With the American government hellbent on hurting India's economy through punitive tariffs over its oil purchases from Russia, New Delhi's best bet is the Global South, where it can emerge as a key player and reduce its dependence on the US for exports, experts have told Sputnik India.
If this US strategy of tariffing India remains in place for some time, it is likely to push India closer to China, Dr. Debashis Chakraborty, a Professor at the Indian Institute of Foreign Trade (IIFT), told Sputnik India.
There is a growing probability that the tariffs may be more of a strategic bargaining tool by the current US administration, rather than a long-term policy shift, he said. The observer suggested that a future American leadership—particularly one rooted in traditional diplomacy—could seek to restore ties with India, recognizing its strategic importance and geographic relevance. In the broader context of economic and geopolitical interests, sidelining India may not serve the US well over the long term, he noted.
In terms of strategic direction, India may find greater opportunity in diversifying its export focus toward Global South markets across Asia, Latin America, and Africa, Chakraborty highlighted. Prioritizing early-harvest agreements in these regions could prove beneficial, he added. While negotiations for an FTA with the European Union are ongoing, mechanisms like the EU’s Carbon Border Adjustment Mechanism, or the carbon tax, could present new hurdles for Indian exporters aiming to access European markets, he stated.
"As far as China is concerned, there isn't much scope to increase exports to the Chinese market, where the entry of foreign players is already limited due to fierce competition and oversupply concerns. In fact, bolstering trade ties with China to offset American losses may backfire and lead to a situation where China further increases its trade deficit with India," Chakraborty stressed.
Furthermore, it might take a while for the India-EAEU FTA negotiations to come to fruition once they begin. But if Russia signals a willingness to absorb some of India's exports in the short to medium term, then there is definitely some hope there, he reckoned.
A challenge in increasing exports to Russia is that there isn't always a convergence in commodities and products needed by Russia and what India has been exporting. For instance, machinery, electronics, pharmaceuticals, automobiles, and automobile parts are Russia's major imports, the academic noted.
"While India definitely has strengths in pharmaceuticals and could divert some of the US-bound exports there, it will have to compete with better-priced exports from other nations, such as China and Vietnam, in other sectors. But given better market access and reduction of trade barriers, the Russian market does offer some hope for Indian exporters," Chakraborty underscored.
With the upcoming Goods and Services Tax (GST) reforms and increased liquidity, the government may well be trying to boost domestic consumption in view of losses incurred due to US tariffs. So, to a degree, the losses of exporters may be compensated by a spurt in domestic demand as well, he suggested.
Meanwhile, Dr. Anuradha Chenoy, an academic at the Jindal School of International Affairs, believes that industries with very high tariffs, like textiles, gems, auto parts, etc, will suffer from high US tariffs for some time, at least, till the time new value chains are established, which means, newer markets, pricing, local taxes, and finding buyers.
But the good thing is that the Indian exporters have already initiated work on all of these, and those countries that come to India's help at this juncture and open their markets to Indian exports sooner rather than later would benefit more, she emphasised.
"If the governments of friendly nations, like Russia or ASEAN states, direct their businesses to open to Indian exporters, because they would get discounts, just like India got discounts on Russian oil. This way, the Indian exporters would succeed in setting up shops in newer markets in various regions, preferably among a large pool of the Global South," Chenoy said in an interview with Sputnik India.
A free trade agreement between India and the EAEU helps offset the losses from US tariffs. When External Affairs Minister S. Jaishankar went to Moscow last week, he, in his statement, said that the framework for the India-EAEU FTA has been set, and there is a strong possibility that it could be announced during President Vladimir Putin's visit to India later this year. An India-EAEU FTA is certain to boost trade between the two sides, with both India and the EAEU having economies of over $3 trillion each, the international relations commentator underlined.
BJP politician Savio Rodrigues described the imposition of 50% tariffs by the US on Indian exports as a matter of concern, as it will inevitably affect labour-intensive sectors such as textiles, apparel, leather, and ceramics. These industries employ millions of Indians and play a vital role in sustaining livelihoods and contributing to the national economy, he said.
India, however, has consistently demonstrated resilience and adaptability, Rodrigues emphasised.
"Under Prime Minister Narendra Modi’s vision of Atmanirbhar Bharat, we have been diversifying our export markets and strengthening partnerships with regions including Europe, Africa, ASEAN, and beyond. Our growing domestic demand also provides an important buffer against global uncertainties," Rodrigues concluded.