US tariff threats open door to a ‘make in India’ moment

From iPhones to automotive parts, India has seen some manufacturing successes, but can it now scale up as tariff clouds gather?

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Employees pack parts for commercial vehicles inside an auto component manufacturing facility in Rajkot, India, on April 3. Photo: Reuters

Published: 5:00pm, 19 Apr 2025Updated: 5:30pm, 19 Apr 2025

As a fresh wave of US tariff threats rattles Asia-Pacific exporters, Indian industry senses an opening to gain ground in the global manufacturing race – though analysts warn that converting opportunity into a lasting advantage will require swift and strategic reforms.

Washington’s announcement of steep new levies on imports from a range of countries, including India, earlier this month was tempered when US President Donald Trump announced a 90-day suspension. The pause – which excludes China – leaves in place only a baseline 10 per cent duty, giving affected nations a temporary window to negotiate better terms.

If and when the higher tariffs take effect, Indian exports would face a 26 per cent duty – much lower than the 46 per cent and 36 per cent levies aimed at Vietnamese and Thai goods, respectively – potentially giving the South Asian nation a relative advantage.

With formal trade talks between New Delhi and Washington expected to accelerate during this suspension period, observers say India has a chance to secure crucial concessions, especially as global manufacturers seek to further diversify supply chains long centred on China.

Indian Prime Minister Narendra Modi shakes hands with US President Donald Trump at the White House in February. Photo: Getty Images/TNS

Indian and US trade representatives have been thrashing out a bilateral agreement since Indian Prime Minister Narendra Modi visited Washington in February and pledged in a joint declaration with Trump to expand two-way trade fourfold to US$500 billion by 2030.