Sudipto Mundle, chairman of the Centre for Development Studies, argues that India should not react to the new U.S. tariffs with “knee-jerk responses”. He states that the macroeconomic impact will be limited, affecting only about 1.6% of India’s GDP, but it will be concentrated in employment-intensive sectors like textiles, gems and jewelry, and marine products. He suggests that the government should provide special assistance packages to these affected sectors to prevent job losses. Mundle warns that retaliatory tariffs would harm Indian consumers with higher prices.
The author advises India to use this situation to reform its trade policy. He recommends that India prioritize joining a regional trade arrangement like RCEP or CPTPP and pursue new FTAs with countries like the UK and EU, which would require a significant reduction in India’s high tariffs. He also emphasizes the need to improve trade competitiveness by lowering the compliance burden for businesses and investing in technology, as well as improving the skills and productivity of the Indian workforce. Mundle concludes that India has the geopolitical space to maintain its strategic autonomy and should continue strengthening cooperation with the U.S. while ignoring Trump’s provocations.