Will Trump’s tariff war increase the great reforms in India?

India has generally turned to economic reforms in time of crisis, The most famous example is 1991When the country adopted liberalization in front of a deep financial crisis.

Now, with US President Donald Trump Tight-for-Tat Tariff War And global trade turmoil, which many people believe that India finds itself at another crossroads.

Can this be a big opportunity for the world’s fifth largest economy to shed its protectionism and to pursue its economy? Will India confiscate that moment, as if it had done more than three decades ago, or will it back back?

Trump has repeatedly branded India a “tariff king” and a “big addict” of business relations. The problem is that India’s Trade-lock import duty – Imported products are the average duty rate – the highest in the world. The US average tariff is 2.2%, China has 3%and Japan has 1.7%. According to data from the World Trade Organization, India has 12%.

High tariffs increase costs for companies dependent on global value chains, which hinders their ability to compete in international markets. They also mean that Indians pay more on imported goods than foreign consumers. Despite increasing exports – mainly operated by services – India runs an important trade deficit. However, with the share of India’s global exports, only 1.5%, the challenge becomes even more necessary.

The jury is on whether Trump’s tariff war will help free India or double on protectionism. Narendra Modi’s government, It is often criticized for its conservationist attitude, It seems that gear has shifted in recent years.

Last month, ahead of Prime Minister Modi Meeting with Trump In Washington, India unilaterally reduced tariffs on Borbon whiskey, motorcycles and some other American products.

Commerce Minister Piyush Goyal has made two trips to the US to discuss a possible trade deal. Anti -Repilee Tariff in Trump’s dangerLump on 2 April. (City research analysts estimate that India may lose up to $ 7bn annually from mutual tariffs, mainly affect areas such as metals, chemicals and jewelery, also at risk with pharmaceuticals, automobiles and food products.)

Last week, Goyal urged Indian exporters to “come out of their conservationist mindset and encourage them to be bold and ready to deal with the world with courage and confidence situation”, according to A. statement From his ministry.

India is also actively moving forward of free trade deals with many countries including the UK and many countries. New ZealandAnd this European Union,

In an interesting twist of events, Homegron Telecom Giants Reliance Jio and Bharti Airtel have worked together with Trump Elli Elon Musk’s SpaceX Launch satellite internet services via Starlink In India. The move surprised analysts, especially later Recent clashes of Musk with both companiesAnd the US and Indian officials interact on the trade deal.

Rapid growth from the late 2000s to the 2000s – 8.1% between 2004-2009 and 7.46% from 2009-2014 – with a steady reduction in tariffs, especially pharmaceuticals, software, autos, textiles and clothes, in clothing, 8.1% and 7.46% from 2009-2014. Since then, India has turned inward.

Many economists believe that in the last decade, conservationist policies have reduced the Make in India Initiative of Modes, which has preferred capital and technology-intensive fields on labor-intensive people like textiles. As a result, it has fought to promote manufacturing and exports.

According to the Professor of Economics at the New York University Sturn School of Business, the high tariff has promoted securityism in many Indian industries, discouraging investment in efficiency.

This has allowed “comfortable incumbents” to gain market power by consolidating its positions without facing more competition. As Mr. Acharya, a former central banker, was noted in one paper By Brookings Institution, to restore industrial balance in India, “needs to reduce tariffs to increase the part of the country of global goods trade and reduce protectionism”.

India’s tariffs are already more than most countries, moving forward can be particularly harmful.

“We need to promote exports and a tight-for-tat tariff war will not help us. China can tolerate this strategy due to its mass export basis, but we cannot, because we keep only a small part of the global market, Rajeshwari Sengupta, who is an essential professor of Rajeshwari Sengupta, which is an essential professor of economics in Mumbai-based Indira Gandhi Institute of Development Research.

In its light, India finds itself at an intersection. As the world undergoes a big innings, India has “a unique opportunity to shape a new vision” for global trade, Claremont McKenna, a business expert Aseema Sinha, a business expert Aseema Sinha.

By reducing conservationist obstacles in South Asia and strengthening relations with South East Asia and Middle East, India has a chance to shape a new business vision, the opportunity to bring itself into a position as a prominent player in the “re-globalized” world, Ms. Sinha, the author of the Global India, says.

“By reducing tariffs, India can become regional and cross-regional magnets for trade and economic activity, drawing in various powers in her orbit,” she says.

This can help India to create jobs that are in dire need at home. Agriculture, which makes 15% of its GDP, is responsible for 40% of employment, which reflects extremely low productivity. Construction is the second largest employer, absorbing casual daily workers.

India’s challenge is not in expanding its rich service sector, which already makes about half of the total exports, but in dealing with large pools of unskilled workers, who lack the basic skills required for service jobs.

“While high-ended services are being completed, most of the workforce remains uneducated and unemployed, often accused for construction or informal jobs. To provide millions of people to entry into employees every year, India will have to increase its manufacturing exports, because relying services will not address some unskilled labor force needs.”

One concern is that reducing tariffs can lead to dumping, where foreign companies flood the market with cheap goods, possibly damaging domestic industries.

According to Ms. Sengupta, India’s ideal approach to India will include “universal shortage” in import tariffs, as currently there are some of the most tariffs among its business partners.

However, there is a warning: China’s trade conflict, especially due to the ongoing trade war with the US, can lead Chinese dumping in India in “short run”.

“To protect this, India can use Non-tariff barriers Against China but only against this one country and only in Siddha dumping cases. She says that, in the interest of India, a bulk of tariff is to be a wholesale, “she says.

It is also a growing concern that India may be more in its efforts to flatter America.

Ajay Srivastava, the founder of Global Trade Research Initiative (GTRI), believes that India’s tendency to soften trade policies “reflects the lack of vigor in global business talks based on rhetoric rather than economic pressure.

If this trend continues, they say, India can compromise more in its business deal with America, further “eradicating its bargaining power”.

“Compared to other major economies, pre -surrenders on many business fronts in India – without implementing a single country -specific tariff without America – it appears weak for an extraordinary pressure strategy.”

The widespread consensus seems that India should redeem what the unexpected results of Trump’s tariff wars can be. Pranjul Bhandari, the chief economist of the chief of India at HSBC, believes that “potential American tariffs may be one. Catalyst for improvements.,

“If the supply chains are resumed during the second Trump Presidency due to high tariffs on large exporters, and the world looks for new producers, India can get a second chance,” she writes.

Building jobs that create goods for the world will not be easy. India has missed a bus on low -end, unskilled factory work – China’s dominance for decades. Is handling automation. Without intensive reforms, India’s risk is left behind.