Economic nationalism or industrialism racism?

India is the fastest-growing economy in the world. And not without reason. For the past decade, reforms and incentives across sectors have been designed to make India a developed nation before centennial celebrations of independence from the British in 2047.

Prime Minister Narendra Modi has underscored the need to reduce import dependency. “Today, we — 140 crore Indians — are working with determination to transform Bharat into a developed nation. It is imperative that whatever is needed for the country’s progress must be produced within Bharat”, PM Modi had said in Dahod at a public rally on May 26, adding, “This is the need of the hour.”

There have been some successes. The auto sector is a booming case in point. India’s nascent defence manufacturing sector is basking in the glow of Operation Sindoor. The pharma and biotech sector is the third largest in the world. India is also a key global textiles and apparel supplier. The jewel in the crown is the electronics and IT hardware sector with mobile phone exports hitting $18 bn in 2024-25.

Now, U.S. President Donald Trump threatens to upend these advances in manufacturing. Under Donald Trump, the U.S. is ramping up its own aggressive manufacturing agenda. While the primary target remains China, India’s rising profile as a ‘China Plus One’ destination has drawn Trump’s attention — and concern.

Apple, a posterchild for Make in India, with exports of ₹1.5 lakh crore worth of iPhones in 2024-25, is in the U.S. President’s crosshairs. The company helped build an entire manufacturing ecosystem in India, one that supports other global players.

Trump wants Apple to quit India and move its production to the US. He has repeatedly made his point. Last month he posted on Truth Social, “I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a Tariff of at least 25% must be paid by Apple to the US. Thank you for your attention to this matter!”

Trump was more direct during his visit to Doha, Qatar. “I had a little problem with Tim Cook yesterday. I said to him, Tim, you're my friend. I treated you very good. You're coming here with $500 billion but now here you are building all over India.” He added, “We're not interested in you building in India. India can take care of themselves. They're doing very well. We want you to build here.”

Recent signals suggest that Apple may just be the start of a shift in U.S. strategy under Trump 2.0 — one that aims to divide global manufacturing vertically. He wants India to be left with mass production, while the U.S. pulls high-tech industries back home.

“We're not looking to make sneakers and t-shirts. We want to make military equipment. We want make big things”, Trump said about a week later. His plan was further revealed when he said, “We want do the AI thing with the computers and the many, many, many, many elements. But the textile, you know, I'm not looking to make t-shirts, to be honest. I'm looking to not make socks. We can do that very well at other locations. We are looking to do chips and computers and lots of other things.”

This view was seconded by Howard Lutnick, US Commerce Secretary at a conversation at the US-India Strategic Partnership Forum in Washington, DC on June 2. “I think United States wants to bring advanced manufacturing back to the United States”, Lutnick said. “There are enormous number of product categories that we going to be delighted for India to produce. You will have a trade deal where we want an enormous number of these industries to go to India”, Lutnick added, giving a glimpse of the American stance on the trade deal.

The first salvo in this global industrial pivot has already been fired. Elon Musk’s Tesla, which was on the verge of finalising a manufacturing deal with India, has pulled back. It now plans to import all vehicles sold in India — from its giga-factories in China or Germany.

A preliminary trade deal between India and the U.S. is expected soon. While it may provide clarity on several tariff issues, it’s also likely to impose restrictions on market access in sectors India deems sensitive. But beyond that, the deeper battle — over the future of manufacturing — is just beginning.