Trump's Tariffs Prompt Amitabh Kant's Call for India to Embrace Trade Reforms as a Stimulus
The US tariffs on Indian goods, announced earlier this year, have sparked a shift in India's policy corridors, with a focus moving from protest to pragmatism. Amitabh Kant, former G20 Sherpa and ex-CEO of NITI Aayog, has framed these tariffs as a "once in a generation opportunity" for economic reform.
The Department for Promotion of Industry and Internal Trade (DPIIT) is tasked with identifying sector-specific frictions caused by the tariffs. Kant views the additional 25% tariff imposed by the US as arbitrary and illogical. He argues that the tariff lacks clear logic since major economies such as Turkey, China, the EU, and even US importers also buy critical minerals or energy from Russia or China but are not similarly penalized.
India, heavily reliant on access to the US consumer base for its exports, faces a significant threat. The tariffs threaten over $48 billion worth of Indian annual exports, particularly affecting shrimp, organic chemicals, ready-made garments, and gems and jewellery. However, Kant urges India to remain "cool, calm, and collected" and use the current tensions as an opportunity for bold internal reforms and economic transformation.
Kant suggests simplifying taxes and regulations, boosting public capital expenditure, reviving key sectors such as travel and tourism, and pursuing joint ventures with countries like China to strengthen the economy. He sees the US tariffs not as merely a trade conflict but as a prompt for India to accelerate domestic structural reforms, enhance economic resilience, and emerge stronger internationally.
Addressing India's "non-monetary trade barriers," such as restrictions on data, certification bottlenecks, and quality control norms, could help India regain competitive ground in the US market and in global trade. The Commerce Ministry is evaluating a "remission + productivity" model to support industries likely to face order declines.
Moreover, Kant advocates for long-awaited tariff rationalization and export subsidy overhaul as a result of the tariffs. He advises India to maintain strategic autonomy and not compromise on its national interests or energy security, stressing that India’s imports of oil from Russia are significantly less than those of other countries.
The Production Linked Incentive (PLI) scheme may be tweaked to reward exports, not just domestic output. This includes promoting plug-and-play manufacturing zones, streamlining export documentation through full digitalization, and revisiting older policies like the MEIS and SEIS schemes under WTO scrutiny.
The tariffs are not just economic penalties, but also political warnings. If India seizes this as an inflection point, it may not only weather the tariff storm but also emerge as a more efficient and competitive economy. Kant's analysis of the Trump tariffs suggests India must invest in productivity, global certifications, logistics infrastructure, and sectoral incentives that prioritize global scale.
In essence, Kant urges India to focus on internal strengthening and strategic mindset. By doing so, India may not only weather the tariff storm but also emerge as a stronger player in the global economy.
- Amitabh Kant, despite the US tariffs on Indian goods being a significant threat to India's exports, valued at over $48 billion annually, sees this situation as a "once in a generation opportunity" for economic reform, advocating for investment in productivity, global certifications, logistics infrastructure, and sectoral incentives that prioritize global scale.
- In the wake of US tariffs, Amitabh Kant, former G20 Sherpa and ex-CEO of NITI Aayog, proposes a shift in India's focus from non-monetary trade barriers such as data restrictions, certification bottlenecks, and quality control norms, to enhancing economic resilience, and aggressive internal reforms, including simplifying taxes and regulations, boosting public capital expenditure, and reviving key sectors like travel and tourism for a more competitive position in global trade.
