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Subrahmanyam said India is at first slip and well-positioned to “take the catch” — the opportunity that could arise from Donald Trump’s plan to impose a 60% tariff on China.
Meanwhile, NITI Aayog member Arvind Virmani said a 10% tariff on several countries, including India, would lead to a partial exchange rate offset, which he believes will not significantly impact India.
Addressing Trump’s concerns about the potential replacement of the US dollar with a common BRICS currency, Virmani referred to India’s External Affairs Minister S. Jaishankar’s statement, which stated that a BRICS currency is not forthcoming. However, he said India’s ultimate aim is for the the rupee to become a globally convertible currency.
Subrahmanyam sees immense gains for India if the country is prepared for an expected trade diversion, adding that the US is India’s largest trading partner, with a deep and multidimensional bilateral relationship. He called for an increase in domestic production and the use of digitisation to enhance cost competitiveness, noting that 60% of all online sales in India currently involve mobile phones, with 98% of these being produced domestically.
With the trade-to-GDP ratio increasing since the 1991 reforms to the Indian economy, Virmani stated that geopolitical tensions and tariffs have heightened shocks to the global trading system.
While addressing the challenges of balancing export growth with import substitution, he pointed out that initiatives like the Production-Linked Incentive (PLI) schemes enable the manufacturing of new products to scale up, allowing for both exports and improved cost competitiveness.
He also mentioned that the slowdown in demand in China is leading to an excess supply of many products, resulting in the dumping of cheap imports. Virmani assured that India is taking all WTO-compliant measures to combat dumping.
Also read: India’s services sector saw strong growth in November, PMI shows
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