RETHINKING INDIA'S TRADE STRATEGY

INDIA MUST LOWER TARIFFS, EMBRACE HIGH-STANDARD FTAS AND ALIGN TRADE POLICIES WITH SHIFTING GLOBAL DYNAMICS TO THRIVE IN THE TRUMP 2.0 ERA

- AMITA BATRA

The most significant development of the past year likely to have repercussions in 2025 and well beyond is the outcome of the US presidential election. President-elect Donald Trump, set to assume office on January 20, is known to follow a bilateral, transactional approach rather than a multilateral, rules-based one in most policy domains. It is no different for the US trade policy that has, over the past seven years, come to be defined by selective protectionism and politically motivated use of tariffs. A further intensification of these trends under Trump 2.0, particularly as regards the 'country of concern' China, will not be surprising. However, the recent announcement of higher tariffs on friendly allies like Mexico and Canada, both members of the North American trade bloc, presents an additional concern of unpredictability and even a likely unravelling of institutional arrangements that the US is a member of, including those designed by President Trump during his first term. In this context, India will need to have a trade strategy that can take advantage of the opportunity that a heightened US-China trade and technology competition may present while also tackling an increasingly uncertain global trade environment. This is particularly relevant given that strong growth of trade, especially exports, is necessary to sustain India's rapid growth towards achieving its vision of 'Viksit Bharat'.

With its impressive growth and stable macro fundamentals, India has an advantage in the 'China Plus One' investment diversification strategy of multinational corporations (MNCs).