When US President Donald Trump raised tariffs on many foreign goods, India was one of the countries that got hit right away with higher levies. Indian exports to the US—an important market—were suddenly facing a 26 per cent tariff, which made it harder for Indian goods to compete and risked hurting India’s export plans.Though this was worrying, India also saw a possible benefit. China was hit even harder — with new tariffs cumulating to 245 per cent on its exports to the US with Wednesday’s announcement by the White House. This has made Chinese goods much more expensive, giving India a chance to fill the gap.STORY CONTINUES BELOW THIS ADThis has opened a pathway to change how global trade works. Vietnam, another country growing fast in manufacturing, also faced higher tariffs than India, making the latter’s competitiveness higher. Business leaders and government officials in New Delhi, quoted in a The New York Times report, called this a “significant opportunity” to push forward India’s goal of becoming a global manufacturing centre.More from India
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Labour ministry signs MoU with Swiggy to list gig opportunities on govt’s NCS portalA historic push toward manufacturingPrime Minister Narendra Modi’s government has been working toward this goal for about 10 years. His flagship programme, called the “Make in India” initiative, was launched to make India a top choice for global manufacturing. To support this, the government set aside over $26 billion in incentives to boost local production in important areas like electronics, auto parts, textiles and chemicals.There have already been real achievements. One big example is Apple’s shift in production. Foxconn, a major Apple supplier from Taiwan, has started making iPhones in India, moving a large part of its work out of China. As Bloomberg reported, India now makes 20 per cent of all iPhones sold around the world. This is a big step forward for India’s manufacturing growth. Recent reports suggest that planeloads of iPhones were shipped from India to the US just days before Trump was to announce reciprocal tariffs on April 2.But this is just the start, says some analysts. The New York Times cited sources close to Apple’s supply chain to say that there are plans to increase production even more. India could end up making as much as 30 per cent of all iPhones globally. Tamil Nadu has become an important manufacturing area and electronic exports from the state’s main airport have reportedly doubled in recent months, as companies prepare for higher US tariffs.STORY CONTINUES BELOW THIS ADStructural challenges persistThis opportunity, however, does not come without challenges, some of them legacy policy issues in India. Analysts have spoken about pending structural reforms. Also, India’s economy has seen remarkable growth in services sector and signals of revival in agriculture.This means the share of manufacturing in India’s gross domestic product has come come from 15 per cent to 13 per cent in recent years, as reported by The New York Times, even though the sector has grown remarkably both in terms of absolute volume and value. In contrast, India’s manufacturing rivals in Asia have manufacturing making up about 25 per cent of their economies.Experts point to several deep-rooted problems. These include high land prices, changing government policies and not enough engineers trained for detailed, technical manufacturing jobs. Weak local supply chains and heavy reliance on imported parts—like synthetic fibres and robotic machines makes the path challenging if not unsurmountable.As The Core pointed out, “Made in India” doesn’t always mean the materials or parts are from India. Because of long wait times and the need to import key items, Indian manufacturers can be at risk.STORY CONTINUES BELOW THIS ADHowever, there’s reason to be hopeful. There are ongoing efforts to build local supply chains in areas like semiconductors, renewable energy and specialty chemicals. The government’s production-linked incentive (PLI) scheme is designed to help India make more of these important materials at home and rely less on imports.Industrial parks in Haryana now have almost constant electricity and some state governments have been able to copy important parts of China’s successful manufacturing systems. The Modi government’s push for digital systems has also seen India cutting down on bureaucratic delays and improving transport networks, making it easier for businesses to operate.India-US factor: A strategic openingIndia’s advantage in the current tariff war isn’t just about money — it’s also about politics. President Trump has shown that he personally likes Prime Minister Modi and both leaders are expected to stay in power until at least 2029. The New York Times report said this shared time in office could help the two countries sign a trade deal, which is expected later this year. Such a deal could make India’s position even stronger as the US moves away from depending on China.STORY CONTINUES BELOW THIS ADThis chance in diplomacy is more than just a nice gesture. It gives India a real opportunity to strengthen its manufacturing industry through long-term partnerships with the US. As China becomes more isolated and global companies rethink their supply chains, India can offer itself as a reliable, democratic and skilled option.A workforce in transitionOne of India’s biggest strengths is its large and young workforce. But this also brings a challenge. Even though India has plenty of workers, many of them don’t have the right skills. However, India is taking steps to fix this. The government’s Skill India programme is working to close the skill gap.States such as Tamil Nadu are also building training systems that match what industries need. If the government and private companies work together, India’s young population could become a real strength for its manufacturing future.India eyes the global defence marketAs India grows its manufacturing sector and builds stronger ties with the US, it’s also stepping into a new role: becoming a major exporter of military equipment. This shift connects closely with India’s broader strategy of reducing its dependence on imports and increasing its global influence—especially at a time when many countries are rethinking who they buy weapons from.STORY CONTINUES BELOW THIS ADAmid rising US-China tensions, India has moved closer to the West through strategic partnerships like the Quad, while still keeping defence ties with Russia. This reflects India’s long-standing policy of “strategic autonomy” — maintaining flexibility and independence in foreign policy decisions.Now, with global demand for arms rising due to conflicts like the war in Ukraine, India sees a chance to supply countries looking for affordable and reliable alternatives to traditional players like Russia and the US.According to a Reuters report, the Modi government is going beyond just making weapons — it’s actively trying to sell them worldwide. It’s offering low-cost loans through the state-backed Export-Import Bank (EXIM), even to countries with financial or political risks that normally wouldn’t qualify for big arms deals.India is also planning to send at least 20 new defence attaches abroad by 2026 to promote its weapons and understand what foreign militaries need. These attachés will focus on countries in Africa, Southeast Asia and Latin America—regions where India sees the most potential for growth.STORY CONTINUES BELOW THIS ADIndia’s defence production has surged, reaching $14.8 billion in the 2023–24 fiscal year—a 62 per cent increase since 2020. While it fell short of its $3.5 billion export goal, the rise from just $230 million a decade ago shows how far the country has come.Indian weapons are also proving cost-effective: its 155 mm artillery shells cost just $300–$400 per unit, compared to over $3,000 for European versions. Similarly, Indian-made howitzers sell for around half the price of Western models.To help push deals forward, Indian defence companies are opening international offices. Even as India faces challenges like limited shipbuilding capacity at home, it is also exploring deals to build battleships for foreign clients.India’s efforts are already paying off. In Armenia, where a defence attache was posted for the first time last year, India captured 43 per cent of the country’s arms imports between 2022 and 2024 — up from nearly nothing a few years earlier, according to Sipri data cited by Reuters. This shows that India is not only entering the market but is starting to disrupt traditional arms supply chains—especially those long dominated by Russia.But while these early wins in defence exports and tariff-led trade shifts are promising, they also highlight a bigger challenge: how to turn short-term momentum into long-term strength.Need for a long-term strategyMany people in India were happy at first about the benefits from tariff changes and trade shifts. But some experts warn not to celebrate too soon. According to The Core, India might be relying too much on short-term tariff benefits as a strategy and in doing so, could be “missing the forest for the trees”.Tariff advantages don’t last forever. The global trade system is unstable and can change suddenly — especially with a president like Trump, who is known for unexpected decisions. If India doesn’t have a clear and long-term plan, it could end up simply reacting to events instead of leading with a strong strategy.Still, there are some positive signs. The Indian government has been pragmatic in quietly negotiating with US trade officials. More and more, there’s an understanding that real global competitiveness comes not just from lower tariffs, but also from cutting production costs, simplifying rules and creating strong support systems for businesses.A moment India must seizeDespite challenges, India looks set for a jump in manufacturing amid a global trade war on the back of US President Donald Trump’s tariff blitz. The US-China trade war and President Trump’s tough tariff policies have disrupted old supply chains and made global companies rethink where to set up their manufacturing. India, with its large market, growing labour force and political stability is now being seen as a strong alternative to China for manufacturing.TagsChinaDonald TrumpGlobal economyIndiaIndian EconomyNarendra ModiTariffUnited States of AmericaEnd of Article
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Trump’s tariff war presents an opportunity that India looks to grab
