Early on Thursday morning, US President Donald Trump announced Liberation, which meant unleashing tariffs on the world including of course India.
Anil Padmanabhan, Editor Capital Calculus on substack, told StratNewsGlobal that the impact on the Indian economy, while significant, does not mean sack cloth and ashes.
Padmanabhan is clear that retaliation is not the answer. India needs the $29 trillion US economy as it consumed $60 billion of our exports last year.
“India needs to take this tariff hit on the chin,” he said, underscoring that it is not 26% tariffs that the US has imposed, rather it is 37% and India needs to do its sums to ensure it stays aligned with the US while getting its act together in a number of areas.
Padmanabhan says India has generally reformed only when its back was to the wall. That was the case in 1991 when then Prime Minister Narasimha Rao launched economic reforms. The same mindset must play out this time round.
“Reform of the bureaucracy is a must to cut red tape,” he said. “For whatever reason, this has not happened and there is nobody quite like Prime Minister Modi who can deliver on this.”
He cited the example of GST, a laudable measure which unified the country but so many years down the line, the bureaucracy is back to weighing it down with more and more slabs, with the inevitable red tape making an insidious come back.
Trade wise India needs to have a short and sweet “negative list”, he said, for example agriculture and pharma are two sectors that India must defend. In his view, India needs to speak clearly to the US about why it wants to keep these sectors out of the American radar.
India must also go the extra mile to boost the small and medium enterprises that employ more than 50% of the work force. Domestic investors must be given a playing field level with those of foreign investors, he said.
Tune in for more in this conversation with Anil Padmanabhan.
