Not a Crisis, but an Opportunity

The U.S. decision to increase import duties on India has now come into effect. Despite several warnings from the Trump administration about raising import tariffs, Prime Minister Narendra Modi did not even bother to respond to them. For the past few days, the Prime Minister has consistently emphasized from various platforms that for an “Atmanirbhar Bharat” (Self-Reliant India), the mantra of “Swadeshi” (local, indigenous goods) must be practiced. This essentially means that the Modi government is responding to the Trump administration’s pressure tactics through action, not words.

After the Trump administration announced the decision to increase import duties, as usual, many so-called intellectuals started making baseless criticisms of India’s foreign policy. Before launching such criticisms, these people did not consider the background of trade relations between India and the U.S. For them, such a study was not even necessary.

The reality is that for a superpower like the U.S., India’s crude oil trade with Russia is of little direct concern. The Trump administration merely used the excuse of India’s oil imports from Russia. The true target of the Trump administration is India’s agriculture and allied sectors. The U.S. wanted India to open its agriculture sector for trade, but the Modi government firmly rejected this demand. Defying U.S. pressure, the Modi government stood its ground.

Countries like Japan yielded to U.S. pressure and opened their agriculture sectors for trade. Not just that, Japan even decided that imports of agricultural goods from the U.S. would carry zero import duty. Similarly, Vietnam too bowed to American pressure and opened its agriculture sector for trade, reducing tariffs on dairy and fish products to zero. India, however, did not succumb to the Trump administration’s pressure tactics. Prime Minister Narendra Modi, who has categorically stated that India will never compromise on the interests of its farmers, did not budge from his resolve.

The India-U.S. trade volume is around $125 billion (?11 lakh crore). Of this, India exports goods worth ?7.48 lakh crore ($85 billion) to the U.S., while U.S. exports to India stand at ?3.52 lakh crore ($40 billion). This means the U.S. has a trade deficit of $45 billion with India. To reduce this trade deficit, the U.S. decided to raise import duties on India. Keeping in mind its current economic situation, the Trump administration has set a target of earning $300 billion in revenue through trade adjustments with other countries.

Some people are deliberately painting a picture that the 25% additional import duty imposed by the Trump administration will cause severe damage to India. But the share of exports in India’s total GDP is only 20%. India’s exports to the U.S. primarily include diamonds, precious stones, pharmaceuticals, industrial products, and auto parts. Given the size of India’s economy, the imposition of 25% additional import duties by the Trump administration will not have any major impact.

Moreover, before the U.S. imposed tariffs, India had already signed Free Trade Agreements (FTAs) with 13 countries including the UK and the UAE. Thus, India has alternative markets available. With FTAs with countries like the UK, Australia, and UAE, exports such as diamonds, precious stones, and auto parts have access to alternative markets. Therefore, the claim that the additional 25% import duty by the U.S. is a catastrophe for India holds no ground.

It is also a misconception that the Trump administration targeted India because of crude oil imports from Russia. In fact, while imposing the additional 25% tariff, the Trump administration kept import duty on petroleum products from India at zero percent. This clearly shows that even though India refines petroleum products from Russian crude, the U.S. deliberately exempted these products — revealing the hidden agenda behind the decision.

India exports textiles, spices, basmati rice, mangoes, bananas, mobiles, and electronic products to the U.S. The Trump administration has not imposed any additional tariffs on pharmaceuticals, mobiles, auto parts, electronic products, or petroleum goods. Even senior U.S. journalists and analysts have criticized the Trump administration for this policy blunder.

Only 10% of India’s total exports go to the U.S. The rest of the world remains open as India’s market. That is why, despite repeated warnings from the U.S., India stood firm on its position. Prime Minister Narendra Modi understands very well that this is the right time to turn a crisis into an opportunity.

In 1998, after the Pokhran nuclear tests, the then Clinton administration imposed several sanctions on India. At that time too, many thinkers harshly criticized the Vajpayee government’s policies. Yet, the Vajpayee government found a way out of the crisis. Its strategy of boosting domestic demand proved highly effective. The ambitious “Golden Quadrilateral” national highway project launched by Vajpayee’s government turned out to be a game-changer.

In fact, President Bill Clinton, who had imposed sanctions in 1998, himself visited India in March 2000 on a 5-day tour — the longest-ever visit to India by a U.S. president.

Throughout many such international developments, India has consistently stood firm on its position. On the matter of increased tariffs too, India has not wavered. The world is now acknowledging India’s new strength on the global stage — that is the real meaning of these events.’

 

(Article Pre-Published in Times of India Online – 01 September, 2025) 

Keshav Upadhye, Chief Spokesperson