What India must fix now: CIO's five-point reform plan to beat Trump's tariff blow

"No response is the best response to a bully. Do REFORMS & boost domestic economy," wrote Gurmeet Chaddha, Chief Investment Officer at Complete Circle, hours after US President Donald Trump announced a 25% tariff and an unspecified penalty on Indian imports.

Chaddha's comment came with a list of five measures he believes India should implement immediately - cut GST across the board, push the RBI to lower rates and reduce risk weights on home loans, accelerate large defence and infrastructure orders, extend the PLI scheme to stressed sectors like electronics and auto, and cut surcharges on income tax.

Trump’s latest move, effective from August 1, targets India over its continued defence and energy ties with Russia. "India will therefore be paying a tariff of 25%, plus a penalty for the above, starting on August first," he posted on Wednesday. The U.S. President also accused India of "strenuous and obnoxious non-monetary trade barriers" and claimed the country had "among the highest tariffs in the world."

Security analyst and ORF senior fellow Sushant Sareen echoed the call for internal reset rather than diplomatic appeasement. "India has hoped it could do a fair deal with US. But succumbing to bullying is not part of the deal. At the end of the day, a trade deal has to be fair, and it must ensure that lives of Indians become better, not worse. Trump too shall pass. US tariffs are not the end of the world," he said.

"Free the economy from the clutches of the bureaucracy, initiate reforms on a war footings, become the demolisher of obstacles that the PM was famous for, make regulation sensible, transparent and enforce it without exception."

Sareen also urged regulatory tightening in the digital space. "Bring in the necessary reforms in the digital space. Force foreign companies to follow Indian laws and have their data centres in India. Trump is a bully. The more we try to please and humour him, the more he will push us. Time to push back."

The Indian government, meanwhile, issued a formal statement via the Ministry of Commerce. "The Government has taken note of a statement by the US President on bilateral trade. The Government is studying its implications. India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective," it said.

India has taken a firm stance on core sectors. It has refused to offer duty concessions on agricultural and dairy imports-especially genetically modified crops and U.S.-origin dairy-citing food security and livelihood concerns. These have not featured in any of India’s free trade agreements to date.