Best of BS Opinion: India's tariff woes will need careful handling

Today's Opinion Page is dominated by the issue of US tariffs, and what India can do to mitigate its effects. How will it impact India's GDP, and is turning to China really a wise call. Read on.

Hello and welcome to the Best of BS Opinion, our daily wrap of Business Standard's opinion page.  India's latest gross domestic product (GDP) numbers have come as a surprise to all, beating even the Reserve Bank of India's projections. But it might be too early to break out the bubbly, warns our first editorial. Things could get tough going forward, due in no small measure to US President Donald Trump's 50 per cent tariffs, which could hamper jobs and domestic demand if not scaled down or back. Demand could also be hit by households holding off big purchases in anticipation of a rationalisation of the Goods and Services Tax. A bigger issue is the low nominal growth in Q1FY26 GDP, which was only 8.8 per cent. If inflation stays low, nominal growth may remain around this level or even lower, which, coupled with lower GST revenue, would make it harder to achieve fiscal targets. The government will need to tread carefully to deal with these multiple emerging issues.  India and Japan have signalled a significant deepening of bilateral ties in the context of tariffs on both nations by the US, particularly with President Trump deciding to give this year's Quad summit in Delhi a miss. The strained relationship with the US has pushed New Delhi and Tokyo to push for a renewed reciprocal tilt, notes our second editorial. Both nations are looking to derive as much shared benefit - 21 pacts signed - from a relationship that has always been cordial and constructive. For both, this hedging of geopolitical strategies is also critical ahead of the Shanghai Cooperation Organisation (SCO) Summit, at which Chinese President Xi Jinping is likely keen to project an alternative China-led global power bloc to Washington.  Our columnist Sunita Narain ponders the coal question and whether we can really do away with it. The world is fast running out of the carbon budget to keep temperature rise below 1.5°C — a guardrail against out and out devastation. At the same time, clean energy is not close enough to close the gap. The EU's energy deal with the US shows it has agreed to remain wedded to fossil fuels, raising questions for countries like India, which face real energy poverty coupled with a need for affordable development. India's energy demand is set to double in five years, but even then, coal will account for half of that supply. In a smell-the-coffee argument, she argues that given that scenario what India needs to do first is to reduce emissions: first, by forcing thermal power plants to meet the highest efficiency standards for the industry, and second, by replacing 20 per cent of coal with biomass as raw material. Unfortunately, current rules favour the cheapest producer, which usually means the worst polluter because of older, depreciated plants, or those with low investments in technology and maintenance.  This makes dirty coal the king of India's power sector, a throne it must be displaced from, she writes.  As India shifts it gaze eastwards to China in the wake of the US' tariffs, our columnist Ajay Shah warns that we take a good, hard look in the mirror before venturing ahead. For starters, he says, India is a liberal democracy at heart, an identity it should not dilute by getting into bed with China, which is not a natural, democratic partner. Unlike the US, India's problems with China go beyond tariffs. In fact, both Democrats and Republicans have backed India's rise, and notwithstanding Trump, the US will revert to being an advanced democracy and will improve India ties. China, however, talks of global multi-polarity but wants to the big bully of Asia. As America shuts its doors, India must find new export markets, ideally in advanced non-US democracies - which are twice the size of the American market - instead of China, where they will have to battle economic nationalism and a lack of rule of law. What India needs in the moment, he writes is a greater sense of history and, looking ahead, a greater strategic sense.  Peter Brannen’s ambitious, absorbing book begins with the origins of life and travels through human civilisation and technology, including all the modern woes linked to carbon dioxide. Jaime Green, in her review of 'THE STORY OF CO2 IS THE STORY OF EVERYTHING: How Carbon Dioxide Made Our World' notes that the book can be seen as the story of energy as well, and one of its many fascinating deep dives is its critique of experts who fail to take it into account, given that on this planet, energy comes down to carbon. Brannen, she writes, is an effusive, maximalist writer, never coy with an opinion, and compelling in his arguments. His main point is that humans, even this planet, are a manifestation of life, of order pushing energy toward entropy. And that is part of the story of CO2 - the story of our entire world.