Can Trump's sweeping global tariffs spark a manufacturing boom in India?
Donald Trump's sweeping tariffs have shaken global trade, but disruption often creates opportunity.
Starting 9 April, Indian goods will face tariffs of up to 27% (Trump's tariff chart lists India's rate as 26%, but the official order says 27% - a discrepancy seen for other nations too). Before the tariff hike, US rates across trading partners averaged 3.3%, among the lowest globally, compared to India's 17%, according to the White House.
However, with the US imposing even higher tariffs on China (54%), Vietnam (46%), Thailand (36%) and Bangladesh (37%), India "presents an opportunity" in textiles, electronics and machinery, according to the Delhi-based think tank Global Trade Research Initiative (GTRI).
High tariffs on Chinese and Bangladeshi exports open space for Indian textile manufacturers to expand in the US market. While Taiwan leads in semiconductors, India can tap into packaging, testing and lower-end chip manufacturing - if it strengthens infrastructure and policy . Even a partial supply chain shift from Taiwan, driven by 32% tariffs, could work in India's favour.
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Machinery, automobiles and toys - sectors led by China and Thailand - are ripe for tariff-driven relocation. India can capitalise by attracting investment, scaling production and boosting exports to the US, according to a note by GTRI.
But will India be able to seize the moment?
High tariffs have increased costs for companies dependent on global value chains, hobbling India's ability to compete in international markets. Despite growing exports - primarily driven by services - India runs a significant trade deficit. India's share of global exports is a mere 1.5%. Trump has repeatedly branded India a "tariff king" and a "big ab" of trade ties. With his new tariffs, the fear is that Indian exports will be less competitive.
"Overall, the US's protectionist tariff regime could act as a catalyst for India to gain from global supply chain realignments," says Ajay Srivastava of GTRI.
"However, to fully leverage these opportunities, India must enhance its ease of doing business, invest in logistics and infrastructure and maintain policy stability. If these conditions are met, India is well-positioned to become a key global manufacturing and export hub in the coming years."
That's easier said than done. Biswajit Dhar, a trade expert from the Delhi-based Council for Social Development think tank, points out that countries like Malaysia and Indonesia are possibly better positioned than India.
"We may regain some lost ground in garments now that Bangladesh faces higher tariffs, but the reality is we've treated garments as a sunset sector and failed to invest. Without building capacity, how can we truly benefit from these tariff shifts":[]}