India's government shifts trade strategies for US tariffs

India is bracing for potential tariffs from the U.S. as President Donald Trump prepares to impose taxes on imports starting April 2. The Indian government is changing its trade strategy to avoid negative impacts on the economy, which may harm local industry leaders. In a surprising move, India's two largest wireless companies announced partnerships with Elon Musk's Starlink Inc., a company they had previously opposed. This shift comes amid speculation that these deals are an attempt by Prime Minister Narendra Modi's administration to gain favor with Trump. Under Modi, India's economy has heavily favored a select group of wealthy businessmen by raising tariffs to protect their interests. These tariffs had previously fallen but climbed back up to some of the highest in the world by 2022. Many local conglomerates have thrived without competition, limiting their need to compete internationally. Now, with the possibility of U.S. tariffs, India's industrial leaders are feeling the pressure. The Modi administration is urging local businesses to shift away from their protectionist views. However, this shift may be politically risky, especially as farmers, who form a significant part of the workforce, resist changes that could affect their state protection. In response to U.S. demands, India has been encouraging manufacturers to source materials from America instead of China, which could raise costs. There are concerns about aligning too closely with the U.S. amid rising tensions with China, suggesting India should instead strengthen regional ties. India's economy faces challenges as factory output is at its lowest level since 1960 and the trade deficit with China continues to grow. As domestic demand slows and markets decline, New Delhi hopes to delay the impact of U.S. tariffs to allow negotiations for better trade terms. The message is clear for India's wealthy elite—they must adapt to new realities as government policies shift.