PM Modi Was Right: India's Economic Sovereignty Is Being Tested, But It's Ready

NDTV

20 hours ago

As President Trump signals a return to sweeping tariffs on Indian exports, part of a broader protectionist resurgence in the United States, the instinctive response from some is alarm. The US, absorbing $77.5 billion of India's exports in 2024 (representing 17% of India's total export market), is a critical trading partner. Tariffs targeting sectors like textiles ($9.8 billion in exports to the US), pharmaceuticals ($7.2 billion), and IT services could disrupt supply chains and unsettle exporters and investors.
But this is not a moment for panic. It is a moment for perspective and for recognising that Prime Minister Narendra Modi has been preparing India for precisely this kind of geopolitical and economic shock for over a decade. What critics once dismissed as "economic nationalism," Modi's vision of Atmanirbhar Bharat (a self-reliant India), now appears as prescient statecraft. Through strategic policies, India has built an economy that is more resilient, digitally empowered, and less dependent on any single market, positioning it to navigate global turbulence with confidence.
A Vision Rooted in Resilience
When Modi launched Atmanirbhar Bharat in 2020, sceptics warned it would isolate India from global trade. Yet India's trade-to-GDP ratio, which stood at 43.1% in 2023 (compared to China's 37% and the US's 27%), reflects deeper global integration, not retreat. The initiative has focused on strengthening domestic capacity: India's manufacturing sector grew by 7.8% annually from 2014 to 2023, outpacing the global average of 3.5%. The Production Linked Incentive (PLI) scheme, with $24 billion allocated across 14 sectors like electronics and pharmaceuticals, has attracted investments from global giants like Apple, which now manufactures 14% of its global iPhones in India (up from 1% in 2018).
India's digital transformation is equally remarkable. The Unified Payments Interface (UPI) processed 131 billion transactions worth $2.1 trillion in 2024, dwarfing the transaction volumes of global peers like China's WeChat Pay and Alipay. UPI's success has driven financial inclusion, with 80% of Indian adults now holding bank accounts (up from 53% in 2014), reducing reliance on cash and foreign payment systems. India's digital public infrastructure (DPI), encompassing Aadhaar, UPI, and e-governance platforms, has been hailed by the IMF as a global model, contributing to a 6.5% reduction in income inequality since 2016.
Infrastructure investments further underscore Modi's foresight. India's road network expanded by 59% since 2014, with 150,000 km of highways added, while freight movement through dedicated corridors increased logistics efficiency by 12%. These are not mere statistics; they represent an economy engineered to absorb external shocks, from tariff wars to supply chain disruptions.
The Global Rebalance
Modi's India has also recalibrated its global economic relationships, reducing dependence on any single bloc. While the US remains a key partner, India's trade with the EU grew to $120 billion in 2024, surpassing US trade volumes. The India-Middle East-Europe Economic Corridor (IMEC), launched in 2023, promises to cut shipping times by 40% compared to the Suez Canal route, boosting trade with Europe and the Middle East. India's energy imports, once heavily reliant on a few suppliers, are now diversified: 15% of oil imports come from African nations, up from 8% a decade ago, while renewable energy capacity grew 400% since 2014, reaching 200 GW in 2025.
This diversification also reflects India's careful navigation of a shifting global order. President Trump's remarks questioning India's ties with Russia and Iran may resonate in some quarters, but they overlook the nuanced reality of international diplomacy. India's $13 billion trade with Russia in 2024, primarily for discounted oil, has helped stabilise domestic energy costs, a policy choice not unlike those quietly adopted by several Western economies despite public rhetoric. Likewise, India's engagement with Iran, centred on the Chabahar Port, is driven by connectivity needs to Central Asia and Afghanistan, a region where Western strategies have faltered, often at great cost. Far from being acts of defiance, these partnerships are pragmatic instruments of strategic autonomy. In a world where even the most established powers engage selectively based on interest, India too is asserting its place - firmly, independently, and transparently.
This diversification is also reflected in India's conclusion of landmark trade agreements, including the recently signed UK-India Free Trade Agreement - a strategic pivot that strengthens India's presence in one of its most politically aligned and economically open Western partners.
No Illusions, But No Panic
The tariffs will sting. India's textile exports to the US, employing 12.5 million workers, face a projected 10% cost increase due to proposed duties. Pharmaceuticals, a sector where India supplies 40% of US generic drugs, could see margins shrink. Yet India's options are robust. The domestic market, with a $1.2 trillion consumer base (second only to China in Asia), grew 7% annually since 2019. Exports to non-US markets, like the UAE ($31 billion) and ASEAN ($46 billion), have surged, offsetting potential losses.
India's startup ecosystem, now the third-largest globally with 120,000 startups and 110 unicorns valued at $350 billion, thrives on domestic demand and innovation. The Digital India initiative has attracted $90 billion in tech investments since 2015, positioning India as a hub for AI and semiconductors. This internal strength, coupled with diversified trade, equips India to weather tariff storms.
The Modi Doctrine in Practice
Modi's critics once viewed Atmanirbhar Bharat as insular. Yet in a world where global supply chains are weaponised, Modi's vision is strategic. India's semiconductor mission, backed by $10 billion in incentives, aims to produce 20% of domestic chip demand by 2030, reducing reliance on Taiwan and South Korea. Data sovereignty is also prioritized: India's Data Protection Act of 2023 ensures local storage of critical data, shielding it from foreign leverage.
This is sovereignty redefined, not as isolation but as the ability to adapt and endure in a fragmented global order. India's FDI inflows, reaching $81 billion in 2024 (a 26% increase since 2019), reflect global confidence in this approach, surpassing Brazil and South Africa combined.
Conclusion: India's Next Chapter
The Trump tariffs, potentially adding $5 billion in costs to Indian exporters, are not the end of the India-US economic story. They mark a stress test of India's preparedness. Modi's investments in digital infrastructure, domestic industry, and global partnerships are yielding dividends. While others scramble, India is recalibrating, leveraging its $3.9 trillion economy (fifth-largest globally) and a 7% projected growth rate for 2025, outpacing most peers. But there is no room for complacency. Ensuring last-mile digital inclusion, strengthening labour productivity, and modernising regulatory frameworks remain ongoing tasks.
In a volatile world, India's model, blending resilience, digital empowerment, and strategic autonomy, should inspire others. As tariffs rise and alliances shift, India is better prepared than ever, proving Modi's foresight was not just rhetoric but a blueprint for economic sovereignty.