India is on the verge of signing a large trade agreement with US President Donald Trump, but behind the shiny titles lies the blunt reality-this deal could slice directly through India through the long protected economic armor.
The once -well -known country is preparing for its proud “tariff shift” to drop its guard. Cost? Possible blows this production base, local industries, and can even be the economic choices of sovereignty.
Trump, who created a 26% tariff on Indian exports last month before the pause, has called Indian trade barriers outrageous. The new discussion of the transaction is India's sharp turn.
Cnbc requirements New Delhi has suggested to remove import duties on pharmaceuticals, car parts and steel from the US, at least for the amount of patched. On the surface it looks mutual. Actually, that's not the case. India has kept these responsibilities high for a high reason – keeping its home factories alive. Now, as they are tilted, just to stay in Washington's good books, whole sectors can be destroyed.
Indian tariff horn quickly crumbles
According to the World Trade Organization, the average rate of India is still 17% – this is five times the US pay for incoming goods. Indian tasks help protect everything from agriculture and its hardware, up to footwear, car parts, gold and jewelry. When zero tariffs open for US products, these protective layers will disappear.
Trump knows this and uses the risk of suspended tariffs to put pressure on India. So far it works. He recently said that the deal is “great”. And of course it is – for him. However, this is not just about diplomatic ego. India needs a transaction. Trade with the US hit $ 129 billion in 2024. India considered a $ 45.7 billion surplus, something Trump has itchy to crush.
Because economic growth is about 6%, India is desperate to reach higher. Putting it to 8 or 9% means that the state must attract more foreign capital and expand to the world market. And let's face it: Washington nods help both. But a subtle print is pain.
He fears that the US could swim under a new structure with India. Of course, zero responsibilities sound well on paper. But what does it mean for India's “Make in India”? Analysts claim that the actual damage may be industry -specific, but that does not mean that it is harmless.
Trump transaction could be destroyed by India's main industry
India may not have to panic in every sector. For example, importing steel from the US is zero for Americans. This is a loss game after the transport costs are taken into account. Even if the tariff wall falls, the US steel is unlikely to flood the Indian markets. But this is just one small victory in the sea of losses.
In Pharmas, the US exports mainly patented drugs at the price of the elite. Indian consumers do not buy this stuff on a scale, even without tariffs. So again there is no immediate threat there.
The biggest nightmare is that Indian generic drug manufacturers-who already operate with razor and thin periphery, forced the US to build factories. This would destroy their cost model. Worse, Washington covers the import of Indian generic drugs on the basis of this “new transaction”, it can ruin one of India's strongest export engine.
Then there are cars there. American car manufacturers like Ford and General Motors have tried and managed to overcome Indian drivers. Demand is too wide. Most people want ultra -light Indian brands or top -notch European trips. Americans sit in the middle of a clumsy.
So it's not as if there was a storm for our cars. However, the door of a zero tarit opens, even if no one walks through it. Local players like Tata or Japanese and Korean giants, such as Toyota, Suzuki and Hyundai, are already deeply intertwined on the market.
But don't make a mistake – this deal is not painless. The Indian economy lasts with careful protectionism. Disassembling this structure can be long -term pain. If the government knit too hard, it may push the chain reaction, forcing domestic companies to cut or close costs.
And yet, Wall Street smiling. Investors are already making bets.
In the stock market, banking, materials and health care stocks are all green in anticipation. In particular, financial diseases are expected to end the transaction.
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