Strategic Note on India’s Trade Resilience Amid Evolving U.S. Trade Negotiations.

 

In the interest of national economic strategy, I wish to place certain suggestions in the context of the ongoing trade impasse  between India and our dependable business partner of

years - United States.

India’s Strategic Posture in Global Trade Negotiations:

India’s leadership and diplomatic engagements have consistently demonstrated a governance philosophy that is gracious, respectful, and non-confrontational, even while engaging with the smallest nations. This remains one of India’s enduring strengths.

However, it would be strategically erroneous to presume that India – which is  now the fourth-largest economy globally, possessing credible defence capabilities, a domestic market of 1.4 billion citizens, and a projected GDP growth of ~7.4% in FY 2025–26; would yield to undue pressure on any other matter. India engages with partners on the basis of mutual respect, reciprocity, and long-term strategic balance, not compulsion.

Re-calibrating Export Dependence: An Unintended Positive Outcome:

The United States remains a key strategic and economic partner, and it is reasonable to expect that trade relations will normalise in due course for sure.

Nevertheless, prudent policy demands that India should build trade relations globally; instead of relying on few nations.

Trade Data Overview:

    Table.1

Note: In addition to $85.5 billion; Services exports—particularly IT and software services are substantial in India-USA trade ~ $204.7 billion..

                Table.2

Key Insights of Imports from China:

•    Electronics & Electrical Equipment dominate: India imports nearly 38 % of its total China imports in this one category alone ; driven by mobile components, consumer electronics, semiconductors, etc.
•    Machinery and Reactors: ~21 % of imports are machinery, mechanical appliances, and “reactors” (industrial capital goods).
•     Chemical & Plastic Materials: Organic chemicals (~8.8 %) and plastics (~5 %) together make up ~14 % of imports.
•     Metals & Vehicles: Iron & steel (~2.4 %), aluminium (~1.4 %) and vehicles (~1.6 %) are smaller but significant for manufacturing/assembly sectors.

 

 Context & Trends:

1. India’s imports from China reached an estimated $126.96 bn in 2024, up from ~$121.97 bn in 2023, reflecting sustained industrial demand.
2. China remains a major source for electronics, machinery, chemicals and intermediate goods, contributing a high share of India’s import basket.
3. In FY 2023-24 data, China accounted for ≈15 % of India’s total merchandise imports, and about 98 % of its goods were in core industrial categories.

 

Trade Deficit (Fiscal Year 2024-25):

1. India’s trade deficit with China reached a **record **≈ $99.2 billion in FY 2024–25 (April 2024 – March 2025).
2. This gap comes from imports of about $113.5 billion from China versus exports of around $14.3 billion to China.

 

Strategic Inference:

1)    From a purely arithmetic perspective, if India can sustainably reduce  a ~USD 99 billion trade deficit with China, then it would help in offset revenue loss due deceleration in  exports to USA (~USD 85.5 billion), and India’s macroeconomic stability as a nation remains intact.

2) However, translating this theoretical resilience into practical reality requires deliberate, coordinated, and multi-year strategic execution. A five-year horizon with focused policy intervention can materially reduce vulnerability.

Policy Measures for Strategic Trade Resilience:

A. Accelerated Indigenisation & Manufacturing Scale-Up:

•       Foster entrepreneurship across critical industries.
•       Simplify regulatory frameworks and eliminate redundant documentation.
•       Implement single-window clearances with a maximum 60-day turnaround.
•       Improve access to bank funding and long-term capital.
•    Allocate large contiguous industrial land parcels, preferably near ports, to enable economies of scale.

 

B. Building Critical Industrial Throughputs:

To reduce dependence on China for Electronics, Electrical Equipment, and Machinery (imports worth ~USD 74 billion), India must domestically build few foundational capabilities:

1. Technology Human Capital:

India already supplies global technology talent. Policy focus should be on - retaining domestic talent and re-attracting Indian technologists working abroad (USA, UK, Germany, France) with competitive remuneration and innovation-friendly ecosystems.

2. Strategic Mining & Materials Security:

1.         Critical raw materials required for high-technology manufacturing include: Rare Earth Elements (REE) & Rare Earth Magnets, Copper and Silver.
2.      These materials are the invisible backbone of modern technology, powering: Smartphones, EVs, Wind turbines, MRI machines, Surgical equipment, Robotics, CNC machines, Aerospace, defence, and Satellite systems.
3.     Note: Here lies China’s Strategic Leverage:-  China controls: ~60–70% of global rare-earth mining, and ~85–90% of processing and magnet manufacturing, The entire value chain (mine → oxide → alloy → magnet). This has become a global strategic choke-point, limiting even the policy options of advanced economies.
4.     China’s parallel strength in silver refining (via lead, zinc, and copper by-products) further enhances its leverage.

India currently lacks such a strategic lever, making it vulnerable to unilateral trade actions such as punitive tariffs.

d)    India’s Untapped Potential (Refer Table.3):

India possesses meaningful geological potential in these materials. My Policy Recommendation here would that,  Government of India should make direct and strategic investments in mining. Ensure that revenues from these activities are reinvested locally for - Employment generation, development of Infrastructure, Schools, colleges, and hospitals of that region.

Table . 3 

3.     Strategic International Partnerships:

•      India should enter into strategic mining and processing partnerships with resource-rich but capital-constrained nations.
•     Forge long-term supply arrangements with countries such as: Australia, Vietnam, Brazil, Canada, South Africa, Tanzania, Greenland, Myanmar, Thailand, Russia.
•     I am sure in the current multipolar world order – every country is looking for new trade alliance looking beyond their traditional partners. It is an opportunity for India to do business with European Union, South American & African nations, many BRIC nations, Middle East, Australia, Canada, New Zealand – with him we enjoy friendly relations  . If India proactively engages with these countries, they are likely to respond positively and enthusiastically to expanded trade and economic cooperation.

Learning from China’s Development Model:

China’s transformation into an ~USD 18 trillion economy with a ~USD 1 trillion trade surplus warrants objective study, including:

•       It’s Governance and policy execution models
•       Industrial strategy and regulatory frameworks
•       State–industry coordination
•       Skill development and citizen capability building
•       Long-term focus on AI, robotics, deep tech, space, and defence
•      This need not be emulation—but strategic understanding. 
•      Below table would give glimps of where we stand against China.

Wealth Pyramid Comparison
Category	India	China
Millionaires (USD 1m+)	~868,000	~6.2 million
HNWIs (USD 10m+)	~85,700	~471,600
Ultra-HNWIs (USD 30m+)	~13,000	~98,000
Billionaires	191	495
Global Rank (HNWI count)	#4	#2
Comparative Chart – Economic Power Snapshot
Metric	India	China
Population (bn)	1.43	1.41
GDP (nominal)	~$3.6 tn	~$18 tn
Millionaires	~0.87 m	~6.2 m
HNWIs (10m+)	~85k	~472k
Billionaires	191	495
Fortune Global 500 firms	9	~130
Trade surplus/deficit strength	Weak	Strong
Manufacturing depth	Moderate	Very deep

 

India stands at a strategic inflection point:

The current trade environment, while challenging; offers an opportunity to  build self-reliant industrial capacity, secure critical materials, strengthen long-term economic sovereignty, with disciplined policy execution - India can convert trade pressure into strategic advantage.

 

Author

Thakur Ajit Singh

Founder

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Quick Turtle - An Executive Placement firm,

Chairman, Investor & Consumer Protection, MRCC,

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