The great trade balancing act

The third part of a year-end series focuses on India’s trade policy, a year of baptism by fire. The year ahead demands strategic outreach and homeward focus

- ASIT RANJAN MISHRA

Hours before his scheduled bilateral meeting with Prime Minister Narendra Modi in Washington in February, newly elected US President Donald Trump stunned trade partners by announcing plans to impose sweeping “reciprocal tariffs”, including on India.

The announcement set the tone for global trade in 2025. The moment was later crystalised, on April 2, when Trump publicly displayed a placard listing reciprocal tariff rates country by countryan image that came to symbolise the abrupt unravelling of the postwar trade order.

At their February meeting, Modi and Trump had announced plans to sign the first tranche of a bilateral trade agreement by November. On the face of it, India appeared to enjoy a first-mover advantage over other countries. In reality, the deal stalled over differences on market access, especially India made reluctance to open up its politically sensitive dairy and agriculture sectors.

Caught in a tariff blitz

To signal flexibility, India made several concessions to the US: From cutting import duties on Harley-Davidson motorcycles, withdrawing the so-called Google tax on digital advertising, and later rolling back a host of quality control orders.

Yet Trump's approach remained unpredictable. He shocked the Indian establishment by doubling the already punitive tariff to 50 per cent, effective August 27, as punishment for buying Russian oil. After February, Modi and Trump avoided direct engagements as the American President repeatedly claimed credit for averting a nuclear conflict between India and Pakistan following the escalation after the Pahalgam terror attack. Publicly, Trump alternated between calling Modi a “close friend” and dismissing India as a “dead economy”.