"CAN'T GIVE UP ON AGRI AND DAIRY"

P. Chidambaram, MP and former finance and home minister of India, on the Indian economy and tariff turbulence

- ARCHNA SHUKLA

THE STEEP TARIFFS on India are an outcome of the so-called personal friendship between Prime Minister Narendra Modi and US President Donald Trump gone sour, says P. Chidambaram, Member of Parliament and former finance and home minister of India. In a conversation with Archna Shukla, he speaks about the randomness of Trump's decisions, their impact on the world trade order, the US and the Indian economies. Edited excerpts:

If the steep tariffs, as threatened by the US President, stay, what impact will it have on the Indian economy? Do you agree with the view that this is another 1991 moment for India? If yes, how should India chart a new course?

India in 2025 is not the India that was in 1991. We are much stronger today. We have a large space where we can play our cards that we didn't have in 1991. We are a large mercantile trading country today. The US accounts for about $45 billion worth of India's exports. So, the first thing the Indian government should do is to find alternative markets for a big chunk of these exports.

I have often looked back on the last 10 years and thought that we have been pretty lazy. In the last 10-12 years, have we explored and secured new markets? Have we expanded the basket of products that we are exporting? We should now be aggressive, expand the basket of products, and look for new markets.

We should also look for opportunities for bilateral and multilateral trade agreements. I feel we made a mistake by walking out of RCEP (Regional Comprehensive Economic Partnership).

Nevertheless, we should diversify our exports basket and markets now.

We should liberalise foreign direct investment.

In the short term, we should incentivise exports by, may be, adjusting the exchange rate to compensate our exporters. Now, if this increases the cost of imports, we should cut down on all unnecessary imports such as foreign automobiles or Swiss watches.