Is India Going "Self-Reliant"?

The Economic Times of India reported on the 4th that amid ongoing trade negotiations, the U.S. imposition of a 25% tariff on Indian goods has raised concerns across multiple industries. In response, the Indian government has "taken a firm stance," promoting local production and studying measures to support exporters, with a focus on brand building and financial aid.

On the 2nd, Modi stated at a rally in Uttar Pradesh: "The world economy is facing many worries—there is an atmosphere of instability. Now, whatever we buy, there should be only one standard: that we will buy what is made by the hard work of Indians."

The emphasis on boosting domestic production and consumption aligns with Modi’s "Make in India" initiative and his repeated calls for "self-reliance," which has become even more critical after the U.S. tariffs. The Mint commented on the 4th that Trump’s tariffs on India are expected to cost Indian exports around $33 billion.

India’s next steps will depend on the severity and duration of U.S. penalties. An Indian official told Bloomberg that U.S. trade negotiators are expected to visit India in late August to continue bilateral talks, with India standing firm on not opening its dairy and agricultural sectors to the U.S. due to political and religious sensitivities.

An official told the Economic Times: "Brand building and promotion are crucial for Indian exporters to reduce reliance on subsidies under U.S. tariffs."

Another official told PTI on the 4th that the government is studying support measures for exporters in textiles, chemicals, and other sectors. The Commerce Ministry has held meetings with steel, food processing, engineering, marine, and agricultural export industries to understand their high-tariff challenges.

Additionally, Mint reported on the 4th that India may retaliate by imposing equivalent tariffs on U.S. imports. Some experts suggest India could reintroduce its digital tax on U.S. firms after its planned abolition on April 1, 2025.

Former Foreign Secretary Shyam Saran, in the same column, urged India to follow China and Brazil in standing up to Trump. He wrote, "Resisting Trump will be painful… but we must be prepared to endure it." "Yielding to his exaggerated political and economic demands would severely harm India’s national interests." "We cannot let any country veto which nations India should or shouldn’t partner with."