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COVER STORY AUGUST 08, 2025 | The Indian Eye 5

long-term costs include price hikes, tries like Vietnam and South Korea
disrupted industries, and diplomat- have leapfrogged in finalizing deals.
ic backlash. Developing nations like The $500 billion trade target seems
India, seeking multi-alignment and distant unless the pending negoti-
trade diversification, find themselves ations—now paused until mid-Au-
forced into strategic recalibration. gust—are quickly revived.
Trump’s tariff war is less about eco- Keshap’s warning was sharp: “If
nomics and more about asserting we fumble this negotiation at the goal
dominance in a multipolar world— line, we are all going to live to regret it.”
using trade not just as policy, but as
leverage in a broader contest of power. POLITICS &
Experts agree the tariffs will
sting—especially for sectors like PROTECTIONISM
pharma, rice, and textiles. According he political context matters.
to a Ventura Securities report, India Trump’s tariffs have a do-
may lose between $5 and $6.75 bil- Tmestic audience—aimed at
lion in exports, potentially shaving off projecting strength before the 2026
0.15–0.2% from GDP growth. But midterms. But his trade gambit
the same report underscores India’s PM Modi and US President Donald Trump deliver at a joint press meeting in Washington, may backfire. American businesses,
key advantage: resilience. DC in February (ANI) especially in pharmaceuticals, are
“Even with a 25% US tariff, In-
dia remains competitive,” the report alarmed by rising costs. Indian goods
might get more expensive, but they
notes, pointing to India’s Free Trade MANUFACTURING AT A WASHINGTON’S MIXED won’t be easily replaceable.
Agreements (FTAs) with Australia, CROSSROADS SIGNALS On the Indian side, politics too
the UAE, and ASEAN that can cush- plays a key role. The US demand
ion losses and reroute exports. Trade ndia’s textile, electronics, and ormer President Trump’s social for access to Indian agriculture and
with the EU is also poised to expand, automotive industries—espe- media suggestion that India dairy markets has stalled progress.
and Indian companies are moving Icially suppliers to major global Fmight buy oil from Pakistan “Farmers are a crucial electoral
quickly to increase presence in Latin brands—are also under scrutiny. For was met with bemused silence in New group,” notes an S&P report. With
America and Africa. many firms, this could be the inflec- Delhi. The MEA declined to com- state elections approaching and
Real estate magnate Sushil tion point that forces strategic invest- ment, but insiders saw it as political
Mohta is blunt: “Our economy is very ments in ASEAN, African, or Latin theatre rather than policy. 2029 in sight, the Modi government
is unlikely to concede on such sensi-
strong today. The common people in American manufacturing units, echo- Instead, India has continued im- tive sectors.
India work very hard. Our growth is ing China+1 trends. porting Russian oil, rejecting West- Instead, it is choosing to wait out the
not dependent on any one country.” Electronics producers, particular- ern pressure. “Energy sourcing is storm—hoping for a softened US stance
ly in smartphone assembly, are already based on market conditions,” Jaiswal or, perhaps, a post-tariff equilibrium.
INDUSTRY REACTS seeing production clusters shift fur- reiterated. Washington may be irked,
ther inland, bolstered by Production but India’s position is consistent with THE ROAD AHEAD
mong India’s largest export Linked Incentive (PLI) schemes. “The its strategic autonomy doctrine—
contributors is the rice sector. time to be cost-efficient, value-adding, one that it applied in the Ukraine he long-term trajectory of the
ADev Garg, Vice President of and tech-integrated is now,” said a se- war and continues to uphold. India-US trade relationship
the Indian Rice Exporters Federation nior official at Dixon Technologies. While US-India relations remain Twill depend on how both sides
(IREF), admits the concern but sees India’s export economy is now fundamentally strong, as evidenced handle this disruption. The Modi
opportunity too. being forced into a high-efficiency by USIBC President Atul Keshap’s government is betting on strategic
“Thailand and Pakistan face orbit. For some, the tariffs are pain- comments, “there is impatience” in patience, relying on its growing do-
19% tariffs. We now have a 6% gap, ful—but for others, they’re the need- the White House. India initiated the mestic capacity, rising exports to al-
yes—but the rupee is weak, and we ed push to retool. bilateral trade deal, yet other coun- ternate markets, and the weight of
have record surpluses. We could ac- its economy.
tually increase our rice exports to the Already the world’s fifth-largest
US despite the tariff,” Garg said. economy, India aims to be the third
In the pharmaceutical sector— by 2027. The sense in New Delhi is
where India supplies nearly 47% that this moment is more a bump
of the US generic drug market— than a blockade. As one policy ana-
the stakes are higher. A 25% tariff lyst put it, “Trump’s tariffs are fire-
could cause US drug prices to jump crackers. They make a lot of noise,
20–25%, warned Girdhar Gyani of but don’t burn down the house.”
the Association of Healthcare Pro- Still, the urgency remains. A fi-
viders. “It’s unclear whether the US nal trade deal that protects Indian
healthcare system can absorb such an interests—while reassuring Ameri-
impact,” he cautioned. can allies—is vital. As Atul Keshap
Yet, Indian pharma giants are noted, “We have a future together to
far from helpless. Many have already work on AI, semiconductors, defence
invested in Mexico- and US-based production... this is critical to the free
manufacturing facilities to circum- world.”
vent tariffs. Others are shifting to India, it seems, is not just with-
high-value, complex generics and Union Commerce Minister Piyush Goyal speaks in Rajya Sabha on the reciprocal tariff standing the Trump tariff test—it
combination drugs, which are less imposed by the US (ANI) may be using it to reshape its global
price-sensitive. trade destiny.

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