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Recent remarks by former U.S. President Donald Trump, suggesting that the “Indian economy is dead,” have sparked debate on whether stringent tariff barriers from the U.S. could significantly harm India’s economic trajectory. While such statements may capture headlines, the reality is more nuanced and rooted in both data and structural strengths of the Indian economy.

India’s export integration with the global economy remains relatively modest, with its share of global exports standing at less than 3%. This means that even if the U.S. were to impose higher tariffs on Indian goods, the direct impact on the overall economy would likely be limited. Tariffs can certainly disrupt specific sectors—such as gems and jewellery, textiles, or other export-oriented industries—but India’s growth model is far less dependent on exports compared to many other emerging economies.

The real backbone of India’s economic expansion lies in its robust domestic consumption, the rapid expansion of the services sector, and sustained internal investments. According to IMF and World Bank projections, India is set to remain one of the fastest-growing major economies in the coming years, with GDP growth rates expected to hover between 6% and 6.5%. This optimism is not built on the assumption of frictionless global trade but rather on the strength of India’s internal demand, urbanization, infrastructure investment, and a young workforce driving consumption patterns.

This is not to downplay the challenges tariffs could bring. For certain industries—such as the diamond sector, which relies heavily on exports to the U.S.—higher tariffs could squeeze margins, slow orders, and force businesses to seek new markets. Similarly, labour-intensive manufacturing exports may face short-term setbacks. However, India’s economic structure offers a form of insulation: when external headwinds arise, domestic drivers often step in to keep the growth engine running.

Moreover, India has been steadily working to diversify its trade relationships, both through regional agreements and through growing exports to markets in the Middle East, Africa, and Southeast Asia. This strategic diversification, coupled with a growing emphasis on value-added manufacturing under the “Make in India” initiative, can mitigate the risk of over-reliance on any single market—especially the U.S.

In essence, while Trump’s proposed tariff measures could cause turbulence for certain sectors and exporters, they are unlikely to derail India’s overall growth story. The country’s economic resilience lies in its broad-based growth model, where domestic consumption, infrastructure development, and technological services hold far greater weight than export performance alone. For policymakers and businesses, the message is clear: stay agile, diversify markets, and continue leveraging the strengths of the domestic economy to weather any global trade storms.

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