Tariffs, trade and tipping points: What are some risks and opportunities for India?

In recent weeks, global trade has become even more complex as shifting tariff policies continue to fuel uncertainty across international markets and disrupt supply chains again. So, what are some risks, opportunities and strategies lying ahead for India?

Let’s take a look

Balancing without tilting

In a fragmented geopolitical and trade landscape, aligning too closely with one bloc can put India at risk. Considering that global value chains are deeply interlinked, we need to be strategically diplomatic without compromising on long-term economic goals.

Takeaway

Maintain trade neutrality, strengthen domestic manufacturing and deepen ties with emerging markets.

Watch the spillover

As China looks for alternative selling markets, India can face a wave of cheap imports. With our trade deficit with China already at a record high of USD99.2 billion, we need to be more watchful.¹

Takeaway

Engage in strategic dialogue to lower tariff and non-tariff barriers, unlocking better access for our exporters. At the same time, strengthen local value chains for critical inputs to boost manufacturing resilience.

Anti-dumping measures

India has imposed a 12 per cent safeguard duty on select steel imports to protect domestic manufacturers.² We need to be more proactive in monitoring developments and implementing strategies.

Takeaway

Stay vigilant and implement essential trade measures to shield domestic industries from dumping threats.

Origin matters

With the U.S. tariffs pushing firms to rethink sourcing, India has a chance to capitalise—but only if we focus on strategic value chain integration. To meet the non-preferential rules of origin criteria, we need to prioritise ‘substantial transformation’ over ‘basic assembly’.

Takeaway

Focus on developing deep manufacturing capabilities and prioritise strengthening the technology ecosystem.

Trade pact soon

India will potentially be the first country to sign a trade pact with the U.S., giving us a head start in the supply chain realignment race. Currently, India’s bilateral trade with the U.S. stands at around USD120 billion.³ The agreement can take this up to USD500 billion by 2030.⁴ Besides, we also need to diversify our export markets with other key countries.

Takeaway

Reduce single market dependency by fast-tracking FTAs with countries, such as the U.K., EU, Oman and Canada, where Indian exporters can capitalise on emerging market opportunities.

India’s position in global trade is rising but staying ahead will require sharp strategy and stronger alignment with global shifts. By leveraging its growing global position, the country can play a larger role in the evolving supply chain landscape.

^[1] FY25 trade deficit with China close to USD100 billion amid dumping concerns, India Shipping News, 28 April 2025, accessed on 29 April 2025
^[2] Centre imposes 12 per cent safeguard duty to shield Indian steel sector, Press Information Bureau, 21 April 2025, accessed on 29 April 2025
^[3] India U.S. trade, IBEF, February 2025, accessed on 29 April 2025
^[4] India, U.S. look to deepen trade, tech ties through new bilateral agreement, Economic Diplomacy Division, 22 April 2025, accessed on 29 April 2025