Former RBI Governor Raghuram Rajan has warned against the U.S. President Trump's decision to impose a 50% tariff on Indian exports. He stated that India should not be overly reliant on any single country and must diversify its trade relations.
Trump Tariff: U.S. President Donald Trump's decision to impose a 50 percent tariff on Indian exports has raised concerns in India. Industries such as textiles, diamonds, and shrimp are expected to be directly affected. Now, former Reserve Bank of India (RBI) Governor and renowned economist Raghuram Rajan has cautioned the government in this matter. He stated that India should take this decision as a serious signal and re-evaluate its trade policies.
Trade Has Now Become a 'Weapon'
Raghuram Rajan said that in the current global order, Trade, Investment, and Finance are rapidly being used as Geopolitical weapons. This tariff by the United States is forcing India to consider how much reliance it should place on any single country for trade.
He stated, "Today, Trade has become a weapon. This is a warning that we should not be overly dependent on any single country. We need to diversify our trade relations so that our economy is not significantly impacted by the policy of any one nation."
Why America's Tariff is a Warning Bell for India
The United States announced on Wednesday that it would impose a 50% tariff on Indian exports. The textile, diamond, and shrimp industries will be the most affected by this decision. Notably, an additional 25% tax has also been added, which is linked to India's purchase of Russian oil.
However, surprisingly, such tariffs have not been imposed on China and Europe, which purchase the most oil from Russia. This clearly indicates that the United States is directly putting pressure on India's policy.
Raghuram Rajan's Warning
Rajan stated that this is the time for India to wake up. He said, "We should continue our trade relations with the United States, but we must also pay attention to Europe, Africa, and other countries in Asia. Relying on just one country can be economically dangerous."
He further added that India needs reforms that will enable it to achieve an economic growth rate of 8 to 8.5 percent. Only then will India be able to provide employment to its youth and be capable of withstanding the shocks of such policies.
India Needs a New Approach to Russian Oil
The former RBI Governor also questioned India's policy on Russian oil imports. He said, "We need to consider who is actually benefiting from this policy. Currently, refining companies are making good profits, but this benefit is being recovered from us by imposing heavy tariffs on our exports. If the benefit is not very significant, then we need to consider whether it is right to continue this policy."
