Summary:
As the U.S.-China trade war intensifies under Donald Trump’s renewed leadership, India stands at a strategic crossroads. With steep tariffs hitting Chinese exports, New Delhi is offered a 90-day window to prove itself as a viable alternative. But can India fix its deep-rooted manufacturing issues in time?
Table of Contents
The Opportunity Amid Tariff Chaos
When U.S. President Donald Trump reimposed a steep 27% tariff on most Indian exports earlier this year, policymakers in New Delhi held their breath. On the surface, it looked like a punishment—but within it, many saw a rare opening. After all, China, India’s biggest economic competitor, had been hit with an eye-watering 145% tariff. Vietnam wasn’t spared either.
To business leaders like Praveen Khandelwal, BJP parliamentarian and a key figure in India’s trade community, this was more than a geopolitical flashpoint. It was an economic moment of truth. “This is a significant opportunity for India’s trade and industry,” he said in a recent interview with The New York Times.
“Make in India”: Progress or Pipe Dream?
Launched in 2014 with bold ambitions, Prime Minister Narendra Modi’s “Make in India” campaign aimed to transform India into a global manufacturing hub. But ten years in, the picture is mixed.
Apple’s Taiwanese manufacturing partner, Foxconn, has started assembling iPhones in Tamil Nadu, slowly shifting production away from China. According to sources within Apple’s supply chain, India could be making 30% of the world’s iPhones in the near future.
Meanwhile, Tamil Nadu’s main airport has seen a surge in electronics exports, doubling to over 2,000 tonnes a month. These are big wins on paper.
However, India’s manufacturing sector now contributes less than 13% of the GDP, down from 15% a decade ago. Despite $26 billion in incentives, the goal of creating 100 million new jobs in manufacturing by 2022 remains far out of reach.
Factory Floor Realities
A closer look at the ground reveals the disconnect. Just outside Delhi, at the Rai Industrial Estate, Vikram Bathla’s battery company, LiKraft, hums with activity. His 300 employees assemble lithium-ion batteries under sterile white lights. But there’s a catch—the parts are mostly imported.
“The battery cells are from Inner Mongolia. Our welders are Chinese. We can buy the machines, sure—but we lack the skilled workers,” Bathla admits. Five years in, he’s still playing catch-up with global competitors.
At AutoKame, another factory in the area that makes car-seat covers, it’s the same story. Imported fibres, German robotic cutters—foreign inputs are everywhere. The label might say “Made in India,” but the DNA is international.
The Bureaucratic Bottlenecks
India’s problems go beyond factories and machines. High land costs, poor infrastructure, erratic policy shifts, and a lack of skilled engineers all play a role. But there’s also a more unusual hurdle—its judicial system.
Anil Bhardwaj, who heads a major manufacturing association, points to the legal backlog. With over 50 million court cases pending, small businesses fear expansion because they can’t afford to get stuck in legal battles, especially against powerful corporations or political interests.
“People fear growing too big. The moment you do, you’re a target,” Bhardwaj says.
Electricity availability and some procedural ease have improved, but the systemic issues are far from solved.
India and the 90-Day Countdown
With Trump offering a 90-day tariff reprieve for countries like India—provided they align with U.S. trade goals—the window is open. The challenge: can India step into the vacuum left by China?
According to a report by Delhi-based GTRI, the upcoming 120% tariff on low-cost Chinese e-commerce goods is a “massive opportunity” for Indian small sellers, artisans, and manufacturers—if bureaucratic hurdles can be cleared quickly.
U.S. Strategy: Betting on India?
Washington is clearly looking to India as a key partner in its effort to counterbalance China. Trump’s administration has floated a “grand encirclement” strategy—an economic alliance between the U.S., India, Vietnam, Japan, and South Korea. Treasury Secretary Scott Bessent told Bloomberg, “They’ve been good military allies. Now we need them to be economic ones.”
India is playing along—blocking Chinese firms like BYD while courting Tesla and other U.S. tech giants. This is a clear sign of a shift in India’s global posture.
Boeing, Beijing, and the Blame Game
Meanwhile, China has responded forcefully. One of the biggest shocks came when Beijing instructed airlines to halt new Boeing purchases. For a country projected to buy 9,000 jets over 20 years, it’s a big statement.
India, by contrast, is expected to buy only 2,400 aircraft—but that gap reveals both risk and opportunity.
Chinese media mocked Trump’s move with a viral meme: Trump declares, “I hold the cards.” Xi replies, “The cards are made in China.”
Final Thoughts: A Test of Time
India’s moment may have arrived, but the clock is ticking. Global companies want alternatives to China. America wants partners. And for the first time in years, the pieces are on India’s side of the chessboard.
But unless India resolves its infrastructure, legal, and policy issues, it risks missing this historic opportunity. The next 90 days could shape the next 90 years.