'Embrace instead of being paranoid': As US tariffs loom, Minhaz Merchant says this is biggest economic reform India needs

Editor and publisher Minhaz Merchant Wednesday called for a significant reduction in India’s import tariffs. Taking to X, he argued that lowering tariffs is the "biggest structural economic reform" India needs, as it would push domestic companies to become more competitive without relying on protectionist barriers.

“Lowering import tariffs is the biggest structural economic reform India needs. It will force Indian companies to become competitive without the protection of duties on foreign products. India should embrace this opportunity instead of being paranoid about it,” Merchant tweeted.

India has historically imposed high import duties on various goods to protect domestic industries, particularly in sectors such as electronics, automobiles, and consumer goods. While this approach has supported local businesses, it has also raised costs for consumers and limited foreign competition.

Merchant’s statement comes amid ongoing discussions about India's economic strategy and impending US tariffs. ​The two countries are navigating heightened trade tensions due to the implementation of reciprocal tariffs by the US administration. President Donald Trump has announced that these tariffs aim to address perceived imbalances in trade relationships, particularly targeting countries with substantial trade surpluses with the US, including India. ​

The Trump administration has expressed concerns over India's tariff structure, labeling it as one of the highest among major economies. Specific issues highlighted include complex import requirements and high duties on American products, which the US views as significant trade barriers. In response, the US has initiated tariffs that are set to take effect immediately, targeting key Indian exports such as automobiles and pharmaceuticals. ​

In anticipation of these tariffs, India has been proactive in seeking solutions to mitigate potential economic impacts. The Centre has considered reducing tariffs on over 30 US products and increasing imports in sectors like defense and energy. Additionally, India has offered tariff cuts on imports of US agricultural products as a concession to avert the impending tariffs. ​

Analysts have projected that the US tariffs could significantly impact Indian exports, with potential declines estimated between $2 billion to $7 billion in the financial year 2025-26. Sectors such as engineering goods, pharmaceuticals, and textiles are expected to be among the most affected. The broader economic implications include potential disruptions to supply chains and increased costs for consumers in both countries.