Tariffs: India to become a manufacturing hub, global companies to invest on a large scale

New Delhi| India will remain at the top of the world’s major beneficiaries despite the US imposition of a 26 per cent tariff. This will, on the one hand, help India to achieve its mastery in manufacturing. Secondly, globally those companies can turn to India which are struggling with heavy tariffs from countries like Vietnam along with America and China.

The tariff rate imposed by the US on Indian goods is modest compared to the heavy fines imposed on other global trading partners, Ventura Securities reported. This underlines India’s increasingly favorable position in the global trade dynamic amid a reassessment of US international commerce strategies. This shows that channels of interaction are open. This cautious execution could pave the way for constructive growth rather than new disruptions in the global business spirit. Trump’s tariff strategy could shock demand in America. This may increase global supply.

China suffers more losses due to low tariff on India
China may have to suffer losses due to relatively low tariffs on India. Apple or big company contract manufacturers in China and Vietnam can now move to India. This will help India in building a manufacturing system. Before Trump, the Biden administration had also taken the initiative to manufacture outside China. This trend will be faster. India’s current exports are $750-800 billion and China’s $3.3 trillion. In this situation, India has ample scope for growth.

Opportunity to increase exports
Opportunity for India to increase export capacity Unlike the COVID-19 crisis, which simultaneously shook both demand and supply, the current situation is supply driven, stemming from structural changes in global manufacturing. India’s export potential is going to increase with increasing capabilities and favorable policies. A possible global interest rate cut could boost consumption and further boost India’s economy. India’s competitive edge is not limited to exports. It also benefits from skilled workers, a strong system, political stability and improved relations with many countries.

India ahead in taking advantage of change
The global business landscape is undergoing a transformation. India is in a unique position to take advantage of this change. With modest tariffs, growing manufacturing base and structural benefits, India can become an important link in global supply chains. India’s destiny is to engage more closely with the US and the West, however, it is also important to be cautious about US diplomacy. India needs to invest in cutting-edge future technologies like autonomous systems and artificial intelligence (AI) with Western partners.

A ray of better hope
The tariff issue is a ray of hope for India, as it is one of the most protectionist large economies in the world. If India is able to enter into a special agreement with the US, under which it has to make concessions to reduce its tariffs substantially, it will indeed be great for India.
Indian tariffs could decrease significantly and this would increase efficiency and productivity in India and increase growth

The need to make our firms globally competitive
India is not helping itself, as it is reducing the possibility that its firms will actually be globally competitive. In such a situation, it needs to make its firms competitive at the global level. India’s destiny is to connect more closely with other great free market democracies in the world.

Special emphasis will have to be given on pharma, electronics, textiles
India should focus on pharma, electronics, textiles to avail tariffs. Textiles should be expanded through PLI and other schemes. The government has announced many schemes to increase exports, yet more work is needed. There is a PLI of $2.7 billion for electronics. There should be a consistent focus on enhancing the efficiency and performance of these sectors.

It is important to understand America’s policy
It is important for India to understand America’s tariff policy. Tariffs on India are very low in areas where India has competition from China along with Bangladesh, Vietnam and Lanka. For example, Bangladesh is competitive in textiles. Vietnam and China are in manufacturing. These countries have tariffs of 37 to 154 per cent.