Indian Prime Minister Narendra Modi strongly opposed U.S. President Donald Trump’s plans to impose steep tariffs on Indian exports, calling the measures “unfair and unjustified”. As part of an effort to mitigate potential economic repercussions, Modi hinted at new tax incentives for businesses and exporters as a counterbalance – signaling his two-pronged strategy of resistance and relief.
Trump’s Tariff Threat On Wednesday, the White House revealed its plan for new tariffs against Indian goods ranging from steel and textiles to pharmaceuticals. Trump justified his action under his “America First” agenda by accusing India of maintaining “massive trade imbalances” and unfair market barriers that hamper U.S. firms.
The proposed tariffs, estimated at billions of dollars, come at an awkward moment for both leaders. Trump sees them as part of his campaign to protect American workers; for Modi they represent a potential risk to India’s export-driven sectors and growth targets set forth by his government.
Modi’s Response On Friday evening in a televised address, Modi strongly denounced tariffs as protectionist measures that threaten bilateral relations and warned they could damage bilateral ties. He declared these actions were unfair and unjustified and undermined partnership between our two democracies, further damaging bilateral ties.
At the same time, he sought to reassure Indian businesses, suggesting his government’s intent on cutting taxes and offering targeted incentives for industries most affected. Modi declared: “We will not allow external pressures to derail India’s growth story.” Our exporters would also be supported through relief measures, innovation, and access to new markets.
Works are underway for an Income Relief Package to alleviate current debt levels.
Financial Ministry officials have indicated that they are considering proposals including tax cuts for manufacturing firms, subsidies for small and medium-sized exporters and credit guarantees for companies exposed to U.S. markets. No final package has yet been revealed but according to insiders these could be unveiled within weeks should tariffs go through.
Analysts note that tax relief could ease short-term pain but caution of structural hurdles that remain. “India cannot rely on subsidies and tax cuts alone to overcome prolonged trade tensions with the US,” according to economist Radhika Sen. She added “diversification of export markets and deeper reforms are important if India wants to endure this ordeal.
Diplomatic Tension
This tariff dispute adds more tension to an already fragile bilateral relationship, one which has witnessed both cooperation and conflict over time. While Washington and New Delhi have strengthened defense ties and collaborated on technology, trade frictions continue to be an irritant between them.
Indian officials insist they remain open to negotiations, while Trump has demonstrated little willingness for compromise. “For too long the U.S. has been taken advantage of,” Trump announced at one rally, declaring, “That ends now!”
Outlook
With tariffs imminent and no sign of compromise between governments, both appear to be bracing themselves for an extended standoff. Modi must balance his nationalist rhetoric with pragmatic economic policies that protect vulnerable industries while for Trump the tariffs represent yet another test of his protectionist gamble on trade.
As markets closely monitor this conflict, its outcome could have serious repercussions that extend far beyond Washington and New Delhi, disrupting global supply chains and testing one of the world’s most consequential partnerships.