Capitalmind CEO Deepak Shenoy has offered his assessment of India’s trade position amid the fallout from the United States’ new 50 per cent tariffs on Indian exports, stating, “We are relatively irrelevant in the trade world for large countries,” and calling much of India’s export output “easily replaceable.”
Shenoy’s comments come in the wake of a significant escalation in US trade penalties against India. Effective August 27, the total tariff on a broad swathe of Indian goods entering the US market has reached 50 per cent.
The move affects over $48 billion worth of Indian exports, striking directly at labour-intensive and value-added sectors including textiles, clothing, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and a range of electrical and mechanical machinery.
According to data from the Global Trade Research Initiative (GTRI), 66 per cent of India’s exports-about $60.2 billion-are now subject to the full 50 per cent tariff, threatening the price competitiveness of Indian goods in the world’s largest consumer market.
“We were never China+1. Maybe China+0.05,” Shenoy wrote, rejecting long-held narratives that global supply chains might pivot toward India. “What we produce for export, mostly, seems to be easily replaceable as they are commodities, like steel or iron ore or t-shirts or what not. This is the reality.”
Shenoy emphasised that India’s heft in the global economy originates more from its consumption than production. “We are big because we are a consumer, not because we produce. We depend on other countries for our consumption and the little that we produce,” he wrote.
In light of the tariff escalation, Shenoy argued that ramping up exports would be ineffective in the face of global pressure and coercion. ““We can either dial up our exports or push for more domestic production. The first is useless, other countries can always arm-twist,” he said, suggesting instead that India focus inward by reforming domestic production.
Shenoy called for deep structural changes: “To domestically produce, we need to remove the extreme rent seeking requirements of environmental overreach, unnecessary labour laws, high cost of capital, a freer rupee etc. This will still take a decade, but what better time than now to start?”
While critical, his tone remained optimistic. “This is not political. I am very bullish about India, we have an incredibly bright future. We have to recognize where we are and move from there.”
He also did not spare the Indian private sector, calling out entrenched inefficiencies. “And the blame lies with industry too. We are oligarchic, corrupt and reward all sorts of fraud in [the] private sector as well.”
India’s total goods trade with the US stood at $131.8 billion in FY2024–25, with exports at $86.5 billion. US data puts Indian exports even higher, at $91.2 billion.