US tariffs may boost India's local production efforts

A new report by Motilal Oswal highlights how US tariffs can help India grow its domestic industries. While the tariffs increase costs and hurt exports, they also encourage India to produce more goods locally. This can reduce the country's dependence on foreign products. US tariffs have impacted Indian exports significantly. In 2018, India faced a 25% tariff on steel worth $761 million and a 10% tariff on aluminum worth $382 million. These tariffs made Indian steel less competitive in the US market, resulting in a 46% drop in steel exports over a year. Another major issue is how trade tensions affect India's currency. The country imports a large portion of its crude oil, paying in US dollars. If the rupee weakens, oil imports become more expensive, putting further pressure on the economy. The report also warns that a prolonged tariff conflict could reduce India's GDP by 0.3%. Despite these challenges, the report suggests India can turn this situation into an opportunity. Historically, India has maintained higher tariff rates, which could now be used to strengthen local industries. By focusing on self-sufficiency and boosting exports in less affected sectors, India can navigate through the trade conflict. The report encourages India to promote domestic production and seek better trade agreements with other countries. If India strategically uses this situation, it could foster local investments and reduce reliance on imports.