This tariff battle highlights a truth too easily ignored in Washington: India has other markets and suppliers, but can the U.S. just as readily find another India?
By Gaurav Bhagat, Founder, Gaurav Bhagat Academy: Remember when “Made in China” was stamped on virtually everything from your coffee mug to your phone? By mid-2025, that era is fading fast. A major realignment of global supply chains is underway, and the new hotspot is “Made in Bharat.” This surge isn’t just patriotic sloganeering – it’s shrewd geopolitics and smart business. As US President Donald Trump brings back onerous tariffs to trading partners, India (formally Bharat) is on the rise with record velocity and ingenuity to take its place. The outcome: international companies are diversifying beyond the nation-of-one trap, and India has emerged as the world’s most scorching supply chain secret.
Tariffs and the Big Switch in 2025
In August 2025, President Trump shocked New Delhi by imposing a 25% tariff on Indian imports, followed rapidly by an additional 25%, doubling charges to 50%. The White House defended these retaliatory tariffs as punishment for India’s ongoing acquisition of Russian oil, blaming India for “fueling the Russian war machine.”. India’s Ministry of External Affairs condemned the action as “unfair, unjustified and unreasonable, citing double standards; several other nations purchased Russian energy but weren’t targeted.
Tariffs were unexpected since the US-India trade relationship had been improving: bilateral trade reached an all-time high of $212+ billion in 2024. Decades of negotiation on a new trade agreement fell apart overnight. Yet India’s reaction was intransigent. Prime Minister Narendra Modi pledged that he’d “pay a very heavy price” before he’d compromise India’s sovereignty and farmers’ interests. Officials hinted at tit-for-tat retaliation, and sure enough, India has form for hitting back. When the U.S. pulled trade privileges in 2019, New Delhi struck back with tariffs on 28 U.S. products, from almonds to apples, targeting about 6% of U.S. exports to India.
Beyond the West: Bharat Builds New Alliances
India is not alone in encountering the tariff barrage, it’s using diplomatic and economic ties outside the Western block. New Delhi has strengthened relations with the BRICS countries (Brazil, Russia, China, South Africa, and now an enlarged group that includes economies such as Saudi Arabia and the UAE) over the last few years. This is part of a wider geopolitical realignment: the so-called Global South (emerging Asia, Africa, Latin America) now represents 85% of global population and almost 40% of global GDP, and they are exercising their influence.
Trade with BRICS has risen astronomically. India’s trade with its BRICS counterparts totaled $399 billion in 2024, rising at a record ~20% per year since 2020. The growth is fueled primarily by commodities and energy, such as India increasing oil imports from Russia (capitalizing on discounts during sanctions), making Russia and Saudi Arabia its largest oil suppliers. Indeed, India imported in excess of $50 billion of Russian oil in 2024, utilizing it to protect its energy requirements (and even re-exporting some of the fuel to Europe). Washington’s tariff vengeance on these purchases merely drove India further in the direction of its non-Western allies.
New trade corridors are unfolding beyond the U.S. sphere.
India has entered new agreements and pacts to diminish reliance on the U.S. or dollar-based systems. In 2023, it also made a deal with the UAE to settle bilateral trade in Indian rupees rather than dollars, and even connected their instant payment infrastructures for frictionless cross-border payments. This allows India to purchase Gulf oil in INR, shielding both sides from currency risk and American financial sanctions. Bilateral trade with the UAE is already massive (approximately $85 billion in 2022-23) and set to expand at a quicker rate under the new currency regime. Similarly, India is doing more business with Russia in rubles and other domestic currencies. The message sent out is clear: India and its allies want a more equitable trading system where one country cannot use its currency or market size to weaponize it. India is also making regional alliances and trade agreements.
It had concluded a significant free trade pact with Australia and UK and an economic partnership agreement with the UAE within the last three years, increasing trade with those partners. Significantly, fellow BRICS member Brazil has spoken up for India, with President Lula even speaking to PM Modi on phone regarding a collective BRICS response to Trump’s tariffs. Such unity threatens potential orchestrated counter-measures or at least moral support from a bloc encompassing a massive portion of the world economy. Collectively, through platforms such as BRICS, SCO, and others, India is pursuing collective remedies, for instance, exchange of best practices to manage Western sanctions if any in the future, creation of alternative payment channels (“BRICS Pay” is in development), and collective bargaining power to push reforms in global institutions.
Why America Needs India (More Than Vice-Versa)
This tariff battle highlights a truth too easily ignored in Washington: India has other markets and suppliers, but can the U.S. just as readily find another India? India’s economy, now the world’s 5th largest and fastest-growing large nation, has a consumer base and talent pool that American businesses yearn for. India is the world’s most populous country and an important growth market for American brands. From fast food and beverages to Big Tech, U.S. firms have rapidly expanded in India, attracted by its rising middle class. For example, India is the largest user base for Meta’s WhatsApp and a huge market for iPhones and Levi’s jeans.
As incomes climb, millions of Indian consumers aspire to “world-class” products – something U.S. companies are eager to supply. If India responds or if the people turn anti-American (as now with calls for boycotts), those U.S. companies lose big.
Even prior to any formal response, Made-in-USA products are already facing the backlash: Indian social media and business communities are calling people to “buy local” following Trump’s 50% tariff slur. Coke is being discussed to be replaced by local beverages, or Amazon to be replaced by Indian e-commerce, a concerning sign for American investors. And it’s not only consumer brands in the balance. American exporters would have trouble filling the gap left by an isolated Indian market. Take American agriculture: India is the biggest single purchaser of US almonds, buying over half of all U.S. almond exports and the second-largest purchaser of U.S. apples. If India imposes high tariffs on these (as it did in 2019) or comes to find them elsewhere, Washington apple growers and California farmers can’t easily discover another market of 1.4 billion increasingly affluent consumers. The U.S. also has a surplus in services trade with India, ranging from education (Indian students send billions to U.S. universities) to tech services, which will be at risk should ties decline. Strategically, isolating India would drive it strongly into the bloc of America’s competitors.
Though India considers its alliance with the U.S., it has alternatives, ranging from defense procurement (it can purchase sophisticated weapons from Russia or France if American access is denied) to energy (as it did with its Russian oil turn). The U.S., however, would struggle to identify another nation that provides both the size of market and democratic alignment that India does. As a case in point, when Apple had to diversify out of China, it looked to India, not Vietnam or Mexico, because of sheer size and expertise available.
Diplomacy, Not Tariffs: The Way Forward
India has stated that problems need to be resolved through discussion, and actually, after the initial shock, New Delhi maintained the window open for negotiations. Both have much to win from tempering tensions. The U.S. and India are natural allies in a variety of respects, countervailing China’s ascendance, cooperating on technology and climate change, and establishing robust supply chains (the initial vision of the currently abandoned deal). Washington can instead utilize India’s desire to collaborate on equitable terms, rather than resorting to confrontation. The G20, BRICS, and even the Indo-Pacific forums can be platforms to renew trust. India’s G20 presidency was characterized by attempts to narrow global North-South gaps, and it proved adept at building consensus.
Within BRICS, India is scrupulous to project the group not as anti-West but as a platform for problem-solving and mutual respect. This subtle position would see India playing the role of a bridge relaying concerns of the developing world to Washington while calling on partners such as Russia or China not to take drastic measures that would fuel wars. During the BRICS summit, diplomats pointed out that BRICS is not a counter-bloc but a center of gravity for those who crave fairness. In that vein, a diplomatic solution might include the U.S. accommodating India’s requirement for strategic autonomy (such as importing its oil unshackled) while India resolves some of the U.S. market access issues in the longer term.
Both parties ultimately have a stake in a healthy, diversified supply chain network that keeps the global economy stable. As a commentator once said, counting on just one source, be it one country for production or one nation for markets, is old-school thinking in the 21st century. The future belongs to diversification, toughness, and attunement with the ethos of our era.
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