Donald Trump renewed tariff tactics may come across as disruptive, but for India they have opened a rare political window for deep economic transformation. Instead of responding with short-term tariff tweaks or tactical adjustments India must use this moment to push forward long-overdue structural reforms.
India’s upbeat tone amid global uncertainty is understandable Commerce Minister Piyush Goyal has attributed it to an “aspirational India.” But the optimism masks a deeper, slow-burning polycrisis: stagnant manufacturing output, rising youth unemployment weak investment, declining consumer demand, and a defence sector heavily reliant on imports.
Former RBI Deputy Governor Viral Acharya has pointed out how Indian conglomerates have entrenched themselves across multiple sectors without boosting efficiency or technological competitiveness. Their dominance, rather than fuelling innovation, has often led to protectionism and inefficiency, keeping India isolated from global value chains.
India has tried incentives before. In 2019, corporate tax rates were slashed to attract investments falling from 30% to 22%, and down to 15% for new manufacturers. But that ₹1.84 lakh crore gamble hasn’t spurred the investment or job growth it was meant to. Likewise, the Production Linked Incentive (PLI) schemes have struggled to meet targets.
Meanwhile, average tariff rates have risen from 6.2% in 2013 to 12% in 2023, but without stimulating meaningful domestic manufacturing growth. Rather than creating globally competitive companies, the protectionist stance has often fostered complacency in domestic markets.
India long-delayed second-generation reforms land, labour, tax rationalisation, infrastructure upgrades, and policy stability are now unavoidable. Incremental changes haven’t worked. What’s needed is a coordinated, holistic economic shift that aligns with investor expectations and India’s own developmental aspirations.
The demographic clock is ticking India adds 12 million job seekers each year. Without structural change opportunities will be missed, and frustration will mount. This also includes revamping India’s military-industrial complex to reduce import dependency and modernise indigenous capabilities.
Trump pressure may spark action, but India’s reform drive must come from conviction, not just compulsion. It’s not enough to merely please Washington with tariff cuts. India should pitch a broader economic reform timeline one that includes a temporary hold on some non-tariff barriers but promises a transparent, time-bound review process.
If the US is genuinely interested in reciprocity and wants India as a strategic counterweight to China, then a deeper, shared reform agenda will serve both sides better than quick, tactical deals.
