There was a time when everybody was euphoric about India. Now with the tariffs and so on, there may be more pessimism about India, says Raghuram Rajan
'We don't know what happened between India and the US, but hopefully in the longer run sanity prevails on all sides and we all reach reasonable deals,' says Rajan
These disruptions are especially damaging for small and medium enterprises. Rajan warned that once international buyer relationships break down, they are often lost for good. “Someone else in Bangladesh or Vietnam takes up the slack,” he said. “The longer this lasts, the more it becomes a permanent rupture.”
Sibal argued that India, under Modi, has maintained dignity and stood firm against unfair trade terms, unlike other nations that succumbed to Trump’s pressure.
Raghuram Rajan said India cannot be the most tariffed country in the world – more than China – and then have Washington talk about “military friendship and alignments and joint manoeuvres and so on”.
Rajan says while the developed economies have secured lower tariff levels, India’s priority must be to stay competitive relative to its peers in East and South Asia.
While higher H-1B visa fees would cause short-term disruptions, the potential expansion of tariffs under the HIRE (Help In-sourcing and Repatriating Employment) Act could have a far more lasting impact, warns Rajan
The professor argues that employment growth potential lies primarily in non-tradable sectors like personal services, which remain less affected by technological disruptions.
Rajan explained that the strong real GDP number was partly a statistical effect of unusually low inflation.





