There is a reason why Prime Minister Narendra Modi has been flying around the world, meeting leaders of other emerging nations. It is in anticipation of events such as the tariff blackmail being practiced by US President Donald Trump. It is necessary for countries outside the developed economies to network their own strengths as an alternative to the exploitative hold the US has over the system. It is just this that Trump fears, which is why he continuously attacks BRICS and other such alliances. The possibility, for instance, of the US dollar no longer remaining the currency upon which international transactions are based can prove a severe setback to the US economy, because it would then have to perform, rather than just print as many bank notes it desires.
Trump should realise that he cannot turn back time and revive US manufacturing capacity that has become obsolete for its economy. The products that it made were outsourced decades ago for good reasons. Tariffs raised to protect local manufacturing that does not exist may hurt the exporting countries but will eventually hit the consumers in the US. It is possible that even Trump knows that and is only making exorbitant demands to strengthen his negotiating position.
India already has a healthy export market in Africa, where the affordability and suitability of its products are liked by consumers. India, China, Russia and others are helping resource rich countries of this continent to develop their economies, thereby increasing their purchasing power. South America also has great potential in a different way. Barriers of various kinds put up by the US will only speed up the process of diversification and, in the process, increase the sophistication and economies of scale among Indian industries. The present situation should be looked at as an opportunity rather than a setback.
It has already been mentioned by experts that India’s domestic demand is not only growing but is reaching formidable proportions. Perhaps, this market has not been served as well as it should have been by local industry because competition has been lacking. The agriculture sector, also, has for long been pampered and become dependent on government subsidies, instead of striving to increase productivity. Any kind of future deal that will bring in competition from the US should be met with systemic reform rather than the desire for further protection. India will not be able to acquire developed economy status by shying away from challenges. Trump may prove the catalyst in achieving this goal.
