India’s Road to Resilience: From Tariffs to Triumph

Turning tariffs into a growth opportunity: India

As the U.S announces new tariffs on India with 27 percent on Indian auto parts, electronics, and jewelry exports has caused a serious trouble. India is set to lose $31 bn in exports to the U.S which is 0.9% of India’s GDP. These core sectors can hurt India’ export economy in the short run. But this is also the right time to embrace the change and ask a bigger question: Can India turn this challenge into an opportunity to rise beyond its capabilities?
While the tariffs might give a setback, they also stand a chance to rethink our strengths differently, rebuild our manufacturing base, and reposition India on the global stage. This could be a nudge to act smarter, and perhaps more united.

What does tariffs mean for India?

Let’s first understand what has changed. A 25 percent tariff means that Indian products that enter the foreign markets, particularly the U.S will now cost more, making them less competitive compared to goods in similar countries. The sting is felt in three major sectors – automobile components, electronics like smartphones, and jewelry especially gold and diamond exports. These sectors make up a significant chunk of India’s exports. So yes, the impact is bad, but it’s time to get bold. With the global attention drifting away from China, companies are looking out for new manufacturing partners. India can shift the gears and become the lead.

Sectors in focus: India

 The 25% tariff hike mainly affects:

1. Automobile & Auto Parts: Includes engine parts, transmissions, and EV components. These compete with China and Mexico in U.S. markets.
2. Electronics: Smartphones, semiconductors, circuit boards, and telecom equipment. Many are part of global supply chains dominated by China.
3. Jewelry: Gold, diamond, and silver jewelry exports (especially to the U.S. where India is a major supplier). High margin products seen as luxury or non-essential.

These sectors are mainly in focus due to their rising export volumes, and perceived trade imbalance. They are also the strategic sectors where the U.S or others want to boost their own domestic production.

Sectors not in focus: India

1. Pharmaceuticals: India is a major supplier of affordable generics and essential medicines. U.S. and EU depend heavily on India for bulk drugs. Not targeted due to healthcare sensitivity and lack of alternatives.
2. IT Services & Software Exports: Services aren’t taxed like physical goods. India’s strength in IT and software makes it hard to replace quickly. Also, global companies rely on Indian talent for cost-effective operations.
3. Textiles & Apparel: Countries like Vietnam and Bangladesh are bigger players in exporting cheaper garments. India is not seen as a dominant threat in this sector.

India’s Gameplan: What can India do?

1. Fixing the backbone: Infrastructure and Logistics:

It is essential that India gets parts to a port or shipping finished goods across states, at cheaper logistics and set up a faster mechanism for many businesses in India.

Projects like Gati Shakti, and the National Logistics Policy are already in progress, but they need to move faster. Good roads, better rail freight, and smart warehousing can make a significant shift to gain competitive advantage.

2. Inviting the world to “Make in India”:

As the tensions are rising and the tariff wars raging, global companies are actively looking for alternative manufacturing bases. India can pitch in as a safe, democratic, talent-rich destination, and improve the ease of doing business in order to drive the global companies to come and manufacture in India. Companies like Apple, Samsung, and Foxconn are already expanding operations here. This is the time to build in India, not just for India, but for the world.

3. Support start-ups to replace imports:

From EV tech and battery recycling to chip design and 3D jewelry printing, we already have startups working on big ideas. But most of them are stuck because of lack of capital or drowned in regulations. If the government and private sector can support these startups with funding, mentorship, and lighter rules, then India can build home-grown alternatives to imported goods. The reliance on electronics from Taiwan or Japan can reduce significantly when India can design and build its own.

4. Manufacture More:

India will need to make “Make in India” better and bigger. This is where schemes like Production-Linked Incentives (PLI) can be really game-changers. But these schemes need to be more flexible, faster in disbursing benefits, and tailored to each sector’s specific needs with strict adherence to quality control. Training the workforce, improving R&D, and using smart tech in manufacturing will go a long way.

To stay competitive, exporters need a better policy support. This includes tax breaks for exporters, easier access to export financing, stable and long-term trade policy. India can actively negotiate better trade deals with countries in the sectors which are significantly hit by the tariffs.

Conclusion: India turning tariffs into triumph

 Tariffs may slow India’s growth in the short term but cannot de-rail the bigger journey. This is the perfect time for India to reset, re-strategize, and rise. Despite these temporary setbacks, India can perceive them as indications to sharpen our edge in manufacturing, scale up innovation, and invest in infrastructure that powers global competitiveness.

By focusing on the sectors to bring out more resilience, India can pivot from being just a global supplier to becoming a global leader. India has to rise beyond its capabilities, build smartly, and export with effectiveness.

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