Despite challenges from Trump’s tariff regime, India can boost domestic production, reduce import dependence, and emerge stronger, says Motilal Oswal.
New Delhi, March 24: While US President Donald Trump’s tariff policies continue to raise concerns among global trade partners, a new report by Motilal Oswal Financial Services suggests that India can convert this global trade tension into a strategic opportunity to bolster its domestic manufacturing sector.
The report acknowledges that rising tariffs, exchange rate volatility, and export losses pose real challenges. However, it also emphasizes that India is well-positioned to strengthen self-reliance, capitalize on shifting trade dynamics, and stimulate local industry growth.
“While concerns persist regarding escalating costs, exchange rate volatility, and potential ramifications for exports, India can capitalize on trade tensions and fortify its domestic industries,” the report states.
Over recent years, the US has imposed heavy tariffs on Indian exports, notably in 2018 when it levied 25% tariffs on $761 million worth of steel and 10% on $382 million worth of aluminum imports from India. The impact was immediate—steel exports to the US dropped by 46% within a year, as American buyers turned to cheaper sources.
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Beyond trade, the report highlights concerns about currency depreciation. India imports nearly 87% of its crude oil, paying in US dollars. As global trade tensions trigger capital outflows and a weaker rupee, oil import costs rise, adding pressure on India’s current account and inflation. A prolonged tariff war, it warns, could shave off 0.3% from India’s GDP.
Yet, Motilal Oswal believes that India can strategically use import duties to protect and develop domestic sectors. India historically has higher tariff rates than many major economies—providing it the policy flexibility to incentivize local manufacturing and reduce dependence on foreign goods.
The report encourages India to promote sectors less affected by US tariffs, and double down on ‘Make in India’ initiatives, attract domestic and foreign investments, and negotiate favorable trade deals with alternate global partners.
While Trump’s protectionist policies may disrupt traditional trade patterns, they also present an opportunity for India to reshape its trade and industrial strategy—one focused on resilience, competitiveness, and self-sufficiency.