‘If we can’t import freely, we can’t export freely’: Jayant Sinha on India’s trade barriers at BT India@100

India needs to lower trade barriers and open its economy further if it wants to become a global manufacturing and export powerhouse, former MoS Finance Jayant Sinha said, pointing to the stark difference between the country's import tariffs and those of export-oriented economies such as Vietnam.

Speaking at the Business Today's IndiaAt100 event, Jayant Sinha, Former Chair of the Standing Committee for Finance, MoS Finance, and President of Everstone Group said India's import tariffs are around 15% compared to 1% in Vietnam.

He argued that easier access to imports is essential for companies seeking to plug into global value chains and compete in international markets. “All that being said, we need to really open ourselves up to the global economy because if we can't import freely, we can't export freely.”

The comments come as India seeks to expand its manufacturing base and capitalise on the China-plus-one strategy, under which global companies are diversifying production and supply chains beyond China.

For Sinha, greater trade openness will be crucial if India wants to capture a bigger share of that shift.

India versus Vietnam 

Sinha pointed to Vietnam as an example of an economy that has used trade openness to become deeply integrated with global manufacturing networks.

Vietnam's exports are equivalent to about 90% of its GDP, while India's are around 20%, he said. Foreign direct investment in Vietnam stands at roughly 4-4.5% of GDP compared with about 1% in India, according to Sinha.

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Global investors are taking note of that difference. “Number three, why are you not more open to the world in terms of trade? They're looking at Vietnam and saying look at Vietnam.”

Sinha said investors increasingly ask why India has not integrated itself more deeply into global value chains. “Vietnam has exports which are 90% of GDP. We are 20% of GDP. Their FDI is 4 ½ % of GDP. Ours is about 1%. So they're saying why aren't you more open like China and Vietnam and get plugged into global value chains?”

One major difference, he said, is the tariff structure. “Vietnam's import tariffs are 1%. Ours are about 15%. So if we can't import, it's very difficult to export.”

Open up sector by sector 

Sinha acknowledged that trade policy has become increasingly complicated as economic considerations intersect with geopolitics, national security and supply-chain resilience.

He cited punitive tariffs linked to India's purchases of Russian oil as an example of geopolitical considerations spilling into trade policy. “I mean the idea that there'll be these punitive tariffs on us because of you know the Russian oil situation has nothing to do with trade. It has to do with geopolitics.”

China, critical minerals and magnets further complicate the picture, making unrestricted trade difficult in strategically sensitive sectors, he said. “So it all gets very very complicated when it comes to trade.”

Despite those constraints, Sinha argued that India should progressively reduce barriers where possible rather than allow geopolitical uncertainty to derail its broader integration with the world economy.

“And so we have to find a way of opening up sector by sector as much as we can because when we open up then we can export much more.”

Smartphone manufacturing shows what India can do 

India's emergence as a major smartphone manufacturing base demonstrates the potential gains from integrating domestic production with global supply chains, according to Sinha.

“In 10 years we become one of the world's after China probably the largest exporter of smartphones right now and some 25% of Apple iPhones are actually made in India.”

He said the transformation had happened rapidly, demonstrating that India can build globally competitive manufacturing industries when the right policy framework is in place. “That has happened in five or six years. What an incredible story. So absolutely we can do it and we must do it.”

The smartphone experience is particularly significant for India's wider manufacturing ambitions. As multinational companies rethink supply chains, India has an opportunity to establish itself as an alternative production base, but Sinha's argument is that export competitiveness cannot be separated from the ability to efficiently import components, technology and other inputs.

Trade agreements as a policy anchor 

Sinha also pitched deeper participation in international trade agreements as a way to anchor India's gradual opening to the global economy.

“Of course with the right set of policies and by being really open to the world there for example as I have written if we can join CPTP those kinds of trade agreements they become a very important policy anchor for us and enable us to open up progressively to the world.”

The broader trade push ties into Sinha's argument that India should aspire to become a $30 trillion economy by 2047.

He identified the China-plus-one manufacturing opportunity as one of the major global forces India needs to seize, alongside artificial intelligence and the transition towards green technologies.

But capturing that opportunity will require India to compete for investment against economies that are already deeply embedded in global supply chains.

Sinha said international investors remain enthusiastic about India's prospects but are also seeking answers on issues ranging from AI and energy dependence to jobs and trade openness. “The India story is very strong. The India story is very attractive. People are excited about India,” he concluded.

Watch the full conversation here: