‘Don’t think there is much to be feared...’: Adi Godrej dispels fears of Donald Trump’s tariff threat for India  

Nadir Godrej, Chairperson of Godrej Industries Group, shared his insights on the challenges and opportunities shaping global business in a conversation with Siddharth Zarabi, Editor of Business Today, at the World Economic Forum in Davos. 

During the discussion, Godrej touched on a range of issues impacting the business landscape, from the effects of rising commodity prices and interest rates to the complexities of supply chain disruptions and the changing business environment. He also offered valuable advice on how companies can adapt and thrive in such times. 

Regarding Donald Trump’s potential return to office, Godrej said, “Trump has made a lot of statements. We’ll need to wait and see what actually happens. He has mentioned tariffs and even annexing neighbouring countries. From an Indian perspective, I don't think we have much to fear unless high tariffs are imposed on Indian goods. He has previously criticized India’s high tariffs, so it would be prudent for us to reduce some of them proactively.” 

Godrej also discussed the potential impact of higher tariffs on China, noting that India could benefit in such a scenario. However, he acknowledged the role of figures like Elon Musk, who may influence the new administration’s stance on China. 

On the China+1 strategy, Godrej expressed skepticism about its full implementation, pointing out that China is making it difficult for companies to relocate to India. He highlighted two key challenges: China’s resistance to transferring know-how and its overcapacity, which allows it to undercut prices even with high tariffs. Despite these hurdles, he noted that the desire for more supply chain options remains strong. 

He reflected on the pandemic, saying, “Although Chinese goods were cheaper, the reliability of supply was so poor that we had to start producing certain chemicals ourselves. When we could source cheaply from China, we did, but reliability became a bigger issue.” 

In terms of potential disruptions from a tariff war between Trump and China, Godrej expressed little concern for India, suggesting that India’s growing export of phones and chips, along with the strength of its domestic market, would mitigate any major impact. 

Addressing concerns over a slowdown in consumption and lack of investment in the private corporate sector, Godrej acknowledged that while growth had been slower than expected, it was still in the 6-7% range for the upcoming year. He mentioned that rural demand, which had been depressed, was showing signs of recovery. 

When asked about the upcoming Union Budget and whether stimulus measures might be necessary given the current economic climate, Godrej said, “The government has focused on reducing the budget deficit, but I believe the deficit isn’t a significant issue as long as it contributes to economic growth. What matters more is debt-to-GDP ratio. If the economy grows at 9% rather than 6.7%, the debt-to-GDP ratio will improve. We should prioritize reducing debt-to-GDP while allowing for some budget deficit as long as it stimulates growth. Capital expenditure by the government creates long-term assets that may seem like overspending initially, but will ultimately deliver returns.” 

Godrej also highlighted India's increasing presence at Davos, with several state governments and their chief ministers attending the event alongside numerous Indian companies. He emphasized that while India's policy environment is relatively stable — a key advantage — concerns could arise around whether the country is sufficiently inclusive in its approach.