Asia Dialogues
Beyond Washington: India’s Trade Destiny in a Multipolar World
Mohit Arora
Executive Director & Partner, Differential Asia, Partner,
Mondriaan Group
The story of India–US trade has always been one of opportunity tempered by uncertainty. The United States was India’s largest trading partner in April–July 2025–26, with bilateral trade touching USD 12.56 billion. Yet behind these numbers lies a persistent fragility: America remains a partner of immense scale, but not always of steady reliability. President Trump’s steep 50% tariff hike on Indian exports has brought that vulnerability on full display.
At stake is more than trade flows. It is confidence, jobs, and livelihoods, from Tiruppur’s garment clusters to Kerala’s shrimp farms, from Surat’s jewellery workshops to small manufacturers across India. Every new order now carries a question: will it clear the tariff wall, or be diverted to Bangladesh, Vietnam, or Turkey?
The Shock of Tariffs
The escalation came in two waves—first 25%, then another 25%—explicitly linked to India’s continued purchase of Russian crude and defense equipment. The sixth round of India-US negotiations on the bilateral trade agreement (BTA) negotiations, scheduled for 25–29 August, is also now expected to be deferred.
Washington is also pressing for wider access to India’s agriculture and dairy markets, which Prime Minister Modi has refused: “India will never compromise on the interests of our farmers.”, Modi declared in his Independence Day speech on August 15, 2025,
But the fallout is real. According to ICRIER, an economic policy think tank, nearly 70% of India’s exports to the US—worth over $60 billion- are exposed. Labour-intensive sectors like textiles, gems, auto parts, and aquaculture are hit hardest. Shrimp exporters face tariffs piled on top of anti-dumping duties, while textile manufacturers now compete against Bangladesh and Vietnam, which enjoy preferential rates. Analysts warn that if tariffs persist, 200,000–300,000 jobs could be at risk.
Beyond Numbers: The Human Cost
Tariffs don’t just dent trade balances. They unsettle lives. Jaipur’s jewellery artisans worry about cancellations. Bhadohi’s carpet weavers calculate how many months of work may disappear. MSMEs—already battling thin margins and long payment cycles—now face deeper uncertainty in cash flow and supply chains.
As Mohit Arora, Executive Director & Partner at Mondriaan Group, observes, “The current tariff regime is unsettling, hitting everyone from auto exporters to Indian suppliers, while ASEAN hubs face ripple effects as buyers re-optimize supply chains. Fluctuating U.S. policies make planning incredibly difficult. But tariffs are not the largest factor affecting business decisions: business decisions are also shaped by productivity, scale, quality, complexity, and timeliness. In the end, these tariffs will eventually raise prices for U.S. consumers, while pushing India to diversify faster. Our response must remain confident and pragmatic. India represents one of the world’s largest markets and brings unmatched skills and efficiencies to the table. This is a moment to broaden partnerships with other forums and countries, including BRICS, ASEAN, Japan, and even China, in areas like electric vehicles, while also improving our own ease of doing business through reforms and world-class special economic zones”.
“India’s greatest strength is different: the promise of the future. If we build robust financial, technological, and trade infrastructure, we can turn this disruption into an opportunity. I trust India’s leadership to do exactly that—engage the world with confidence and steer us toward a stronger, multipolar future.”, he added.
India’s Strategic Response
India is not without options. While a major concern for several sectors, US exports make up only 1.56% of GDP and 7.38% of total exports—far from devastating for a $3.9 trillion economy.
In fact, this crisis may accelerate overdue diversification away from overdependence on one market. Already, Indian exporters are deepening ties with Asia, the Middle East, and Africa. Diplomatically, New Delhi has kept its nerve—expanding engagement with ASEAN, BRICS, and the GCC and collaboration with China in EV supply chains. The message is clear: India will not be forced into abandoning sovereign choices.
And this isn’t India’s first storm. In the late 1980s, Washington threatened New Delhi under its Super 301 provisions. India held its ground. Within years, liberalization turned the economy into one of the world’s great growth stories. A similar pivot may be at hand.
The challenge now is to shift from reaction to resilience. A pragmatic approach begins with mitigation—building tariff pass-through clauses, tightening HS code classifications, and using tariff-friendly finishing hubs. The next step is to compete beyond tariffs by compressing lead times with digital supply chains, moving up the value chain, and investing in automation, skilling, and ESG.
Finally, India must engage policy with confidence: push for carve-outs in labour-intensive sectors, expand SEZs and bonded zones, improve logistics and urban competitiveness, and broaden demand through stronger trade partnerships with ASEAN, Japan, and the Gulf.
The task before us is not merely to weather Trump’s tariff storm. It is to turn it into fuel—an inflection point that propels India into the kind of economy that thrives in a multipolar world without being held ransom to any country’s decisions or favour.
SOURCE
Executive Director & Partner, Differential Asia, Partner, Mondriaan Group
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