NEW DELHI: With the US imposing steep tariffs on Indian exports, 16th Finance Commission chairman Arvind Panagariya on Friday urged the government to move swiftly on long-pending economic reforms and clinch a free trade agreement (FTA) with the European Union, calling the current situation “practically like the 1991 moment” for the economy.
Speaking at the Business Today India@100 event, Panagariya said the tariff shock from the US – India’s largest export market – should serve as a catalyst for reforms in land, labour, and trade policies to strengthen competitiveness.
“At this pivotal moment, we should aggressively pursue the FTA with the EU. As one market (US) seems to be closing, we need to open another wider market,” he said. He added that supply chains could be quickly realigned towards destinations offering lower tariffs, with entrepreneurs adept at making rapid adjustments.
Panagariya dismissed US President Donald Trump’s “dead economy” jibe, saying: “You don’t grow at 7 per cent plus if that is the case. Maybe dead bodies do move.”
Calling for urgent implementation of the labour codes already passed by Parliament, he said reforms in land markets were equally critical, particularly to prepare cities for business alongside improving citizens’ lives. He also pushed for cutting the tangle of central and state regulations that restrain exports.
While acknowledging that India has weathered bigger crises, Panagariya stressed that the current tariff challenge offers a rare opportunity to accelerate growth. “If we set our own house in order, there is nothing stopping our trajectory. I see considerable room for acceleration,” he said.
Several global agencies have warned that the US tariff hike could shave up to 0.5 percentage points off India’s FY26 growth forecast of around 6.5 per cen.
