Trump's 50% Tariffs Could Fast-Track India's Green Manufacturing Push, Say Climate Experts
Despite potential shocks to sectors like textiles, steel and aluminum, the US's 50 per cent tariffs on Indian imports could be a turning point for India to fast-track its green manufacturing, experts say, as geopolitical tensions rise and climate targets come under pressure.
India has set a Net Zero target of 2070 to balance its greenhouse gas emissions with the same amount it removes from the atmosphere, so the overall emissions are zero. It remains steadfast. As of June 2025, it has already achieved 235.7 GW from non-fossil fuel sources. The emission intensity of India's GDP has reduced by 36 per cent between 2005 and 2020.
'The last time President Trump dismissed climate concerns, India did not budge – it went greener. India's position is clear, it will not compromise on its climate commitments, despite the trade upheavals," said Aruna Sharma, Former Secretary, Union Ministry of Steel. 'The tariffs are a cause of concern, but the time has come to talk bluntly and take corrective measures. Our logistics and manufacturing inefficiencies must be fixed. If we don't strengthen our production base now, as China did years ago, we risk losing this window of opportunity."
Global pundits warn that rising costs in the clean energy supply chain could slow the transition, but note that growing protectionist trade policies –already growing before President Trump could break up the global market anyway and drive countries to produce more at home.
'The 50 per cent US tariff could slow India's decarbonization in the short term by raising costs for clean tech and disrupting exports. But in the interim, it could be a blessing—products meant for the US may be redirected to the domestic market, boosting renewable deployment at home. India's huge domestic demand means the long-term impact is less of a worry, though higher overall tariffs could still push up the cost of energy," said Vibhuti Garg, Director South Asia, Institute for Energy Economics and Financial Analysis (IEEFA).
Speaking at a webinar organised by Climate Trends on 'Decarbonization, Tariffs, and the Future of India's Trade Competitiveness', a global panel of experts from India, Europe and the US highlighted that this is a window of opportunity for India to upgrade manufacturing, reduce costs, look for alternate markets and accelerate its green shift. According to Julian Popov, Former Bulgarian Minister of Environment & Senior Fellow, Strategic Perspectives, said clean technology investment is re-defining global investment, and India and Europe are moving rapidly towards an energy transition. 'Europe is actively looking for allies, and there is no more obvious ally than India. With Europe not backing down on its net-zero agenda, the next decade will see accelerated adoption of green technologies. India has a very good opportunity to develop zero- or low-carbon industrial zones to position itself competitively. President Trump's rhetoric will not change that," said Julian Popov, Former Bulgarian Minister of Environment & Senior Fellow, Strategic Perspectives.
MORE ROADBLOCKS OR STEPPING STONES?
But then there is another challenge. The European Union (EU)'s Carbon Border Adjustment Mechanism (CBAM), comes into effect on January 1st, 2026, with steel and aluminum – among the highest CO2-emitting products – facing a carbon tax in Europe. But experts concur that India can counter the EU's CBAM by developing zero- or low-carbon industrial zones – an opportunity well within its reach. 'Green aluminum and green steel are costly to produce, raising the question of whether two production lines would be needed. The quality remains the same, only the production processes and costs change. But it's important that India must now shift focus from trade policy to manufacturing and production policy. Quality products will define our ability to survive in this new trade order," said Ajay Srivastava, Founder, Global Trade Research Initiative.
Uncertainty prevails in global markets after the US President Donald Trump announced an additional 25 per cent penalty on Indian goods, starting August 27. But it also opens up opportunities to expand for India, especially across Europe since environment-friendly business will be the focus. 'India can and should play a stronger role in global renewable energy supply chains – especially in electronics, biofuels, solar panels, and green steel. If India invests now, CBAM can work to its advantage, giving Indian firms a long-term competitive edge," said Dr Bentley Allan, Associate Professor and Affiliate, Ralph O'Connor Sustainable Energy Institute, Johns Hopkins University.
INDIA STANDS FIRM ON CLIMATE GOALS
As of June, 2025, India has already achieved 235.7 GW from non-fossil fuel sources comprising 226.9 GW of renewable energy and 8.8 GW of nuclear power, accounting for 49% of the total installed power generation capacity of 476 GW – a key step towards its decarbonization goals. With this, it also achieved its NDC goal of 50 per cent of its installed electric power capacity from non-fossil fuel sources, five years ahead of the 2030 target.
Experts suggest boosting trade with partners like the EU, Japan and South Korea, investing in low-carbon industrial sectors to avoid the EU's 2026 CBAM, while also working to cut logistics costs to rival China and expanding in green sectors like steel, solar, electronics and bio-fuels could help India withstand the tariff shock. At the same time, meeting green standards could give high-emission exporters a long-term edge in climate-conscious markets.
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August 13, 2025, 13:39 IST
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