Interface (UPI, such as Google Pay, Paytm, honepe) reduced their reliance on petty cash

It was found that a majority of firms relied on digital means for settling all kinds of payments and many types of receipts, for more than 60 per cent of their transactions. The share of firms reporting more than 60 per cent of digital transactions was marginally lower than 50 percent for two types of receipts: “receipts from selling on e-Commerce platforms” and “getting loans”.

To the extent the firms used digital transactions, performing such digital transactions was considered useful for 74 per cent of firms, since it helped improve their ease of doing business. This perception, though, was found to be more prominent among large firms (considering that 50 per cent of firms with annual turnover greater than Rs 100 crore stated this), as against smaller firms (about 38 per cent of firms with annual turnover less than Rs100 crore stated this).

The survey found that digital means were not relied upon for all transactions, and that several firms relied on digital transactions for selective purposes only. It suggests that cash transactions continue to be important. Rather, 69 per cent of firms (in particular nearly 79 percent of smaller firms, as against 56 per cent of larger firms) kept “petty cash” to manage their working capital. There was a wide regional variation, with the incidence of keeping petty cash being highest in the east (99 per cent), followed by west (72.8 per cent), north (66.9 per cent) and south (40.3 per cent).

Well, then did UPI reduce the firms’ reliance on petty cash for day-to-day transactions? The perception is divided. UPI reduced the reliance on cash transactions for 44.5 per cent of firms, with the incidence being the highest in the north (72.6 per cent), and for the majority of smaller firms across the regions (52.5 per cent).

Overall, although digital means have helped facilitate business transactions, the advent of UPI is yet to make a pronounced change in the manner in which many Indian firms handle their day-to-day transactions, considering that many of them have still continued to rely on petty cash (especially those from the east and west). 

Bhandari is a Professor, Dayal and Sahu are Fellows and KS Urs is an Associate Fellow at NCAER. We thank Piyali Majumdar, Visiting Assistant Professor, IIM Rohtak for her inputs in the designing of the questionnaire. Views are personal and do not reflect that of the organisation.

Water must be treated as a finite economic resource, not a limitless political entitlement. This requires tough reforms.

Water underpins nearly every aspect of human well-being, from food security and sanitation to clean energy and public health. Yet, as cities expand, industries grow, and agriculture continues to dominate water use, we are confronting a sobering reality. In many parts of the world, water demand now exceeds what nature can sustainably supply. In India, farming remains the largest consumer, but domestic and industrial use is rising fast. Although India supports nearly 18 per cent of the global population, it possesses only 4 per cent of the world’s freshwater resources. A significant portion of this limited supply, ranging from 78 to 90 per cent, depending on the source, is consumed by agriculture alone. The result is a widening gap between what we need and what we have.

India’s emergence as a global agricultural leader is undeniable. It is the world’s largest producer of milk and spices, and the second-largest producer of fruits, vegetables, and fish. But this success hides a deeper crisis: Our water resources are being depleted faster than they can be replenished.

Over 80 per cent of India’s freshwater withdrawals go to agriculture, much of it lost to inefficient and unsustainable use. In Punjab, groundwater levels are falling by more than one metre every year, driven by the expansion of paddy cultivation and free electricity. According to the Central Ground Water Board, 78 per cent of Punjab’s administrative blocks are now over-exploited, up from 50 per cent in 2004. India is, quite literally, eating its way into a groundwater emergency.

What makes this worse is that our input-intensive, water-thirsty model isn’t even delivering on its core promise, that is, nutrition. Despite achieving food self-sufficiency, nutrition outcomes remain poor. NFHS-5 data show that 35.5 per cent of children under five are stunted, 32.1 per cent are underweight, and 16.6 per cent of the population remains undernourished. This mismatch between food security and nutritional security reflects a deeper flaw: Our incentives prioritise calorie-rich crops like rice and wheat, backed by water subsidies, at the cost of more nutritious, climate-resilient alternatives.

Irrigation, often seen as part of the problem, can also be part of the solution, if managed right. Beyond boosting yields, smart irrigation allows diversification into pulses, vegetables, and oilseeds, which improves household nutrition. It ensures fodder for livestock, raises rural incomes, and reduces distress migration. If used wisely, irrigation can help India grow not just more food, but better food.

The roots of the imbalance lie in flawed policy choices. In Punjab, the Green Revolution displaced traditional crops with paddy, and free electricity drove indiscriminate use of deep tubewells. In Maharashtra, sugarcane, grown on just 4 per cent of agricultural land, uses over 70 per cent of the state’s irrigation water. The impact is especially severe in drought-prone districts like Solapur. Gujarat, however, offers a model of reform. The Jyotigram Yojana, launched in the early 2000s, separated agricultural and domestic power feeders and introduced metered irrigation supply. The result — a 20 per cent drop in groundwater extraction and wider adoption of micro-irrigation in water-scarce regions like Saurashtra and Kutch.

A two-pronged approach

India needs a two-pronged approach: Increase water availability in underused regions like eastern India, and sharply reduce demand in over-extracted zones, especially the northwest.

First, we must rethink incentives. Minimum support prices (MSPs) should be aligned with agro-ecological realities. Supporting millets, pulses, and oilseeds through procurement in rainfed areas can align sustainability with dietary diversity. The 2023 declaration of the International Year of Millets was a welcome step, but it must be backed by consistent fiscal support, market access, and consumer awareness.

Second, we need smarter pricing of water and electricity. Though politically difficult, pilot projects suggest farmers do respond to price signals if better options are available. In Andhra Pradesh, prepaid smart meters on pumps led to a 15 per cent drop in electricity use and greater adoption of drip systems. When paired with efficient technology, pricing can nudge behaviour without coercion.

Third, India must scale up micro-irrigation. Despite 74 million hectares under irrigation, only 12 per cent is covered by drip and sprinkler systems. These can save 30 to 70 per cent of water depending on the crop and terrain. The main barriers, high upfront costs and limited awareness, can be overcome with public-private models, equipment leasing, and targeted subsidies for small and marginal farmers.

Fourth, and perhaps most crucial, is investing in farmer-led water literacy. Reforms will fail unless farmers change how they perceive and value water. Many still equate abundance with security, unaware that overuse today threatens tomorrow’s resilience. Community-led initiatives like water user associations, participatory irrigation management, and groundwater audits, as in Maharashtra’s Jalyukta Shivar Abhiyan, can embed conservation into daily practice and foster collective action.

India cannot resolve its food challenge without fixing how it uses water. Water must be treated as a finite economic resource, not a limitless political entitlement. This requires tough but essential reforms — rethinking subsidies, realigning procurement, pricing inputs rationally, and building trust with farmers.

In an era of rising climate uncertainty, India must shift from growing crops based on political arithmetic to those based on hydrological logic and nutritional need.

The writers are associated with the National Council of Applied Economic Research. Views are personal