Ever since the return of Donald Trump to the political forefront, India’s trade and diplomatic landscape has been facing unprecedented challenges. With Trump's latest move a 25% tariff hike on Indian exports, the pressure on India has mounted significantly. This fresh blow is reportedly a response to India’s continued purchase of Russian oil, which the Trump administration sees as an affront to Western sanctions on Moscow.
With this, India now faces a total of 50% tariffs on several key export sectors, excluding only electronics, pharmaceuticals, and semiconductors. Trump, as ever, justifies his aggressive strategy as part of his “Art of the Deal”, a philosophy where he believes in squeezing counterparts into submission. This time, India is his target.
The administration has offered a 15-day window, positioning it as a chance for India to negotiate. But this window is less a gesture of goodwill and more a ticking clock pressuring India to abandon its energy partnership with Russia. It raises a disturbing question: Does India now need American permission to decide who it buys oil from?
The Hypocrisy of Sanctions
What makes this action particularly contentious is the glaring double standard. China, which imports more Russian oil than India, has faced no such tariffs. In fact, while India is being reprimanded, there are no new penalties against Beijing. The message is clear, America’s strategic silence is transactional, and India is being strong armed not out of principle, but out of convenience.
While the Modi government initially remained silent after the first round of tariffs, hoping diplomacy or strategic silence might yield better outcomes, it has now finally responded. Citing U.S.-Russia trade worth billions and pointing to America’s own purchases of industrial inputs from Russia, India has rightly called out Washington's hypocrisy.
Former NITI Aayog CEO Amitabh Kant, in a tweet post the second tariff hike, finally called this a crisis. But this crisis wasn’t born overnight. It is the result of a decade of complacency and missed opportunities. India failed to diversify exports, to build exclusive global capabilities, and to shield its economy from geopolitical blackmail.
Strategic Blind Spots and Global Vulnerability
Trump’s confidence in arm twisting India stems from a simple economic reality. The U.S. is India’s largest trading partner, and India enjoys a trade surplus with America. On the other hand, China, India’s second-largest trading partner, accounts for a $100 billion trade deficit. In short, India is economically exposed from both ends.
And while key sectors like pharma and semiconductors are exempted, the remaining 55% of exports worth $40–45 billion are now under threat, with tariffs likely leading to $20–25 billion in losses. This will disproportionately hurt sectors like textiles, apparel, and leather, potentially putting 10–15 lakh jobs at risk. MSMEs in towns like Surat, Ludhiana, and Agra may face devastation.
India, unlike China, cannot retaliate meaningfully. It does not have rare earth metals or advanced technologies to pressure the U.S. If India restricts pharma, America has alternatives in Germany and Ireland. If electronics are blocked, the U.S. can turn to Vietnam or Taiwan. Simply put, India lacks leverage.
A Foreign Policy Misfire
Perhaps the most stinging consequence of this crisis is how it has exposed India's diplomatic isolation. Once a leader in the Global South, India now finds itself increasingly alone. Its bid to maintain a non-aligned stance has alienated both the West and its former allies like Russia and Iran. Meanwhile, countries like Pakistan ironically once dismissed as global pariahs are now receiving overtures from the U.S., including invitations to the White House and potential oil cooperation.
This isn’t just geopolitics, it’s humiliation. And it's a signal that India’s strategic standing has weakened. While Indian officials pose tough on social media and reels, the substance of diplomacy is lacking. The Foreign Ministry, especially under Jaishankar, has failed to effectively navigate India through these global crosscurrents.
Meanwhile, Bangladesh and Vietnam with lower tariffs and more competitive manufacturing bases are poised to usurp India’s textile and electronics exports. Bangladesh is already the world’s second-largest textile exporter, and Vietnam is surging ahead in electronics and leather.
The Mirage of Self-Sufficiency
For years, Indians were told they were on the verge of global dominance. Grand claims from finding lithium deposits to becoming a smart city powerhouse were widely publicized. Yet, most of these headlines proved to be overhyped or outright false. The much vaunted lithium discovery in 2023 turned out to be commercially unviable. Gold finds in Uttar Pradesh were scaled down from 3,500 tonnes to a mere fraction.
While the nation was distracted by narratives of cultural revival, temple politics, and polarizing debates, core strategic sectors were neglected. The Make in India mission faltered. The manufacturing sector stagnated. And India failed to build defensive moats in high-tech or raw material sectors that could have given it negotiation power on the global stage.
Today, as Trump imposes tariffs and threatens secondary sanctions, we are forced to confront the consequences of these years of inaction.
Where Do We Go From Here?
There is no easy fix. But the first step is accepting that mistakes were made both in economic policy and foreign diplomacy. This is not a time for diversion or denial. India must now undertake a new wave of liberalization, as it did in 1991, but tailored for today’s globalized and geopolitically charged world.
It must aggressively build indigenous manufacturing capacity, especially in defense and critical tech. It must establish stronger, diversified alliances with France, Japan, South Korea, and Israel. India must develop rare earth processingcapabilities, high-value tech, and independent energy infrastructure. Only then can it stop being vulnerable to coercion.
And most importantly, India needs mature diplomacy not self-congratulatory optics. Somewhere, Trump’s ego was hurt. Somewhere, a poor judgment call was made. And now, India is paying the price.
As the world watches, the question remains: Will India wake up to its strategic realities, or will it continue to live in the illusion of grandeur while others write the rules?
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