Trump Tariffs Trigger India’s ‘Make in India’ Push
With former U.S. President Donald Trump announcing a 25% tariff on all Indian imports, New Delhi appears to be preparing for the long haul.
Although India and the U.S. are expected to continue negotiations on a trade deal, the tariffs are likely to remain in place. U.S. Trade Representative Jamieson Greer said on Sunday that the duties would probably not be rolled back as part of ongoing discussions.
"A lot of these are set rates pursuant to deals. Some of these deals are announced, some are not. Others depend on the level of trade deficit or surplus we may have with the country," Greer told CBS’s Face the Nation. "These tariff rates are pretty much set."
Despite pressure from Washington, India has refused to soften its stance on key issues, particularly regarding agriculture and dairy sectors.
Trump had also warned of additional penalties to discourage India from purchasing Russian energy, but the Indian government has reportedly not issued any directives to refiners to halt Russian crude imports.
In the face of mounting trade tensions, India appears to be leveraging the situation to strengthen the 'Make in India' initiative. Speaking at a rally in Uttar Pradesh on Saturday, Prime Minister Narendra Modi acknowledged global economic uncertainty and instability.
“Whatever you buy should be made by the sweat of an Indian,” Modi said, stressing the need to support domestic production.
He reiterated that protecting the interests of Indian farmers, small industries, and youth employment remains the government’s top priority.
As U.S. trade negotiators are expected to visit India by the end of August to continue bilateral talks, New Delhi is expected to hold firm and deny American access to its agriculture and dairy sectors.
Devendra Pant, Chief Economist at India Ratings (a Fitch affiliate), observed: “Just as Mr. Trump is doing his own cost-benefit analysis for America, each government will do its own analysis.”
Meanwhile, the Central government has urged Indian exporters to focus on building and promoting homegrown brands to withstand the impact of U.S. tariffs. A senior official emphasized the importance of brand development and visibility during this time.
The Commerce and Industry Ministry has begun consultations with sectors such as marine and food products to explore new schemes, including those based on incremental hiring. This comes as Ecuador, a major shrimp exporter, faces a relatively lower U.S. tariff of 10%.
The government is also working on support measures for sectors such as textiles and chemicals to cushion them from the tariff shock. The Commerce Ministry has been conducting meetings with representatives from industries including steel, food processing, engineering, marine, and agriculture to assess the impact.
Exporters are seeking financial support and easier credit access, asking for extended fiscal incentives such as interest subsidies, continued implementation of RoDTEP (Remission of Duties and Taxes on Exported Products), RoSCTL (Rebate of State and Central Taxes and Levies), timely payment of government dues, direct shipping lines to the U.S.
The Commerce Ministry is said to be considering these demands and will engage with states to support the export ecosystem. However, the government has reportedly ruled out offering direct subsidies.
During a recent meeting with industry stakeholders, Union Commerce Minister Piyush Goyal urged banks to reassess risk and rating models for small exporters to help lower borrowing costs. He also agreed to examine proposals aimed at reducing testing and certification charges for MSMEs.
