The additional 25 percent tariff introduced by US President Donald Trump took effect on Wednesday. It is evident that Trump perceives India's advancement as a personal threat. He is making arbitrary decisions like an inexperienced politician. He seems to have forgotten that while America has greatly benefited from globalization and liberalization, it struggles to accept other nations reaping similar benefits. In today's global economy, characterized by the surge of free trade, no nation can achieve wealth by isolating its economy. Trump also seems to overlook India's substantial contribution to the success of America's IT sector and Silicon Valley. Currently, many CEOs of major global tech companies are of Indian descent, and non-resident Indians significantly contribute to America's financial resources. Trump's frustration and desperation are apparent as he has associated the 50 percent tariff on India with revenue from Russian oil. Additionally, Trump is displeased with India's procurement of arms and oil from Russia.
If Trump thinks that by breaking Russia's oil revenue, he can force it to stop the Ukraine war, then this is also his mistake. The world's most powerful president sometimes gets afraid of BRICS. He feels that if BRICS' initiative to find an alternative to the dollar succeeds, then the dollar's dominance will end. India has also completed its preparations to face the challenge of Trump's tariff. Prime Minister Narendra Modi kept the nation's pride alive by clearly refusing to bow down to Trump. In a high-level meeting chaired by the Prime Minister, a complete strategy has been prepared to deal with the tariff. There is no doubt that India's trade will be affected by the American tariff, but the new India is now fully determined to take a stand. Economic experts and exporters are brainstorming on various options.
India's economy is currently worth Rs 339 lakh crore. Every year, India exports goods worth about Rs 38,35,000 crore to the world. Out of this, Rs 7,65,000 crore worth of goods are exported to the US alone, which is about 30 percent of the total exports. Amidst the discussions of imposing 50 percent tariff by the US, it is being estimated that it will not affect all products, but only some categories of goods. Experts believe that it may affect exports worth about Rs 3,20,000 crore.
Even if the export of the affected category to the US stops completely, only 8.5 percent of India's total exports will come to a halt. This is less than one percent of a large economy like India. In such a situation, it cannot be called a big setback for India. India has given priority to its interests by keeping aside the American pressure. Because India has kept the agriculture and dairy industry completely safe. All options are open for India. The products which are exported to America are mainly leather, jewellery, textiles, chemicals, auto parts and marine products. However, some sectors like pharmaceuticals, semiconductors and energy resources have been completely exempted from this tariff. In such a situation, India will now have to try to increase exports to South East Asia, Europe and African countries and reduce its dependence on America. After the high American tariff, it will become difficult for Indian exporters to compete and survive in the US market. Because the tariff rates on other countries will be much lower than India. In such a situation, India has the option of turning towards other markets, while on the other hand giving subsidies to industries at the domestic level. Promote the consumption of domestic goods. This will reduce the impact of US tariff on India's economic growth to a great extent.
Modi government can make some big announcements which will give relief to Indian exporters as well as help them in finding alternative markets. Indian exporters are expecting the government to announce a special package for them for economic relief and especially for the safety of workers. To avoid additional tariff, American importers and Indian exporters have done front loading, so that tariff can be avoided. Prime Minister Narendra Modi is constantly emphasizing on the Swadeshi mantra to reduce the economy's dependence on exports. He has called upon every Indian to adopt Swadeshi. In every public meeting, he has said that the countrymen should buy only those products in which an Indian has sweated. The countrymen will also have to take a pledge of Swadeshi. When there is an atmosphere of instability in the world and India is facing the challenge of keeping itself safe, then every countryman should also understand his responsibility that selling Swadeshi goods and buying Swadeshi goods will be the true service of the country. Now that the festive celebrations have started. Till Diwali, the markets will be bustling with people. People should buy every small and big product Swadeshi. This will increase the demand for products. When demand increases, production will increase. To increase production, industries will need more labour. This will keep the cycle of economy moving. The time has come for India to show the power of self-reliance. America will also soon understand that without Indians, it will lose its shine. The people of America do not have the labour force that Indians have.