The main possible speed-breakers for India in Trump’s policy lie in the fields of tariffs and trade, and illegal immigration to the US.
In April, Trump set off a global economic tremor by announcing sweeping new tariffs aimed at undoing what he called “decades of unfair trade practices”.
A 10 percent tariff was levied on all countries, with Canada and Mexico notably spared. For India, a 27 percent reciprocal tariff was announced, though implementation was deferred for 90 days to allow for negotiations.
While this announcement marked the beginning of another turbulent chapter in the US trade policy, for India it could well be the start of something transformative.
While China responded with fury, a 125 percent duty on US imports and tight control over rare earth exports, India chose a measured, non-confrontational approach, which may turn out to be the more strategic one. As the US softens its stance toward China, announcing a forthcoming reduction in its own steep tariffs (albeit “not to zero”), India finds itself better placed since this moment, fraught as it is, presents a rare opportunity.
With US firms scrambling to diversify supply chains and reduce dependency on China, India could emerge as a key manufacturing partner and investment destination. Even Chinese companies in recalibrating their global operations may see value in examining production in India, not only for its vast domestic market but as a springboard to the West.
But seizing this opportunity demands more than deft diplomacy; it requires transformation. India’s regulatory bottlenecks, outdated labour laws, and fragile infrastructure are longstanding deterrents to large-scale investment. The last wave of major economic reform was over three decades ago, and today the stakes are higher, the urgency greater. Reform is no longer a choice but a dire necessity.