The global economy is entering an era of fragmentation and strategic friction. On Wednesday, Donald Trump announced a 25% tariff on India, plus a penalty. Despite the rhetoric, the nations are close partners, with the US being one of India's most important export destinations. While we have deep and growing ties with the US, we must not compromise on our strategic autonomy.
Regardless of a trade deal, India must address what lies within its control. We can't integrate into GVCs unless we make our economy more competitive. To seize this opportunity, we must act with clarity, speed and conviction, anchored in five strategic imperatives:
Regulatory reforms
Today's compliance-heavy regime must be replaced with a trust-based regulatory system. Incorporating regulatory impact assessments and expediting the restructuring of regulatory bodies will be essential. The recently announced Jan Vishwas 2.0 Bill is a step in the right direction, but deeper operational reform is essential. The National Single Window System must become the default for business approvals. Business incorporation should auto-trigger GST, MSME and Startup India registrations.
Further, a comprehensive GST reform, including rationalisation of rates and the inclusion of petroleum, electricity and real estate, will reduce friction and unlock business growth. To send a powerful and unequivocal signal, the new labour codes must be implemented.
A strong partnership between the state and the private sector must drive India's growth. Rules must be clear, consistent and easy to follow. This entails building public goods, reducing bureaucratic red tape and fostering fair competition. Whether through markets or public-private models, the goal is the same: to unlock productivity, support innovation and expand opportunities. We have a perfect example in DPI. Now, we must build on this success by embracing the next frontier: Industry 5.0, where tech, human creativity and sustainability meet.
Unlock investments
DBTs have curbed wasteful expenditure. Now, simplifying tax filing and improving enforcement will enhance compliance and collections. Fast-tracking disinvestment and scaling asset monetisation can unlock non-tax revenue (NTR). Reforms in PSEs can improve returns and productivity.
RBI has done a phenomenal job in front- loading repo rate cuts this year. However, over time, a plan should be formulated to reduce the SLR for banks, thereby freeing up capital and lowering the cost of borrowing.
India must steadily raise its infrastructure spending from the current 3.5% of GDP to at least 4-5% over the next five years. This will not only crowd in private investment but also lower logistics costs, improve productivity and create long-term capacity for growth.
Aim for global capital and talent
To export competitively, we must also import efficiently. Our high tariffs and inconsistent quality control orders (QCOs) raise input costs, penalise exporters and deter investors. A rational, globally aligned tariff structure is vital. At the same time, India must diversify its export markets and product mix to reduce vulnerability to geopolitical shocks and policy unpredictability.
Press Note 3 rightly imposes safeguards on FDI from neighbouring countries, including China. But in sectors like component manufacturing, where China is embedded in GVCs, strategic autonomy must allow calibrated economic engagement. We should not let security concerns prevent us from sourcing efficiently and scaling competitively.
India must also replicate the success story of mobile manufacturing across other sectors. This involves engaging directly with leading firms, providing them with plug-and-play infrastructure, and ensuring swift and certain approvals.
As PLIs mature, India must pivot to innovation, R&D and export heft. A Global Research Chairs programme - with top talent, flexible terms and world-class labs - can anchor this shift. Liberal visas and diaspora ties will strengthen our global STEM ecosystem.
Innovation needs more than talent - it needs an enabling state and a scaling private sector. Without that ecosystem, breakthroughs rarely become global wins.
Focus on tourism
India's tourism is rich but underplayed. It's time to reboot 'Incredible India' with modern storytelling, global co-branding and diaspora outreach. A unified digital window for clearances and real-time e-visas is key to unlocking its full potential.
Let cities lead
India's cities fuel growth, but struggle with congestion and poor governance. The ₹1 lakh cr Urban Challenge Fund is a big step - now, it must reward clean air, green spaces and smart mobility. Empower municipalities as drivers of creative economy, not just service providers.
The disruptions caused by tariff wars, supply chain realignments and geopolitical tensions have opened a window of opportunity for India to take the lead. However, true leadership will not emerge from tinkering or hesitation.
With the right reforms, we can unleash free enterprise, attract capital and accelerate growth across sectors. Now is the time to act boldly, deliver big, and make India the world's most dynamic growth story.
Regardless of a trade deal, India must address what lies within its control. We can't integrate into GVCs unless we make our economy more competitive. To seize this opportunity, we must act with clarity, speed and conviction, anchored in five strategic imperatives:
Regulatory reforms
Today's compliance-heavy regime must be replaced with a trust-based regulatory system. Incorporating regulatory impact assessments and expediting the restructuring of regulatory bodies will be essential. The recently announced Jan Vishwas 2.0 Bill is a step in the right direction, but deeper operational reform is essential. The National Single Window System must become the default for business approvals. Business incorporation should auto-trigger GST, MSME and Startup India registrations.
Further, a comprehensive GST reform, including rationalisation of rates and the inclusion of petroleum, electricity and real estate, will reduce friction and unlock business growth. To send a powerful and unequivocal signal, the new labour codes must be implemented.
A strong partnership between the state and the private sector must drive India's growth. Rules must be clear, consistent and easy to follow. This entails building public goods, reducing bureaucratic red tape and fostering fair competition. Whether through markets or public-private models, the goal is the same: to unlock productivity, support innovation and expand opportunities. We have a perfect example in DPI. Now, we must build on this success by embracing the next frontier: Industry 5.0, where tech, human creativity and sustainability meet.
Unlock investments
DBTs have curbed wasteful expenditure. Now, simplifying tax filing and improving enforcement will enhance compliance and collections. Fast-tracking disinvestment and scaling asset monetisation can unlock non-tax revenue (NTR). Reforms in PSEs can improve returns and productivity.
RBI has done a phenomenal job in front- loading repo rate cuts this year. However, over time, a plan should be formulated to reduce the SLR for banks, thereby freeing up capital and lowering the cost of borrowing.
India must steadily raise its infrastructure spending from the current 3.5% of GDP to at least 4-5% over the next five years. This will not only crowd in private investment but also lower logistics costs, improve productivity and create long-term capacity for growth.
Aim for global capital and talent
To export competitively, we must also import efficiently. Our high tariffs and inconsistent quality control orders (QCOs) raise input costs, penalise exporters and deter investors. A rational, globally aligned tariff structure is vital. At the same time, India must diversify its export markets and product mix to reduce vulnerability to geopolitical shocks and policy unpredictability.
Press Note 3 rightly imposes safeguards on FDI from neighbouring countries, including China. But in sectors like component manufacturing, where China is embedded in GVCs, strategic autonomy must allow calibrated economic engagement. We should not let security concerns prevent us from sourcing efficiently and scaling competitively.
India must also replicate the success story of mobile manufacturing across other sectors. This involves engaging directly with leading firms, providing them with plug-and-play infrastructure, and ensuring swift and certain approvals.
As PLIs mature, India must pivot to innovation, R&D and export heft. A Global Research Chairs programme - with top talent, flexible terms and world-class labs - can anchor this shift. Liberal visas and diaspora ties will strengthen our global STEM ecosystem.
Innovation needs more than talent - it needs an enabling state and a scaling private sector. Without that ecosystem, breakthroughs rarely become global wins.
Focus on tourism
India's tourism is rich but underplayed. It's time to reboot 'Incredible India' with modern storytelling, global co-branding and diaspora outreach. A unified digital window for clearances and real-time e-visas is key to unlocking its full potential.
Let cities lead
India's cities fuel growth, but struggle with congestion and poor governance. The ₹1 lakh cr Urban Challenge Fund is a big step - now, it must reward clean air, green spaces and smart mobility. Empower municipalities as drivers of creative economy, not just service providers.
The disruptions caused by tariff wars, supply chain realignments and geopolitical tensions have opened a window of opportunity for India to take the lead. However, true leadership will not emerge from tinkering or hesitation.
With the right reforms, we can unleash free enterprise, attract capital and accelerate growth across sectors. Now is the time to act boldly, deliver big, and make India the world's most dynamic growth story.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
Amitabh Kant
The writer is former CEO, NITI Aayog & G20 sherpa, GoI