Tariff Tug

The resurgence of US President Donald Trump and his aggressive tariff policy places India in a uniquely precarious yet opportune position.

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As the world's fifth-largest economy, India faces a fundamental choice: double down on protectionism or seize this disruptive moment to push bold, market-opening reforms. The stakes are high. Mr Trump's trade war rhetoric and punitive tariffs on trading partners offer India a second chance to integrate more deeply with global markets - provided it acts decisively. Historically, India has reformed when crisis forced its hand. In 1991, a balance of payments crisis sparked sweeping liberalization. Today, the global trade environment, battered by tit-for-tat tariffs and protectionist sentiment, presents a less obvious but equally pressing challenge. India's high average tariffs - around 12 per cent compared to China's 3 per cent and the US's 2.2 per cent - make it an outlier among major economies. While these duties have shielded domestic industries, they have also stifled competition, fostered inefficiencies, and left India with only a 1.5 per cent share of global exports. Prime Minister Narendra Modi's government has flirted with liberalization, cutting tariffs on select US goods ahead of high-level meetings with Mr Trump. But these are piecemeal gestures rather than a comprehensive reform strategy. India's current approach, oscillating between protectionism and reluctant concessions, risks undermining its credibility as a serious trade partner. If India is seen as pliable, making unilateral concessions to avoid retaliation, it may sacrifice long-term bargaining power. Yet, there is a clear strategic opening. As global supply chains shift - driven by geopolitical tensions, tariffs, and the search for alternatives to China - India could position itself as a manufacturing hub. It missed the earlier wave of low-end factory jobs that powered East Asia's rise, but opportunities remain in mid-level manufacturing, pharmaceuticals, electronics, and renewable te