Will Trade-Shy in India in addition to Edge in Tariff-Driven Slowdown?

India is The World’s Fifth-Largest and Fastest-Growing Major Economy.

Yet, A Recent Legacy of Protectionism and Inward-Focused Trade Policies Have Held Back Its Global Competitiveness.

Ters Tariffs Are High And the Share of Global Exports Remains Under 2%. India’s Vast Domestic Market has been fueled with a Growth – Outpacing Many Oters, Economists Argu, Larzy Because The Rest of the World is Slowing. But in a turbulent, increasingly protectionist way, Self-reliance May Oddly Serve as A Short-Term Shield.

AS Counters to Respalibrate to Respalibrate US Trade Policies – Like Donald Trump’s Latest 90-Day Tariff Pause of Saber-Rattling – India’s Relative Detachment May have made it looked more like the more Trade-dependent economies.

“India’s Lower Exposure Trade Could Favour. Says Rajeswari Sengupta, An Associate Professor of Economics at Mumbai-Based Indira Gandhi Institute of Development Research.

“Being Trade-Shy has turned into Advantage – But We Can’t Afford Complacency. To Seize New Opportunities, India Must Stay Nimble and Open Up to Trade Gradually and Strategically,” She Adds.

It May Not Be Easy, Given India’s Long and Complicated Relationship With Trade Barriers and Tariffs.

In His Book India’s Trade Policy: The 1990s and Beyond, Columbia University Economist and Noted Trade Expert Arvind Panagariya Traces The Complex and Often Inconsistent Evolution Of India’s Approach to Trade.

During The Inter-War Years, Industries Like Textiles and Iron and Steel Lobbied – And Received – High Levels of Protection. The Chronic Shortages of World War Led to Even Strict To Import Controls, Enforced Through Licensing System.

While Asian Peers Suchan, South Korea and Singapore Shifted to Export-Led Strategies – And Began Posting Impressive Growth Rates 8-10% Annually – India Chose to Double Subtitution. As A Resault, the Share of GDP Shrank from 10% in 1957-58 to Just 4% By 1969-70.

By The Mid-1960s, India Had Banned Imports of Consumer Goods Altogether. This Not Only Removed The Pressure On Domestic Producters to Improve Quality But Also Denied Them to World-Class Inputut and Technology.

As A Result, Indian Products Lost Their Competitiveness in Global Markets and Exports Stagnated. The Resulting Foreign Exchange Shortages LED to Even Tighter Import Controls, Creating a Vicious Cycle That Stifled Growth. Between 1951 and 1981, Per capita Income Grew at a slugged Pace of Just 1.5% Year.

The Turning Point in 1991. A Balance-of-Payments Crisis, India Dismited Many Import Controls and Let The Rupee Depreciate – A Move That Much-Needed Boost To Exporters and Domestic Producers Competing With Import Licensing On Consumer Goods Only In 2001, after the World Trade Organization (WTO) Ruled Against It.

The Impact was starring: between 2002-03 and 2011-12, India’s Exports of Goods and Services Six-fold, Soaring From $ 75bn to Over $ 400bn.

With Trade Liberalisation and Other Reforms, India’s per capita Grew More in The First 17st Century Than It Did Throughout The Entire 20th Century, Notes Prof Panagariya.

But the pushback to Trade didn’t end.

Trade Liberalisation in India Was Reversed Twice – In 1996-97 and Again 2018 – With Extensive Use Of Anti-Dumping Measures From The Most Competitive Sources, According to Prof Panagariya.

“Many Post-Colonial States Like Deep-Rooted Suspicion That Simply New Forms of Colonization. Unfortunately, this Mindset Still Lingers Among Some Shame,” Says Vivek at Dehejia, A Professor of Economics Carleton University in Canada.

Many Economists Argu Stopy of Protectionist Policies Has Undercut Prime Minister Narendra Modi’s In India Initiative, What Focused on Capital and Technology-Intensive Sectors Like Sidelining Labour-Intensive Industries Like Textiles. AS A Result, The Program has struggled to deliver Meaningful Gains in Manufacturing and Exports.

“IF Foreigners Cannot Their Thirstays To Revenues To The Revenues To The Goods They Buy The Us. If We Cut Back On Their Goods,” Prof Panagariya wrote.

Such Protectionism has acronyism of LED to Allegations of Allegations.

“Rariffs Have Indian Indian Industries, Disincentivising Investments in Cosy Incumbents and Allowing Them to Steadily Garner Market Positions,” According to Viral Acharya, A Professor of Economics at New York University Stern School of Business.

With the US Turning Inward and China Under Pressure, Belonging Country Union Even Scrambling Reliable Trade Partners – And India Could Be One of Them. To Seize This Moment, Believe In India Must Lower ITS Tariffs, Boost Export Competitiveness and Signal IT Openness to Global Trade.

Sectors Like Garments, Textiles and Toys present in Golden Opportunity, Especially For The Medium and Small-Scale Sectors. After a Decade of Stagnation, The Big Question is: Can They Scale Up – And Will The Government Back Them?

IF Trump Follows on the Current Pause after the Current Pause, Or 6.4% – Drop in Exports to the US This Year, According to the Global Trade Research (GTRI), A Delhi-Based Think Tank. (In 2024, India exported $ 89bn Worth of Goods to the American Market.)

“The Trump Tariffs Are Expected to Deliver to Mild Blow to India’s Merchandise Exports to the US,” Says Ajay Srivastava of GTRI.

He emphasises The Need for India to Broaden ITS Trade Base After Securing With The US. This includes fast-tracking agreements with the en, UK and Canada, While Deepening Ties with China, Russia, Japan, South Korea, and ASEAN.

At Home, Real Reforms on Real Impact Hings: Simpler Tariffs, A Smoother Goods and Services Tax (GST)Better Trade Processes and Fair Implementation of Quality Controls. With These, India Risks Missing The Global Moment.

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