Trump Tariffs Won't Trigger 'Reforms'

Last week, United States (US) President Donald Trump imposed a 25 per cent tariff on select Indian exports, and soon escalated it to a threat of 50 per cent, primarily over our continued import of Russian oil.

- DEBASHIS BASU

This amounts to punitive sanctions reserved for enemies. Unless reversed quickly, it will deal a hard blow to a few traditional exporters to the US such as garments, leather, and gems and jewellery. The Indian political response has been a predictable mix of defiance and chauvinism, claiming to "safeguard the welfare of farmers, labourers, entrepreneurs, industrialists, exporters, and small businesses." But a more revealing set of reactions came from business leaders and officials. Amitabh Kant, former chief executive officer of the NITI Aayog, called the tariffs a "once-in-a-generation" moment — or, in Bollywood terms — an Agneepath turning point. Anand Mahindra, chairman of the Mahindra group, called it "global Manthan," conjuring the churning of mythical amrit (nectar) from the trade turmoil. Are such expectations realistic?

1. Serious reforms, anyone? Mr Kant is suggesting simplifying bureaucracy and tax structures (e.g., reducing the number of slabs of goods and services tax, or GST, to just two) and "reviving" the tourism sector. He suggests that no form should exceed half a page and no law should be longer than two pages in order to foster entrepreneurship. Mr Mahindra advocates a functional, single-window clearance for investment. He also calls for boosting tourism through faster visa processing and better infrastructure. He wanted production-linked incentive (PLI) schemes to be expanded, and import duties on manufacturing inputs to be rationalised to boost competitiveness. All sensible, all familiar. India has heard them before.