By Ephraim Agbo
When Prime Minister Narendra Modi took the stage in New Delhi this week, the timing was no accident. Just days after Washington slapped 50% tariffs on Indian goods, Modi used his first major speech since the move to double down on his vision of atma-nirbharta — self-reliance.
“India’s farmers, fishermen, and cattle rearers are our top priorities. India will never compromise on protecting their interests,” Modi declared.
The message was clear: India will not bend under U.S. pressure. But behind the rhetoric lies a complicated balancing act between protecting domestic producers, keeping the middle class afloat, and maintaining critical ties with Washington.
The Political Economy of Self-Reliance
Modi’s push for self-reliance isn’t new. It builds on earlier campaigns like “vocal for local”, which encouraged Indians to buy homegrown goods and support small industries. This time, however, the stakes are higher.
According to the BBC’s Davina Gupta, lowering agricultural tariffs — a key U.S. demand in ongoing trade talks — would be politically suicidal for Modi. Opening India’s vast rural sector to genetically modified U.S. crops would anger millions of farmers who form the backbone of his support base. Instead, Modi is doubling down on subsidies for domestic producers and inviting global companies to “make in India” by partnering with local manufacturers.
Sectors like semiconductors, defense, and renewable energy are being positioned as strategic anchors of this policy. At the same time, whispers in Delhi suggest the government could lower goods and services taxes (GST) by October, just before Diwali, to shore up middle-class consumption.
Who Wins and Who Loses?
For Indian small businesses, the pain is already real. The U.S. has slapped 25% tariffs on textiles, jewelry, and shrimp — sectors dominated by micro and small enterprises. That has fueled anti-American sentiment, especially among BJP-affiliated trade unions now calling for boycotts of U.S. goods.
But Modi’s nationalist messaging resonates. Many of his supporters see him as standing up to Washington, projecting India as a sovereign power unwilling to compromise on its core economic interests. The risk, however, is that protectionism may slow innovation and make it harder for India to integrate into global supply chains.
Can India Afford to Defy Washington?
Economically, India is in a strong position — growing at nearly 8%, with Modi enjoying the political security of a third term. Yet, unlike China, India lacks the economic heft to endure prolonged tariff wars with the U.S. The India-U.S. relationship remains strategically indispensable, particularly for balancing China’s rise and managing tensions with Pakistan.
For Modi, then, the challenge is to sell self-reliance at home while keeping the U.S. alliance alive abroad. Too much resistance risks escalation; too much compromise risks political backlash.
The Semiconductor Flashpoint
Adding to the uncertainty, President Trump has hinted at imposing tariffs on semiconductor imports in the coming weeks. That move, if implemented, would ripple far beyond India.
Semiconductors are the backbone of the digital economy — powering smartphones, laptops, appliances, and artificial intelligence systems. Currently, Taiwan and South Korea dominate the industry, with U.S. companies like Intel lagging behind in scale. Tariffs could raise costs for American tech firms and consumers, but they might also accelerate Trump’s push to reshore semiconductor manufacturing — even to the extent of Washington considering a stake in Intel.
For India, this creates both risk and opportunity. On the one hand, higher U.S. tariffs could shrink demand for Indian electronics exports. On the other, if Washington and Delhi align on chip manufacturing, India could position itself as a vital alternative to China in the global supply chain.
The Road Ahead
Modi’s gamble is as much about politics as economics. By championing self-reliance, he is tapping into a deep well of nationalist pride, rallying farmers and small producers at a moment of heightened external pressure. But the real test lies in whether India can convert protectionism into long-term competitiveness.
The U.S. tariffs may have forced India into a corner, but corners can also create pivots. If New Delhi can leverage this crisis to attract investment, modernize industries, and build resilient supply chains, Modi’s call for atma-nirbharta could become more than rhetoric.
For now, India’s middle class waits for tax relief, farmers wait for protection, and Washington waits to see whether Modi’s defiance is sustainable — or simply political theater.
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