Exclusive: Deepen reforms, strengthen BRICS, say experts on Trumps tariff hikes on India

Kolkata: While the 50% retaliatory tariff from US President Donald Trump shocked many in India, a few experts from different fields suggested that the policymakers of the country could explore the twin strategies of accelerating and deepening reforms on the pone hand and build international alliances, preferably at the BRICS level, to respond to the challenge.

Arihant Bardia, chief officer and founder Valtrust Capital told TV9 that the situation might not be as gloomy as is apparent to a casual observer. "It is to be noted that India is not an export oriented economy, unlike other countries, and therefore the impact of this will be minimal, with many estimates, putting this at quarter percentage of the GDP. Most importantly, the tariff Saga may give a major fillip to the much needed reforms. History says that major reforms have taken place during times of crisis," he said.

Bardia also noted that the Indian rupee could be impacted negatively by the tariffs. "To some extent, this would provide relief to exporters. As an investor, one should also rebalance their global allocations to take advantage of this," added Bardia.

The founder of Valtrust Capital also pointed out that it is unlikely that India would eventually get tariffs "at the lower end of the range though the tariffs come into effect after 21 days, giving some time to negotiate and iron out the trade deal". Incidentally, the tariff on Indian goods is 50%, which is one of the highest globally and at par with Brazil.

Nandini Dutta, who teaches economics at Delhi's Miranda House, thinks India should reach out to the leaders of different countries to formulate an appropriate strategy to respond to the situation. "BRICS is a good platform to begin. Both Brazil and India are at the receiving end of the highest tariff wall. China has the standing and muscle of a manufacturing hub. There should be a collective confrontation. The US is not a producer country, it is a consuming one. It is time for the producers to team up," remarked Dutta.

"There is no point in thinking about a counter tariff against the US. We don't have that standing," she said, adding that the MEA has to understand the new emerging global alliances. "I heard on Wednesday night that PM Modi is visiting China and that is the right thing to do," she said.

Incidentally, BRICS includes 10 countries now - Brazil, China, Russia, India, Egypt, Ethiopia, Indonesia, Iran, South Africa and the United Arab Emirates.

Sankar Chakraborti MD and CEO Acuite Ratings and Research thinks in order to safeguard national priorities the Centre "is likely to emphasise diversification of export markets. In this pursuit, the bilateral trade agreements are seen as critical to stabilising trade flows and reducing over-dependence on a single market, expanding the trade partnerships with the European Union and ASEAN countries as a strategic necessity".

At another level, India could continue working with China and Russia, added Chakraborti. "India's recent outreach on the expected diplomatic engagements with China and Russia has renewed momentum around strengthening the Russia-India-China  (R-I-C) trilateral framework. These discussions are viewed as an opportunity to enhance geographical and economic cooperation, potentially providing a strategic platform for trade and investment diversification.’

On Wednesday (August 6) itself, veteran industrialist and Mahindra Group Chairman Anand Mahindra expressed the same opinion on social media platforms. I a post on X he wrote that the country's policymakers should step beyond incremental reform to push the frontiers of ease of doing business and aggressively attract investments, thereby seize the opportunity precipitated by the retaliatory tariff of the US President.

"India must go beyond incremental reform and create a genuinely effective single-window clearance system for all investment proposals," Mahindra wrote, adding "We can begin with a coalition of willing states aligning with a national single-window platform. If we demonstrate speed, simplicity, and predictability, we can make India an irresistible destination for global capital in a world seeking trusted partners." He had another suggestion: to tourism as a generator of forex engine.

Mahindra also gave the example of the economic liberalization being inaugurated in this country as a response to the balance of payment crisis in the beginning of the nineties.