In times of crisis, India has always backed economic changes; in 1991, it liberalized its economy to combat financial unrest. Given the current interruptions to global commerce brought on by US President Donald Trump’s tariff battles, many people wonder if India would seize another opportunity for reform.
Trump has called the nation a “tariff king” and a “big abuser” of trade rules, and he has frequently attacked high import taxes. India levies an average import duty of 12%, which is significantly more than that of the US (2.2%), China (3%), and Japan (1.7%).
These high tariffs, which raise the cost of imported goods, affect both consumers and businesses that depend on international supply chains. Despite rising exports, India only makes up 1.5% of world exports and maintains a sizable trade imbalance.
Prime Minister Narendra Modi’s government has shown signs of shifting away from protectionism. Before a recent meeting with Trump, India lowered tariffs on American products like bourbon whiskey and motorcycles.
Commerce Minister Piyush Goyal also visited Washington twice to discuss trade agreements, signaling a willingness to negotiate. Analysts estimate India could lose $7 billion annually if retaliatory tariffs target sectors like metals, chemicals, and jewelry.
Meanwhile, India is strengthening trade partnerships with the UK, EU, and New Zealand while exploring free trade agreements. Economists argue that past protectionist policies have stifled manufacturing and hurt Modi’s Make in India initiative.
High tariffs discourage competition, allowing domestic industries to consolidate power without improving efficiency. Reducing high import tariffs could boost exports, attract foreign investment, and create jobs.
India faces a crucial decision: embrace globalization or retreat into protectionism. Some experts warn that a blanket tariff reduction could lead to market flooding by cheaper Chinese products. India could impose non-tariff barriers on China to counter this while lowering tariffs for other trade partners. Without decisive reforms, India risks falling behind as global trade realigns.
