Should India Be Viewed as a Partner Instead of a Rival?

New Delhi, Aug 18 (NationPress) As President Donald Trump gears up to impose a staggering 50 percent tariff on imports from India starting August 27, foreign policy analysts warn that viewing India as a trade enemy could have detrimental effects on the United States. A recent report from the Australian Institute of International Affairs (AIIA) indicates that such coercive tactics might jeopardize the decades of trust established between Washington and New Delhi, potentially nudging India closer to China.

This action follows Trump's declaration on July 30 of an additional 25 percent penalty on Indian imports, compounding an existing 25 percent duty, which was justified by India’s acquisitions of Russian oil.

Experts emphasize that India’s energy choices are fundamentally influenced by market conditions. With regular suppliers redirecting crude to Europe, India opted for affordable Russian oil to ensure energy security for its 1.4 billion citizens.

As articulated by India’s Ministry of External Affairs, these imports are aimed at maintaining “predictable and affordable energy costs.”

The AIIA report underscores that India should not be seen as an economic competitor but as a key ally, essential to the United States’ strategy in the Indo-Pacific region.

In the last twenty years, the relationship between the two nations has grown stronger, marked by significant milestones like the 2008 civil nuclear agreement and enhanced defense collaboration.

By 2024, trade between the two countries reached $129 billion, with aspirations to elevate this figure to $500 billion by 2030.

India’s involvement in the Quad and its contributions to counterterrorism are highlighted as vital to U.S. interests, according to the report.

In contrast, the United Kingdom’s approach serves as a model for constructive engagement. On July 24, India and the UK finalized a significant Free Trade Agreement (FTA) after three years of discussions.

This agreement abolishes tariffs on 99 percent of Indian exports, reduces duties on British imports such as whisky and cars, and enhances professional mobility.

With trade projected to double to $120 billion by 2030, the FTA exemplifies that honoring India’s priorities—like protecting its agriculture and MSME sectors—can foster prosperity without confrontation.

Despite the geopolitical unease stemming from tariffs, S&P Global Ratings has minimized their anticipated economic impact.

During a webinar on Asia-Pacific Sovereign Ratings on August 13, S&P Director YeeFarn Phua stated that India is unlikely to suffer significantly as it is “not a trade-driven economy.”

Exports to the U.S. comprise only 2 percent of India’s GDP, with major sectors such as pharmaceuticals and consumer electronics exempt from the new tariffs.

“In the long run, we don’t foresee this having a major negative impact on India’s economy, so the positive outlook on India persists,” Phua concluded last week.