India-US Relation

October 24, 2025 No Comments

Abstract

Clearly state the issue: Trump’s tariffs on India (50% + additional penalties).
Core argument: India has survived similar challenges before and must treat this as an opportunity for reforms.
Key insight: Trust deficit with the US, push towards multipolarity, reforms + resilience.

Introduction

Place tariffs in historical context: Nixon–Kissinger years, transactional geopolitics.
Thesis: US actions confirm the volatility of relying on it; India’s long-term strategy must be multipolar, reformist, and self-reliant.

Not the End of the World

Short-term export pain (labour-intensive sectors, ~90 million workers affected).
India’s economy not export-led (domestic consumption ~70% GDP).
IMF’s India forecast remains positive (6.4%).
Comparative tariff rates (India 50%, China 30% but with leverage).
Lessons from history: diversification, value addition, reforms.

Resilience and Reforms

Case study: steel/aluminium tariffs (2018). India diverted trade successfully.
Current priorities:
- Modernize manufacturing (precision engineering, AI, green tech).
- GST reform (rate simplification, boosting consumption).
- Income tax cuts, merging inefficient welfare programmes.
- Push for 100% FDI in key sectors + AI investment.
- Retaliation options (re-impose equalisation levy, hike tariffs).
Atmanirbhar & PLI as the backbone.

Hard Geopolitical Realities

US discomfort with India’s multipolar vision.
Strategic autonomy vs alignment with the US.
Western analysts (Tellis, Curtis) warn India risks irrelevance if not aligned.
Counterargument: History shows blind alignment reduces sovereignty (1971, 1998).
Multipolarity is India’s best safeguard, not dependency.

Global Trade System in Flux

WTO’s collapse: dispute settlement dead, MFN principle eroded.
US–China operate outside rules, others will follow.
Rise of coalitions/plurilateral deals (FTAs, BRICS+).
Need for India: resilient supply chains, plurilateral security + economic blocs.

The China Factor

China’s leverage: rare earths, US Treasury bonds, predatory exports.
WTO framework hollowed out by “China shock.”
India–China–Russia handshake in SCO alarming the West.
India must pragmatically engage China (economic interdependence).

Way Forward for India

Diversify exports beyond US: East Africa, ASEAN, GCC, Latin America.
Develop alternatives to SWIFT (rupee settlement, BRICS payment system).
Push for BRICS currency backed by NDB.
Reduce logistics costs (13–14% vs China’s 8–9%).
Implement labour codes, align education with AI-driven economy.
Build coalitions of resilient democracies and plurilateral trade agreements.

Conclusion

Tariffs = short-term setback, long-term opportunity.
India must use this “crisis” as a 1991-style reform moment.
Strategic autonomy + bold reforms = India’s path to sustained relevance.
History shows India thrives when it forges its own way.