What’s more, today, India is the world’s fourth largest economy. It truly is at an inflection point as it continues to balance increasingly contentious global trade ecosystems and unpredictable, ever-changing market conditions. The country has earned the title of the fastest-growing major economy globally, with a remarkable quarterly GDP growth rate of 8.2% during the July-September period. And this growth is moving quickly, hitting its quickest clip in 1.5 years, which was up from the 7.8% recorded in the first quarter of this year.
Yet, for all the promising developments in our economy, it is hardly smooth sailing ahead. Piyush Goyal, India’s Commerce and Industry Minister, has called on the United States to sign a free trade agreement if the Trump administration finds satisfaction with India’s proposals. This ask is especially timely now, as our trade relations hang precariously under the weight of tariffs and national emergencies.
Trade Relations and Tariffs
The U.S.-India trade relationship has experienced major obstacles over the past several years. Under President Donald Trump’s administration, the US ranked tariffs on Indian shipments to 50% thereby fully doubling it. A punitive 25% levy was put in place last August. All this happened due to India’s extensive purchases of Russian crude oil. Such measures have initiated fear among the Indian policymakers about their negative effect on bilateral trade.
In response to these tariffs, three Democratic lawmakers in the US House of Representatives recently introduced a resolution aimed at terminating the national emergency that justified these duties on Indian imports. This decision is yet another sign of a major change underway in the political landscape. It would create opportunities for reengagement on existing trade deals between the two countries.
During all this chaos, Goyal reiterated the need to promote trade settlements in Rupees with other nations. This would greatly reduce India’s demand for US dollars in global transactions. This shift will avoid the strengthening of its own currency and reduce its vulnerability to external shocks.
Economic Growth Amid Challenges
Even as India attracts the world’s attention while dealing with massive portfolio outflows, its economic fundamentals continue to look bright. In fact, foreign investors have sold a net of almost $18 billion in stocks this year. Consequently, India has emerged as one of the most impacted global markets from such outflows. Nonetheless, this has not dimmed the prospects of a booming economy.
Former US Trade Representative Jamieson Greer lauded the offers made by negotiators with India, describing them as “the best we’ve ever received.” His comments suggest that there is some possibility of compromise. India’s tremendous capacity to continue strong economic growth despite considerable external pressures is a further testament to that country’s resilience and future trajectory.
India imports about 90% of its crude oil, making it vulnerable to fluctuations in global oil prices and international relations. The reliance on foreign oil underscores the need for strategic partnerships and trade agreements that can provide stability and support economic growth.
A New Perspective on Trade
The new global landscape has brought about a new perception of India’s status in the US’ trade strategy. The US now regards India as a viable alternative market to diversify its trade channels, particularly in light of geopolitical tensions elsewhere. This view of the question opens up immense prospects for India, to further establish India’s image as a growing influential player in the global trade.
India’s central bank is adopting a much more guarded touch. It is shying away from actively intervening in currency markets to prevent the fall of the Rupee. This thoughtful approach provides enough room to turn and adapt to outside forces while still prioritizing long term economic investments.