Sputtering Ahead

India must re-energise its Make in India campaign to take on global trade headwinds. Otherwise, it will continue to suffer from bullying by superpowers

- Devabrata Dutta

The Narendra Modi-Donald Trump bromance has hit the pause button.

The year, however, started off well with Modi's visit to the US in February bolstering ties in a number of critical areas. Ties between the two countries were bolstered following Vice-President JD Vance's India visit in April.

However, from the middle of the year bilateral ties have been spiralling down. India is one of the few countries to have been battered by Trump's tariff blitzkrieg.

Unhappy over India's decision to maintain its energy ties with Russia, Trump imposed a 25% additional 'penalty' on August 6, bringing tariffs on some Indian exports to the US to 50%. A planned August visit by US trade negotiators was abruptly called off, delaying talks on a much-anticipated bilateral trade agreement (BTA) further.

The question for India is how to turn this fraught situation into an opportunity—to reform and reinforce its economy so that it can deal with global superpowers from a position of strength.

Home Truths

For India to face up to Trump's (or any other country's) bullying it must confront some economic realities at home. Despite recent record growth, India's manufacturing goal of raising manufacturing to 25% of GDP by 2025 missed the deadline. The share of manufacturing value added in India's GDP has fallen to under 14% after a decade of launching the Make in India campaign.

As a result, India runs trade deficits for the very industrial supplies it aspires to produce. India's trade deficit with China reached an all-time high of $99.2bn in 2024-25, which experts flag as alarming.