US Tariffs on India: Challenges and the Path to Economic Resilience
UPSC Relevance
Prelims: Indian Economy (Balance of Payments, International Trade, Tariffs), Current events of national and international importance.
Mains:
General Studies Paper 2: Bilateral agreements involving India; Effect of policies and politics of developed countries on India’s interests.
General Studies Paper 3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment; Effects of liberalization on the economy.
Key Highlights from the News
The United States imposed 50% tariffs on imports from India, including a 25% penalty for India's oil purchases from Russia.
Due to these high tariffs, Indian products will become more expensive and less competitive in the US market compared to countries like Vietnam and Bangladesh.
This could lead to job losses and revenue loss in India's export sectors such as textiles and pharmaceuticals.
The article argues that an export strategy solely relying on low wages is not sustainable in the long term. China's real strength lies in its vast infrastructure and growing technological capabilities.
As a solution, the author suggests that instead of solely relying on exports, India should strengthen its home market and transform into a producer-consumer economy.
This requires increasing wages and income within the country and fostering industries based on technology and a knowledge economy.
India's greatest strength and defense is its large youth population (demographic dividend). It is essential for the government to increase investment in health and education to develop their capabilities.
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