Economic Security and Resilience Review
Date: March 04, 2025
This issue of ESRR flags the key elements in the Union Budget introduced by Finance Minister Smt. Nirmala Sitharaman on February 1, in particular those relating to trade, foreign investment, economic security, and nuclear energy development. Analysts saw reductions in customs duties on certain items as a response to criticism of India’s ‘high tariffs’ by President Donald Trump, and his highlighting of the issue of large trade deficits.
The ESRR also tracks the many tariff-related initiatives set in motion by President Trump, for achieving different policy goals. The ‘fair and reciprocal tariff plan’, which is aimed at reducing deficits, with imposition of reciprocal tariffs for each country, is set to be implemented from April 2, and could impact India. The restoration of steel and aluminium tariffs in full and with extended scope, and aluminium tariffs also rising to 25%, are expected to come into force from March 12. This measure is intended to enhance domestic capacity utilisation in the US in these sectors, and will impact India.
Certain other measures, such as the tariffs sought to be imposed on Canada, Mexico and China, are targeted at fentanyl trafficking or immigration. These will now kick in from March 4 as of now, along with an additional 10% tariff on Chinese exports above the 10% that has already entered into force. These measures on third countries could also indirectly affect India due to possible trade diversion.
President Trump has also set out elements of his ‘America First Investment Policy’ which seeks to fast track investment from US allies, partners and their sovereign wealth funds. It further restricts investments in critical areas from coming into the US from the so called ‘adversary countries’, that were identified as China, Russian Federation, Cuba, Iran and the DPRK. Greater scrutiny is also envisaged on outgoing investments, technology and other transfers by US companies that could benefit these countries. These elements are indicative of the Trump administration’s geo-strategic policy direction.
This issue reviews the outcomes of the timely visit of Prime Minister Narendra Modi to the US on February 12-13, 2025 and his summit meeting with President Trump. The joint statement issued at the conclusion of the visit sets out a clear direction and substantive agenda for strengthening bilateral trade and economic, defense and strategic ties, including the conclusion of the first tranche of a broad-based Bilateral Trade Agreement, by the fall of this year.
Finally, this ESRR covers the visit of the EU College of Commissioners to India led by the EU Commission President Ursula von der Layen from February 27-28. The main outcomes from the visit, as also from the second meeting of the India-EU Trade and Technology Council meeting held during this period, are outlined. A key highlight was the decision to try and conclude a mutually beneficial India-EU Bilateral Free Trade Agreement by the end of this year.
To read this issue of the ESRR, Vol. III, Issue 2, please see the PDF attached
The ESRR also tracks the many tariff-related initiatives set in motion by President Trump, for achieving different policy goals. The ‘fair and reciprocal tariff plan’, which is aimed at reducing deficits, with imposition of reciprocal tariffs for each country, is set to be implemented from April 2, and could impact India. The restoration of steel and aluminium tariffs in full and with extended scope, and aluminium tariffs also rising to 25%, are expected to come into force from March 12. This measure is intended to enhance domestic capacity utilisation in the US in these sectors, and will impact India.
Certain other measures, such as the tariffs sought to be imposed on Canada, Mexico and China, are targeted at fentanyl trafficking or immigration. These will now kick in from March 4 as of now, along with an additional 10% tariff on Chinese exports above the 10% that has already entered into force. These measures on third countries could also indirectly affect India due to possible trade diversion.
President Trump has also set out elements of his ‘America First Investment Policy’ which seeks to fast track investment from US allies, partners and their sovereign wealth funds. It further restricts investments in critical areas from coming into the US from the so called ‘adversary countries’, that were identified as China, Russian Federation, Cuba, Iran and the DPRK. Greater scrutiny is also envisaged on outgoing investments, technology and other transfers by US companies that could benefit these countries. These elements are indicative of the Trump administration’s geo-strategic policy direction.
This issue reviews the outcomes of the timely visit of Prime Minister Narendra Modi to the US on February 12-13, 2025 and his summit meeting with President Trump. The joint statement issued at the conclusion of the visit sets out a clear direction and substantive agenda for strengthening bilateral trade and economic, defense and strategic ties, including the conclusion of the first tranche of a broad-based Bilateral Trade Agreement, by the fall of this year.
Finally, this ESRR covers the visit of the EU College of Commissioners to India led by the EU Commission President Ursula von der Layen from February 27-28. The main outcomes from the visit, as also from the second meeting of the India-EU Trade and Technology Council meeting held during this period, are outlined. A key highlight was the decision to try and conclude a mutually beneficial India-EU Bilateral Free Trade Agreement by the end of this year.
To read this issue of the ESRR, Vol. III, Issue 2, please see the PDF attached
