India’s post-independence economic strategy in 1947, rooted in socialist principles, failed to deliver strong growth. In 1956, the nation’s per capita income was on par with South Korea, which had just emerged from war. However, while South Korea evolved into a global economic powerhouse, India struggled to keep pace. By 1991, as the Cold War ended, India faced a severe economic downturn that compelled policymakers in New Delhi to implement sweeping structural reforms—measures that ultimately set the stage for future expansion.
Today, India faces another pivotal moment as it navigates the impact of steep tariffs imposed by former US President Donald Trump. The recent 50% duty on certain Indian exports has placed the country on nearly equal footing with China in terms of trade barriers. This development is particularly significant because the United States is India’s largest export market. Previously, the Biden administration had positioned India as a strategic alternative to Chinese manufacturing, promoting it as part of a ‘friend-shoring’ initiative.
Despite the setback, some analysts see potential for long-term gains. The tariff pressure could accelerate domestic industrial development and encourage greater self-reliance in key sectors. Just as the crisis of the 1990s led to transformative policy shifts, current trade tensions may prompt India to strengthen its manufacturing base, diversify export markets, and enhance competitiveness on the global stage.
— news from Bloomberg.com
— News Original —
India Sees a Silver Lining Inside Trump’s Tariff Storm
The socialist economic model India adopted following its 1947 independence didn’t work out so well. In 1956, its per capita income was similar to that of post-war South Korea. While the latter eventually transformed itself into an economic giant, India continued to lag. By the end of the Cold War in 1991, its economy was spiraling into outright crisis, a wrenching experienceBloomberg Terminal that forced New Delhi into a raft of major reforms.
That example may be worth keeping in mind as India now confronts the pressure of massive new tariffs thanks to US President Donald Trump. The 50% levy that kicked in last month leaves India — which the Biden administration had touted as a friend-shoring partner to help diversify away from China — with roughly the same tariffs as China itself. That’s a major blow, given that the US is India’s top export destination.