Today, global trade is being reshaped by a set of blows that go beyond economics. The four factors—defence, immigration, nationalism, and tariffs (DINT)—are working together to reverse decades of globalisation. They are operating in unison. Each one triggers the next, and together they are setting up a very different world. A world I believe India will have a significant role in.
India can leverage this shift.
Start with trade. India exports $87 billion worth of goods to the US and
Today, global trade is being reshaped by a set of blows that go beyond economics. The four factors—defence, immigration, nationalism, and tariffs (DINT)—are working together to reverse decades of globalisation. They are operating in unison. Each one triggers the next, and together they are setting up a very different world. A world I believe India will have a significant role in.
India can leverage this shift.
Start with trade. India exports $87 billion worth of goods to the US and imports $42 billion. The US is our largest export destination, accounting for 18% of our outbound trade. Pharma, gems, and electrical machinery make up the top categories. We have a trade surplus, but in this environment, that only attracts attention.
The US economy stands at $30 trillion; China’s at $20 trillion. The US is a consumption-driven economy—$21 trillion of it, to be precise. This consumption power gives it leverage. It is now using that leverage openly through tariffs. US consumption in pharma, apparel, gems needs Indian brands, products and services. This is a time to develop our own IP and brands.
Tariffs are not new. Britain used them centuries ago to lock in its industrial dominance. By 1850, average import tariffs into Britain were 45 to 55%. It worked for them. That same logic is back in circulation.
A 25% tariff can wipe out half the margin of a $100 million business with 20% EBITDA. At 50%, the business ceases to be viable unless it hikes prices, which isn’t always an option. Many of India’s exporters fall into this vulnerable category. This will affect GDP—by 0.2 to 0.4%, conservatively. The government can think of short-term support to MSMEs, making MSMEs competitive will help us in the long-term.
Then there’s defence. It is an attractive industry, worth over $3 trillion globally and growing at 8% a year. Every country is spending more. The money has to come from somewhere, and increasingly it is being pulled from welfare programs. That trade-off will hurt countries with younger populations and weaker safety nets.
India is a big defence spender and the fourth-largest defence spender in the world. The focus has shifted to building locally and partnering with European suppliers. This is sensible. India has leverage as a buyer of defence equipment and the US needs India here.
Immigration is next. In election after election, immigration has become a rallying cry. It is tied to jobs, wages, and national identity. When manufacturing jobs left the West, the blame didn’t go to automation or productivity gaps. It went to countries like China, India, and Vietnam. In a sense the West didn’t want to do manufacturing jibs profitably.
This created the political ground for economic nationalism. The argument was simple: if your country is losing jobs, stop others from sending you goods and workers. Tariffs followed naturally.
For India, this has upside. IT jobs will feel pressure as companies reshore. Students pursuing education abroad will face more friction. Manufacturing, which has been building momentum under the China +1 narrative, has to find alternative destinations. Supply chains set up after Covid may now have to shift again. And trade alliances like BRICS will need to be reimagined. All of this if unaddressed plays into market confidence. We must contain volatility in capital flows and equities.
There is a silver lining. Pharma and IT services are relatively insulated. Our digital stack is a strong platform to build global relevance. A reverse brain drain may even benefit domestic academia and industry. Strategic partnerships will rebalance as India leans into Europe for defence and aviation. We will also continue to engage with the Middle East, Russia, Japan, and even China.
There is one risk we should avoid. Taxing American tech companies operating in India might feel justified, but the cost will fall on Indian consumers. Turning free services into paid offerings will hurt access, especially in a digital-first economy. It solves nothing and creates new problems. More important, we are the worlds capital of digital consumer services, let’s use that strength to do more, not less in redefining this space with the big tech companies. India is English led digital services and a billion Indians is too big for an global tech company to ignore.
This is also a moment to reconsider our position on agriculture and dairy. These are strong sectors with competitive players. Opening them up selectively will not weaken us. Indian consumers are not easily swayed by foreign brands. Kellogg’s, Coca-Cola, Levi’s; all of them have struggled to be 100 crore brands in India. That trend will continue. National preference is strong and growing.
So far, the government has shown great restraint. That is the right strategy and that has helped. The next phase needs clarity and a grounded view of where India wants to demand and where it is willing to adjust.
The courts have ruled that tariffs are illegal. Tariffs are structural. India’s response will be to choose from a buffet of industries, and countries. We have that luxury unlike other countries.
India will push back quietly and firmly. We have to move now, with influence and our soft power. India matters to the world today as a robust economy and will always matter to the world.
This article is authored by Shiv Shivakumar, operating partner, Advent International.
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