'We are at risk': Uday Kotak says Trump shock should push India out of ‘cruise mindset’

Donald Trump’s tariff onslaught has jolted India into confronting its economic vulnerabilities, said Kotak Mahindra Group founder Uday Kotak, who urged policymakers and businesses to treat the shock as a catalyst for deep structural reform.

Calling the dual US tariff regime a “major shock,” Kotak told the Financial Times in an interview that it has “woken Indians up” to the risks of global dependency. “We must think about this as an opportunity for us to get out of our cruise mindset and from a comfort mindset to ‘we are at risk’,” he warned.

Trump imposed an additional 25% tariff on Indian exports—on top of a prior 25% reciprocal levy—citing India’s ongoing purchase of discounted Russian crude. The penalties, he argues, are aimed at nations “profiteering” from Russia’s war economy. Analysts warn the new tariffs could shave 0.5 to 0.7 percentage points off India’s GDP growth.

Yet Kotak sees opportunity in crisis. “There’s a sense of urgency for transforming India,” he said, urging a pivot toward productivity, efficiency, and global competitiveness. “Manufacturing has to play a very important role,” he said, adding that producers should not depend on India’s domestic market alone, as it leads to avoiding “cutting-edge precision.”

India’s macroeconomic fundamentals remain strong, Kotak added. “Our fiscal deficit is under control, our current account is under control, you’ve got macroeconomic stability.” But with a per capita GDP of just $2,700—compared to China’s $13,300 and the US’s nearly $89,000—he warned India risks slipping into the “middle-income trap.”

“At the current ‘cruise’ level, we’ll keep on improving, but is it fast enough for us to get past the middle-income trap? I think there’s a gap,” he said.

Kotak called for direct fiscal support to “turbocharge” small businesses in manufacturing, R&D, and technology—key to escaping the trap and building resilience.