In the annals of history, crises have often served as catalysts for profound transformation. The United States’ imposition of irrational and unfair tariffs on Indian goods presents such a pivotal moment for India. For India, this could well be our ‘New Deal’ moment – a defining period between 1933 and 1939 under President Franklin D. Roosevelt, which reshaped the American economy in the aftermath of the Great Depression.

Far from denting our economy, the current tariff threat can serve as an inflection point, providing an impetus to turbocharge reforms, bolster domestic manufacturing, and deepen self-reliance. As the adage goes, “Never let a good crisis go to waste." India’s response could not only mitigate short-term hiccups but propel the nation toward sustained high growth, leveraging initiatives like Make in India and Atmanirbhar Bharat as key pillars for economic strength and national security.

At first glance, the tariffs seem intimidating, threatening to disrupt India’s economic growth. However, a closer examination reveals their minimal impact on India’s GDP. According to Moody’s, a 50% US tariff scenario, simulating the worst-case escalation, could shave just 0.3% off India’s GDP in FY26, primarily through reduced export competitiveness and potential supply chain disruptions. In other words, the potential impact on our $4.30 trillion economy is marginal, easily absorbed by domestic demand and strategic pivots.

This asymmetric impact gives India room to respond strategically rather than defensively. The 1991 economic reforms were born in the midst of a balance-of-payments crisis. Today, with robust reserves, strong macroeconomic fundamentals, and a steady 6.5% growth rate, this presents more of an opportunity than a threat to fast-track transformation.

India’s merchandise exports to the US, while significant at around $80 billion annually in goods like pharmaceuticals, textiles, and engineering products, make up only about 18% of total exports. In addition, the tariffs are expected to impact about 55% of India’s exports, amounting to approximately $48 billion in value, in sectors such as gems and jewellery, textiles, and auto components. The broader trade ecosystem, including services and other markets,........

© News18