India has long benefited from geopolitical arbitration, maintaining good relations with Russia, the United States and Europe. However, this delicate balance is currently put to the test by A series of political shocks caused by the administration of President Donald Trump. These disturbances, which probably will not go away in the near future, give birth to a key question: can India maintain the status of the fastest growing economy in the world?
The most urgent challenge for Indian decision -makers is the survival of the escalation of the trade war. In August, Trump imposed a 50 % duty on import from India, citing the need to reduce the trade surplus towards the United States and punish this country for mass purchases of Russian oil. Trump made additional pressure, calling the European Union and other G7 countries to take even more stringent steps, namely the imposition of a 100 % duty on imports from India and China.
Trump's decision to increase fees for H-1B employee visits to 100,000 hole. (PLN 365 thousand) is another blow to the economy of Indiaand especially for the IT services industry – one of the most dynamic motorbike motorbike motorbike motorbike motorbike motorbike motorbikes. Currently, India citizens constitute over 70 percent. all H-1B visa owners, and most of them work in the IT or technological sector.
Therefore, it is not surprising that the prices of share of Indian companies, such as dad Consultancy Services, Infosys and Wipro, which largely rely on H-1B visas to access the American market, fell after the announcement of Trump's decision.
Shock resistance
Although Trump called India a “dead economy”, it is not clear whether he meant it as a statement of fact or as a threat he would realize if India does not offer sufficient concessions in commercial negotiations with the United States. Anyway, There is little indications that the Indian economy is threatened with a breakdown in the near future.
On the contrary, India belongs to the most dynamic economies in the world. In July, before the United States has been imposed by the United States, the International Monetary Fund forecasted that India's GDP would increase by 6.4 percent. in 2025 and 2026 – significantly exceeding the forecasted annual growth rate of 1.9 percent. for the United States. No other large economy This result is not approachingexcept for China, where it is 4.8 percent.
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Unless there is external shocks, India has a chance to maintain a quick growth rate over the next decade and become third largest world economy until 2030. Given the huge population and growth dynamics, India can even overtake China and the United States and become the world's greatest economy in the next 50 years.
However, it is not clear to what extent changes in the US policy can affect the trajectory of India growth. At the beginning of the 21st century, India was much less exposed to the impact of global trade than China, and exports accounted for less than 15 percent. Their GDP, compared to 20 percent In the case of China. Since then, however, India's dependence on trade has increased significantly. Export currently accounts for over 20 percent. GDP, which makes this country more susceptible to commercial shocks.
Considering that the United States is India's largest export marketTrump's duties will probably hit more than similar actions of other trading partners. However, it should be remembered that India is a continental economy in which national consumption plays a much greater role than external demand. In addition, the trade significance of the EU for India is almost equal to the sense of the United States, and China and the Middle East are also important export directions. Therefore, although American duties' increases are destructive, they are not fatal.
Necessary reforms
This does not mean, however, that Indian decision -makers can afford passivity. To alleviate the effects of American restrictions, they must implement a double strategy including stimulating macroeconomic policy and joint actions for deepening trade ties with the EU, China and the Middle East.
Prime Minister of India Narendra Modi and chairwoman of the European Commission Ursula von der Leyen in New Delhi in India, February 28, 2025.SONI MEHTA / HINDUSTAN Times via Getty Images / Getty Images
It is also worth noting that the relative importance of the American market will probably fall as a result of Trump's patronist commercial policy. If its administration maintains this course, by 2028 the EU and China may overtake the United States as the main world directions.
In addition to short -term political activities aimed at balancing the decline in demand in the United States, the Indian authorities should implement structural reforms. Key priorities for maintaining long -term economic growth include an increase in women's share in the labor market with 33 percent. to a level similar to Chinese (60 percent), improvement of the investment climate by fighting bureaucratic corruption and modernization of infrastructure – roads, railways, ports and airports – to reduce production and trade costs.
Thanks to the introduction of these reforms, India will not only survive the Trump's customs war in the short -term perspective, but also keep your economic miracle For many subsequent years.
I’m Ashley Davis as an editor, I’m committed to upholding the highest standards of integrity and accuracy in every piece we publish. My work is driven by curiosity, a passion for truth, and a belief that journalism plays a crucial role in shaping public discourse. I strive to tell stories that not only inform but also inspire action and conversation.
