Opinion | Target 2038: How Modi's Make In India Reboot Can Turn Trade Shock Into Strategic Win

A tariff works when American buyers can switch to another supplier, and it turns costly for Washington when they cannot

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On September 2, the Japan Credit Rating Agency raised India’s long-term sovereign rating by one notch, from BBB to A-, and lifted the country ceiling to A.

Growth had held at around seven per cent, carried by private consumption and public investment, and the banks’ lending into that growth had brought their gross non-performing loan ratio down to 1.8 per cent by the end of March, which the agency credited to the Insolvency and Bankruptcy Code, government capital injections and tighter supervision by the Reserve Bank of India.

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It traced the productivity gains to digital public infrastructure and GST, and it counted foreign exchange reserves well above India’s short-term external debt as the cushion that would absorb a shock from abroad.

The ceiling matters for manufacturing because it caps the rating any Indian borrower can receive on foreign-currency debt, and companies building plants often borrow abroad. On JCR’s scale, India now sits two notches above the BBB that S&P awarded in August 2025, after an eighteen-year wait.

Sixteen days later, on September 18, that shock came as President Donald Trump signed the Lindsey O. Graham Sanctioning Russia and Iran Act, which requires him to impose tariffs of up to 100 per cent on the five largest buyers of Russian oil and gas that are still buying 30 days after enactment, unless he waives them in the national interest. Its backers in Congress named India and China as its targets because their purchases keep paying for Russia’s war in Ukraine. In February, the Supreme Court ruled that the emergency-powers law behind Trump’s earlier tariffs on India gave him no power to levy them; however, the new Act gives him tariff power over India under a statute. On the same Friday, the White House extended its $100,000 charge on new H-1B petitions for workers abroad to September 2027, although a federal court in Massachusetts had struck the charge down in June and nobody is currently paying it.

The first signal measures the strength of India’s economy, and the second measures how much damage Washington can do to it. Make in India turned 12 on September 25, and it rests on the premise that factories convert the first kind of strength into protection against the second. The past year bore that premise out in smartphones.........

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