Now comes the final lesson from what has been an extraordinary year: India’s government allowed the rupee to slide to historic lows, and this apparent weakness is actually the soundest strategic choice Modi could have made.

The rupee fell to 92 per dollar—a historic low. Hours within the India-US deal being announced though, it recovered to about 90 against the dollar.

Traditionally, the decline seen in the rupee’s value over the past few months would signal crisis and weakness. Governments usually scramble to defend against such currency depreciation. Central banks drain reserves. The narrative becomes one of economic distress and lost confidence. But India’s approach has been different. The Reserve Bank of India has resisted the urge to spend heavily to defend the currency level. Instead, it has accumulated reserves to a record $709.4 billion. It has distinguished between speculative shocks requiring intervention and fundamental adjustments the market should be allowed to make. It has let the rupee fall freely.

This choice was not made in isolation. It is the culmination of a strategic judgment that began with the India-US trade negotiations.

When Trump’s administration imposed a 50 per cent tariff on Indian goods in August 2025, it was the first real test of Modi’s conviction that India would not bend under pressure. The tariff was punishing. Gems and jewellery exporters faced collapse. Textiles, leather, engineering sectors reeled. The government could have capitulated. It could have promised to buy more from America, to abandon Russia, to align completely. Instead, it held firm through months of uncertainty and negotiation.

On February 2, Trump called Modi. The conversation was personal. Within hours, the tariff fell from 50 per cent to 18 per cent. India had negotiated a deal that would have been unthinkable in the depth of the trade war. This was not surrender. This was leverage. Trump blinked first, and India now has among the lowest tariffs in Asia.

An 18 per cent tariff is still an 18 per cent tariff. Indian exporters would still face some cost burdens, but they are much better placed that they were just a week ago. Interestingly though, the Indian currency........

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