Trump tariffs may force India to review Viksit Bharat playbook

Subscribe to enjoy similar stories. New Delhi: In the immediate aftermath of the new US tariffs, India’s response has been twofold: to seek new opportunities in the changing world order, and re-evaluate its manufacturing strategy.

US President Donald Trump’s additional 26% tariff on Indian imports into the US hits at the protection the Union government offers to domestic products from competing imports—one of two key elements of the country’s manufacturing strategy; the other is incentives linked to production. The two elements are key to Prime Minister Narendra Modi’s vision for making India a developed nation—or Viksit Bharat—by 2047, a century since Independence.

On Friday (Thursday in the US), Trump’s administration recalibrated its reciprocal tariff on India to an additional 26% levy across a range of commodities starting 9 April, down from the 27% hike announced on 2 April, as it corrected its trade deficit computations. Also read | Trump’s reciprocal tariffs: India braces for economic ripples “We are of the view that the reciprocal tariffs on India and other Asian countries could create an opportunity for India to scale up its manufacturing capabilities," said a government official who spoke on condition of not being named.

There is a strong possibility that manufacturing firms in countries like Vietnam and Thailand may consider relocating to India to take advantage of lower tariff and incentive benefits, the official said. The US has imposed additional 46% tariffs on Vietnamese imports into the US, and 36% on products shipped in from Thailand.

“Our focus is on increasing domestic manufacturing, which will lead to employment generation. If required, we are open to introducing new schemes or modifying existing ones