For a nation that cries from the rooftop every time Pakistan does something, India’s silence on the face of the tariff whammy from one of its closest allies has itself been deafening.
US President Donald Trump’s tariff tirade has been ongoing, relentless and fluctuating more than the Delhi weather right from April 2, but it takes a real-world turn with terrible repercussions for the South Asian wannabe power from 9.30am Wednesday morning, when 50 per cent tariffs come into play.
Trump has threatened more, like 145 per cent on China back in April, but all that has been more talk than action. But in India’s case, the 25 per cent tariff plus 25 per cent penalty now seems very much a reality and could give a bodyblow to India’s economy.
But New Delhi has been maintaining a steadfast silence. The domestic narrative, ever since talks broke down, has been all about ‘atmanirbharta’, being self-reliant and riding it out. PM Modi himself said in Gujarat, “No matter how much pressure comes, we will keep increasing our strength to withstand it.”
Is it working? V.P.Singh, professor of economics and director PGPM at Great Lakes Institute of Management in Gurugram, believes it will. “India’s leadership has responded as a mature negotiator emphasising on economics instead of politics,” he said, adding, “India is reducing GST slabs to trigger domestic demand; RBI has assured that interest rates will be lowered in case US tariffs create adverse impact, new trade routes are being explored (while) Russia has agreed to open its market to India which was earlier being supplied by Europe.”
The political
India’s silence on American highhandedness is very much political as it is about trade—talks got stuck on the thorny issue of opening up India’s agriculture and dairy sector to American imports. Both are not only vital to a vast number of rural Indian livelihoods, around 48 per cent by some estimates, but they are also significant politically. Modi’s 11-year tenure as prime minister has generally seen him get away with almost anything, including a nationwide ban on 85 per cent of the currency in circulation.
Except on two occasions.
First was the rookie PM’s attempt at land reforms, through which farms could have been consolidated and corporatised, like in most of the West. That legislation was soundly defeated in Parliament as his party (at that time in 2015) still did not have a majority in both houses. And second, of course, was the farm bills, which his government tried to bulldoze through, but had to eat humble pie in the face of massive resistance from the farmers.
The writing on the wall, even for giants like Modi and his second-in-command Amit Shah, was clear: playing with farmers extract too heavy a price, often existential.
So now to try tampering with the present system of Indian agriculture, even if extremely inefficient, would be tantamount to political hara-kiri. Especially for the sake of a foreign party, even if by correlation, it is the Indian economy that will be the affected party. So no to any sort of farm reforms and yes to keeping an arms’ length from any deal that will have American wheat selling in the Indo-Gangetic plain.
The diplomatic
This is perhaps where the loss will hurt even more, for India had invested steadfastly, since the turn of the millennium, in the US as a close partner. That is virtually crumbling down in direct proportion to Trumpian rants on Truth Social.
Keeping quiet may be a necessity, but it is not like India is taking it lying down. Slowly and steadily, and even before the tariffs and penalties, India has been slowly trying to test the extent of the US’s tolerance. Be it talks of a dollar substitute at the BRICS forum with the likes of Brazil and South Africa, or the ‘non-aligned’ stance over the Ukraine war, which eventually seems to have gotten New Delhi into hot waters on the trade side.
The economic
Where it all comes down to. Tariffs will hurt the Indian economy, and way beyond the hundreds of thousands in sectors affected like textiles. And not having an alternative to the US, or in other words, the cold war India has been having since 2020 with its eastern superpower neighbour, would hurt.
But India is trying, and trying hard. It is a pragmatic approach, at least some of it aimed at observers in Washington—to show that India is not moping over the breakdown in relations and is moving on with America’s bete noires. It is as much a pressure tactic as can be Trump’s tirade against India in the past few weeks.
And if that doesn’t work, there is the longer and tougher road of sewing up a new partnership of the ‘global South’. On the plus side, India’s trade with China has only ballooned despite all the friction, and even if it leaves India at a disadvantage (trade deficit is hitting 100 billion dollars). But it at least gives a leeway to proceed further.
And now, all eyes will be on the SCO Summit next week in China, where Modi will start afresh, and start from scratch, an attempt to make (new) friend-turned-enemy into friend again. Singh added, “Higher tariffs will have an adverse impact initially, but India sees it as an opportunity to emerge stronger. Something tells us, Trump will be watching.
