WEDNESDAY, MAY 07, 2025
India's Perspective on the Global Trade War: Challenges and Opportunities
Published on Apr 21, 2025
By EMN
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- In recent years, the global economic landscape has been increasingly shaped by trade tensions among major economies, particularly between the United States and China. These trade wars, rooted in protectionist policies, tariffs, and geopolitical rivalries, have sent shockwaves through international markets. From India's perspective, the global trade war presents both challenges and opportunities that could shape the future of its economy.
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- Understanding the Global Trade War: A trade war typically arises when countries impose tariffs or other trade barriers on each other in retaliation for unfair trade practices. The most notable example in recent history is the US-China trade conflict, which escalated in 2018 and led to billions of dollars in tariffs on goods traded between the two largest economies in the world. This conflict disrupted global supply chains and had far-reaching consequences for emerging markets like India.
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- India's Position in the Global Trade Ecosystem: India is the world's fifth-largest economy and a significant player in global trade. Traditionally, India has maintained a cautious approach to globalisation, balancing between free trade agreements and protection of domestic industries. The global trade war has forced India to reassess its trade strategies and partnerships.
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- On one hand, the disruption in global supply chains created opportunities for Indian exporters, particularly in sectors like electronics, textiles, pharmaceuticals, and automobiles. Many multinational companies began looking at India as an alternative manufacturing hub to China, a move aligned with the Indian government's "Make in India" initiative.
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- On the other hand, the increased protectionism globally has affected India's exports, particularly to the United States and China, two of its largest trading partners. Indian goods faced higher scrutiny and competition, and retaliatory tariffs by the US on Indian steel and aluminum added to the challenges. Furthermore, India itself withdrew from the Regional Comprehensive Economic Partnership (RCEP) in 2019 due to concerns over China's dominance, reflecting a cautious stance on large multilateral trade deals.
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- Economic and Geopolitical Implications:
- India's trade policies are increasingly being shaped by geopolitical considerations. Strengthening ties with the United States, Australia, Japan, and the European Union has become a strategic priority. The formation of trade alliances like the Quad and bilateral agreements with countries such as the UK and UAE indicate India’s desire to diversify its trade relationships.
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- At the same time, India must deal with internal structural challenges such as infrastructure bottlenecks, regulatory hurdles, and the need for greater ease of doing business to truly capitalize on the global realignment of supply chains.
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- The Way Forward:
- For India, the global trade war is a reminder of the volatility of international relations and the need for economic resilience. To benefit from the changing global order, India must:
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- *Invest in modernising its manufacturing sector.
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- *Encourage innovation and skill development.
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- *Negotiate balanced trade deals that protect domestic interests while promoting global integration.
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- *Reduce dependence on any single country for critical imports, such as electronics and crude oil.
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- While the global trade war presents significant short-term challenges, it also opens a window of opportunity for India to assert itself as a global economic power. By adopting pragmatic and forward-looking trade policies, India can transform these geopolitical shifts into long-term gains and emerge stronger in the new world economic order.
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- Dr. Ranjit Paul
- Academic Dean
- Public College
Nagaland Districts
