Time to push back: On India and the continuing U.S. pressure
The newest allegation brought by the United States against India could prove to be the most damaging to the Indian economy. A fresh report from the White House, which lists roughly 40 nations altogether, asserts that India is among the principal facilitators helping China bypass American tariffs. The claim suggests that India and these other nations bring in Chinese merchandise, carry out minor alterations, and subsequently ship them to the U.S. under lower duty rates than what direct Chinese products would encounter. It is widely known that Chinese imports constitute a major foundation of Indian manufacturing. Nevertheless, the profile of these purchases is gradually transforming. India is slowly shifting away from merely importing completed items, applying superficial changes, and reselling them. On the contrary, the proportion of intermediate components within Indian imports originating from China has been on a continuous upward trend. In other words, India is currently handling a large portion of its own assembly and production across multiple industries, depending on China and other suppliers solely for required components. This evolution represents a vital milestone toward comprehensive domestic manufacturing. Washington has not yet declared any retaliatory measures stemming from its evaluation of alleged Chinese tariff circumvention, though such a scenario remains possible. Should such actions materialize, however, New Delhi must refuse to yield to American demands on this matter. As officials themselves have acknowledged, Chinese supplies currently play a crucial role in the success of the "Make in India" initiative.
Apprehensions regarding India capitulating to American pressure are rooted in historical patterns. During his initial tenure as U.S. President, Donald Trump strongly criticized India's import duties on luxury motorcycles. Back in 2018, India lowered these tariffs from a range of 60%-75% down to 50%, and subsequently reduced them further to 40% by February 2025, even before formal trade negotiations had commenced. In a similar vein, the government drastically cut import taxes on shrimp feed and its raw ingredients during the February 2024 Budget, addressing a primary demand of the United States. Identical adjustments were made regarding duties on frozen duck and turkey. The threat of 50% punitive tariffs compelled India to reduce its reliance on Russian petroleum, notwithstanding the country's vocal assertions regarding energy independence and the favorable discounts it was obtaining. Russia's proportion of Indian crude imports dropped beneath 20% by January 2026, compared to nearly double that figure when the 50% penalties were enacted half a year prior. A comparable situation occurred with Venezuelan oil back in 2019. It was only due to the turmoil in West Asia and a temporary waiver from Washington that India eventually resumed purchasing Russian crude. Furthermore, permitting foreign direct investment in the e-commerce inventory model, a step India took recently, was something Amazon had campaigned for over the span of ten years, representing a softening of India's long-standing policy. Because the U.S. can exert tremendous leverage, making certain compromises is somewhat comprehensible. Yet, this dynamic has only encouraged Washington to escalate its expectations, meaning the time has come for India to begin standing its ground.