How India’s Self-Reliance Shapes Its Response to US Trade Pressures
India is responding to proposed US tariffs with confidence and strategic independence. Discover the implications for trade, defence, and the broader US-India relationship amid global economic uncertainties.
In the face of the US's proposed 50% tariffs, India has exhibited remarkable resilience and confidence, reflecting a broader commitment to strategic independence. Prime Minister Narendra Modi asserted India’s strength, emphasising its ability to withstand economic pressures. With domestic consumption accounting for 70-75% of its economy, India’s self-reliance mitigates the potential impact of US tariffs, which are likely to primarily raise consumer prices in the US.
India's robust economic stance sends a clear message: the era of US dominance is waning. The US's attempts to exert control through tariffs are becoming less effective as India solidifies its role as a rising power in global trade. Furthermore, the motivations behind these tariffs are rooted in geopolitical tensions, particularly regarding energy control and the competition between India and China.
The complexities of US-India relations are notable, with India's position on agricultural and dairy markets being a significant factor in trade discussions. Additionally, the US's inconsistent foreign policy, as seen in its recent relationship with Pakistan, raises questions about its strategic priorities and ethical stance.
The burgeoning movement to reject American products poses a significant risk of backlash for the US and US companies operating in India. While India has not yet implemented retaliatory measures, the possibility remains a serious concern. This growing sentiment could escalate into concrete actions, impacting various sectors of the bilateral relationship.
In the defence sector, India has already signalled a shift away from US reliance. The abandonment of the Poseidon maritime patrol aircraft deal and the US's subsequent struggles to find buyers for its F-35 fighter jets, particularly after a month-long public relations setback in Kerala, underscore this trend. Further implications could include India reconsidering or even dropping the GE engine deal for the Tejas light combat aircraft. Instead, India might explore alternatives with Russian or French manufacturers. The closer collaboration between France’s Safran and India’s AMCA (Advanced Medium Combat Aircraft) project highlights this strategic pivot. Engaging with GE on the Tejas engine deal presents long-term risks, including high costs and minimal technology transfer, offering limited rewards in return.
Beyond defence, the implications extend to the commercial aviation sector. Indian airlines may re-evaluate their relationships with Boeing, potentially reconsidering or cancelling existing orders. This shift could significantly impact Boeing’s market share in the rapidly growing Indian aviation market.The broader sentiment of unreliability surrounding the US as a business partner for India is a consistent theme, regardless of the political administration in Washington. This perception of unpredictability is a crucial factor driving India's efforts to diversify its strategic partnerships and reduce its dependence on any single country, particularly in critical sectors such as defence and technology. This underlying lack of trust could fuel further policy decisions aimed at limiting exposure to potential US actions or policy shifts, leading to a more diversified and self-reliant Indian economic and strategic posture.
In this evolving landscape, India is poised to emerge stronger, presenting a hopeful prospect for sustainable economic growth amidst global uncertainties.
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