'Not just through tariffs': Sitharaman says trade is being weaponised, India will have to negotiate carefully
Beyond trade negotiations, it is the strength of our economy that will give us a decisive advantage, says FM Sitharaman
- Dec 17, 2025,
- Updated Dec 17, 2025 12:52 PM IST
Global trade is increasingly being weaponised - not just through tariffs, but through several other measures as well, Finance Minister Nirmala Sitharaman warned on Wednesday. "Trade is getting weaponised through tariffs, through many other measures, and India will have to negotiate its way carefully through this," she said while speaking at the Times Network India Economic Conclave 2025. "Beyond trade negotiations, it is the strength of our economy that will give us a decisive advantage."
Her remarks come at a time when India faces steep tariff and non-tariff barriers from multiple trade partners, including the United States, Mexico and the European Union.
In August, the US slapped a 50% tariff on goods imports from India. This included a punitive 25% tariff in response to New Delhi's continued oil trade with Russia. The finance minister said, "India has never weaponised tariff and has focused on its domestic strengths, bolstering it through structural reforms."
Mexico, too, has now imposed duties of up to 50% on imports from non-preferential trade partners, including India. The tariffs, which take effect from January next year, are expected to hit India's annual $5.75 billion exports to the country, affecting key segments like electronics, apparel, chemicals, and engineering goods.
Referring to advice from some quarters that India should pursue freer trade or avoid being inward-looking, Sitharaman said, "While it is good to hear people give their advice, India, and countries like India who have aspirations, will have to mark their own goal post."
On domestic economic priorities, she said, "The services sector is contributing to the GDP, we have to now spend time to see how the manufacturing sector picks up, and the government will have to spend money on research and development for it."
Sitharaman also said that the government was trying to deepen the bond market so that more funds can come in, not just for equity but also bond market. She stressed the importance of fiscal discipline not just for the Centre, but also for the states. "That same accountability, transparency, and fiscal management as a priority will have to be understood and exercised by states," she said, warning that many states' debt levels were unsustainable. "Unless states' debt-to-GSDP is managed better, and their debt stock is brought down with debt servicing due in high interest rate cycle, they will have to borrow to service the loans."
The FM further said that Prime Minister Narendra Modi is known for his fiscal management and that the central government has set clear goals for transparency in budget-making, ensuring that fiscal management is visible to all and meets the highest standards of accountability.
"As a result, we have been able to bring down the debt-to-GDP ratio since the post-COVID period, when it had crossed 60%. It is now on a declining path, and from the next financial year, this will be a core focus area. The fiscal deficit will continue to remain an important marker, and we will care for it."
Global trade is increasingly being weaponised - not just through tariffs, but through several other measures as well, Finance Minister Nirmala Sitharaman warned on Wednesday. "Trade is getting weaponised through tariffs, through many other measures, and India will have to negotiate its way carefully through this," she said while speaking at the Times Network India Economic Conclave 2025. "Beyond trade negotiations, it is the strength of our economy that will give us a decisive advantage."
Her remarks come at a time when India faces steep tariff and non-tariff barriers from multiple trade partners, including the United States, Mexico and the European Union.
In August, the US slapped a 50% tariff on goods imports from India. This included a punitive 25% tariff in response to New Delhi's continued oil trade with Russia. The finance minister said, "India has never weaponised tariff and has focused on its domestic strengths, bolstering it through structural reforms."
Mexico, too, has now imposed duties of up to 50% on imports from non-preferential trade partners, including India. The tariffs, which take effect from January next year, are expected to hit India's annual $5.75 billion exports to the country, affecting key segments like electronics, apparel, chemicals, and engineering goods.
Referring to advice from some quarters that India should pursue freer trade or avoid being inward-looking, Sitharaman said, "While it is good to hear people give their advice, India, and countries like India who have aspirations, will have to mark their own goal post."
On domestic economic priorities, she said, "The services sector is contributing to the GDP, we have to now spend time to see how the manufacturing sector picks up, and the government will have to spend money on research and development for it."
Sitharaman also said that the government was trying to deepen the bond market so that more funds can come in, not just for equity but also bond market. She stressed the importance of fiscal discipline not just for the Centre, but also for the states. "That same accountability, transparency, and fiscal management as a priority will have to be understood and exercised by states," she said, warning that many states' debt levels were unsustainable. "Unless states' debt-to-GSDP is managed better, and their debt stock is brought down with debt servicing due in high interest rate cycle, they will have to borrow to service the loans."
The FM further said that Prime Minister Narendra Modi is known for his fiscal management and that the central government has set clear goals for transparency in budget-making, ensuring that fiscal management is visible to all and meets the highest standards of accountability.
"As a result, we have been able to bring down the debt-to-GDP ratio since the post-COVID period, when it had crossed 60%. It is now on a declining path, and from the next financial year, this will be a core focus area. The fiscal deficit will continue to remain an important marker, and we will care for it."