The Trump-induced trade war has pushed tensions between China and the US—two economic giants that collectively produce nearly half the world's GDP—to new heights. This tension has sent a shockwave through global markets, with the potential to see the world stumble back into large-scale protectionism.
As the global trading environment becomes more turbulent, India must take this as a strategic wake-up call. The time has come to protect its economy against dependence on too narrow a basket of trade partners. Now, just 10 countries contribute 40-50% of India's exports, and in one of these, the US, a quarter of the country's top five sectors' export takeaways are being consumed. This shrill dependence leaves India vulnerable to bolt-from-the-blue policy changes or tariff hikes—a game of roulette in this unpredictable world.
To build long-term economic resilience, India will need to diversify both its import and export partners, cementing relationships in different regions as well as reducing exposure to the external shocks.