India must stand up to Trump's bullying ways, no matter the price

India must make its economy more outward-oriented but for its own Reasons - not to cater to Trumpian demands

The past week has been a wakeup call for India. Optimistic assumptions of an upward trajectory in India-United States partnership during Donald Trump’s second presidency have been rudely shattered by a 25 per cent tariff on his “friend” India, threats of unspecified penalties for buying oil and weapons from Russia and petroleum products from Iran, and for being a member of Brics Plus. He has also disparaged the Indian economy as a dead weight bound to go down the drain, just as he expects his erstwhile friend Russia to do.  This is no longer a trade and tariff war — it is a geopolitical challenge that uses commercial instruments to bend friend and adversary alike to the current whims of the US President. Some countries have surrendered to his extravagant and discriminatory demands by promising large investments in the US, which may or may not materialise, by which time Mr Trump may be gone. Others like China have resisted using their own commercial leverage over the US. India does not have much leverage, so should it just grin and bear it?

 

The way to deal with a bully is to resist bullying, because submission in the first instance only invites even more overbearing demands in future. What may seem like a small price to pay now will lead to a much higher price later. Not standing up to Mr Trump’s demands now will trap India in an attrition process which will progressively demand even bigger concessions than now. Not drawing a line is fraught with long-term consequences for India’s national security and its credibility and influence in the world.

 

Will there be a price to pay for India’s resistance? Most certainly, and the country should be prepared for this. What is the extent of our economic and commercial relationship with the US?

 

India-US trade volume is at around $186 billion, comprising 10.73 per cent of the total. About 18 per cent of India’s exports go to the US and India sources 6 per cent of its imports from the US. A  10 per cent dependence is significant but not unbearable. In terms of foreign direct investment, the US is only the fourth-largest investor, with 11 per cent of a total inflow of $81.04 billion in 2024-25 — an important but not irreplaceable source. It is estimated that India may lose a couple of percentage points in gross domestic product terms if the higher tariffs are imposed on August 1, but that is a modest price to pay. Even as a much weaker country, we have paid much more in the past to take a stand on our vital interests.

 

The geopolitical ramifications of Mr Trump’s actions are even more worrying. He is demanding a veto over India’s relations with other countries. This should be firmly rejected. India has good reasons to be part of Brics Plus, just as it does to be part of the Quad. The relationship with Russia continues to serve India’s interests in many areas, though there is a diversification under way but for our own reasons. The very volatility in US foreign policy, where friend and foe can be changed on a whim, makes it all the more necessary to maintain and strengthen India’s network of partnerships. The most important asset for India in its external relations has been its credibility and predictability. Nations can rely on India to follow a consistent path. We should not lose that asset to cater to a mercurial leader, even if he leads the most powerful country in the world. The credibility and reputation that has been earned over decades  should not be sacrificed to assuage a transactional partner.

 

India should make its economy more outward-oriented but for its own reasons — not to cater to Trumpian demands. It is good that India has concluded some trade deals and it should double down and finalise others, as with the European Union. It has inexplicably dealt itself out of the most dynamic economic region of Southeast Asia for fear of China using that route to dump its goods in India. This has not led to any reduction in Chinese exports to India, which are now at an all-time high. We must find a way to reconnect economically with our eastern flank because that has an important geopolitical dimension. Most countries in this region want India to be a credible countervailing power to China, but that is not possible without a strong economic pillar. India should apply to become part of the Comprehensive and Progressive Trans-Pacific Partnership, where currently neither China nor the US is present. In the current circumstances, insulating ourselves from the vagaries of Trump’s policies may be best served by this bold initiative.

 

A final word — to those who think we should just buckle down and ride out the Trump presidency because better times will soon return. Once the facts on the ground have been altered for whatever reason, they are difficult to reverse.

 

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The author is a former foreign secretary