Trump tariff threats will provide ‘huge opportunities for India’

US President-elect Donald Trump’s pledge to impose high tariffs on three of its trading partners, including China, will provide huge export opportunities for India, according to the boss of a leading think tank.

BVR Subrahmanyam, chief executive of Niti Aayog, said that Trump’s pledge to introduce 25% tariffs (or customs duty) on imports from Mexico and Canada, and an additional 10% on China, is a signal to domestic industry to prepare to tap into that market.

“Whatever Trump has announced so far, I think there are opportunities for India. We are a man at first slip, the ball is coming in our direction. Are we going to hold it or drop the catch, it’s for us to see… and I think, you will see some steps in next few months,” Subrahmanyam said.

He said there is going to be widespread disruptions to US trade – both imports and exports – that would open up “huge’ opportunities for India.

“The question is if we actually prepare ourselves, it can lead to a massive boom because there is going to be trade diversion,” he added.

The US is India’s largest trading partner. India’s exports stood at $77.51 billion, while imports aggregated at $42.2 billion in the last fiscal year. The US also accounts for 70% of India’s IT export revenue.

“Our relationship with the US is multi-dimensional. It is very deep,” he said.

During his election campaign Donald Trump called India an ‘abuser’ of import tariffs, a claim that echoed his October 2020 statement labelling India the ‘tariff king’.

He has also warned BRICS countries against any move to replace the US dollar and has sought a commitment from the nine-member group that includes India, Russia, China, South Africa and Brazil, among others.

Niti Aayog also unveiled a new report on India’s trade, which will be published on a quarterly basis.

Subrahmanyam said trade needs to be promoted actively to make India a developed nation.

NITI Aayog vice chairperson, Suman Bery, said India should not be “obsessed with trade deficits” as the economy gains more from imports.

“Because we have a floating exchange rate, we structurally will have a trade deficit and because we want to invest, we will structurally have a current account of deficit… these are goods not bads,” Bery said, adding: “We have to walk a very careful line about not closing of imports to the point where we are cultivating local monopolies.” Trade is not only about exports, it is about imports also, he added.

Rating agency cuts India’s FY26 GDP growth forecast

India’s growth forecast for the next financial year (FY26) has been cut 6.7% from 6.9% by leading credit ratings agency S&P Global.

However, in its latest quarterly economic update for Asia-Pacific, S&P maintained its growth forecast for the current financial year (FY25) at 6.8 per cent as “high interest rates and a lower fiscal impulse temper urban demand”.

The update said: “While purchasing manager indices (PMIs) remain convincingly in the expansion zone, other high-frequency indicators show some transitory softening of growth momentum due to the hit to the construction sector in the September quarter.”

It also highlighted that persistent food inflation is delaying rate cuts by the Reserve Bank of India (RBI), with the central bank expected to cut the policy rate only once in the current financial year.

“Consumer inflation is fuelled by supply shocks in agriculture, which have driven up food prices. These shocks are linked to changing rainfall patterns and climate change-driven heatwaves. Traditionally volatile and hard to predict, food inflation has become even more capricious lately. The RBI cannot ignore food inflation when considering rate cuts. Food items make up nearly 46% of the inflation basket and persistently high food inflation raises inflationary expectations,” the update said.

Meanwhile, the rating agency raised its inflation projection for India to 4.6% for the current financial year, up from the earlier projection of 4.5%, even as it lowered its inflation expectation for FY26 to 4.4% from the earlier estimate of 4.6%.