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India’s recent economic performance—marked by a strong 7.8% GDP growth last quarter—has shown resilience in the face of global headwinds. Yet, as international trade pressures mount, particularly with the United States imposing steep tariffs, endurance alone will not be enough. To sustain momentum, India must move decisively on structural reforms, particularly in disinvestment and logistics infrastructure. These two pillars are not just policy preferences; they are strategic imperatives for long-term competitiveness.

Incrementalism vs. Urgency

For decades, India has relied on incremental reforms and the strength of domestic demand to cushion external shocks. While this approach has provided stability, it is proving inadequate against today’s volatile trade environment. Tariff wars, supply-chain disruptions, and slowing global growth demand rapid policy execution, not cautious step-by-step measures. Simply waiting out tariff cycles risks economic stagnation and lost opportunities.

Disinvestment: Unlocking Efficiency and Capital

Disinvestment has historically been treated as an annual fiscal exercise. In FY25, receipts are at their lowest in a decade—evidence that the government is shifting from aggressive stake sales to a more strategic approach focused on “value creation.”

This shift has three critical components:

1. Strategic Privatization – selectively transferring ownership to the private sector where efficiency and innovation can be unlocked.


2. Market Dilution – phasing equity sales to ensure stability and maximize returns.


3. Capital Expenditure Boost – using proceeds not for revenue bridging, but for long-term infrastructure investment.


Done right, accelerated disinvestment can reduce fiscal stress, attract private capital, and spur productivity in sectors long dominated by inefficient public enterprises. Countries like Brazil and Indonesia have successfully used similar privatization drives to fund infrastructure upgrades while drawing global investors. India has a comparable opportunity.

Logistics: The Backbone of Competitiveness

India’s logistics costs, estimated at nearly 10% of GDP, remain a drag on export competitiveness. To withstand tariff shocks and integrate more deeply into global value chains, reducing this cost burden is critical.

Several measures are already underway:

PM GatiShakti Master Plan is building multimodal corridors to streamline freight movement.

Unified Logistics Interface Platform (ULIP) is digitizing and integrating services across modes of transport.

Expressways and Digital Tolling are cutting delays and improving turnaround times.


Moreover, state-level initiatives like Delhi’s upcoming Logistics Policy 2025 aim to create urban logistics hubs, ease congestion, and reduce emissions. Together, these measures can position India not just to survive tariff shocks, but to emerge as a resilient export hub.

Strategic Response to U.S. Tariffs

Estimates suggest that recent U.S. tariff hikes could cost India up to $50 billion in lost trade. While this presents a serious risk, it also underscores the need for a multi-pronged response:

1. Trade Diplomacy – negotiating exemptions and forging sectoral agreements to protect vulnerable industries.


2. Export Diversification – expanding ties with Southeast Asia, Africa, and Latin America to reduce overdependence on the U.S. and EU markets.


3. Domestic Reforms – cutting logistics costs, reforming GST structures, and incentivizing R&D to keep Indian exports competitive despite tariff barriers.

This combination of external diplomacy and internal reform would allow India to shift from reactive defense to proactive resilience.

The Road Ahead: Visible, Bold Reforms

India’s growth story cannot rely solely on the insulation of its vast domestic market. The global economy is increasingly interconnected, and trade wars spill over quickly. Structural reforms in disinvestment and logistics infrastructure are no longer optional—they are urgent.

If India demonstrates visible progress in these areas, it will not only mitigate the impact of tariff shocks but also send a strong signal to global investors that it is serious about competitiveness. Without these reforms, India risks being locked into a cycle of reactive firefighting rather than strategic transformation.

The current global trade environment is a stress test for India’s economic model. Endurance has carried the country this far, but the next phase of growth demands boldness. By unlocking capital through disinvestment and slashing inefficiencies through logistics reform, India can transform external challenges into opportunities for renewal. The real question is whether policymakers will seize this moment to push through reforms at the pace the economy now requires. #StructuralReforms
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