'Trade has now become a weapon...', Raghuram Rajan warns India about US tariffs

Dr Raghuram Rajan on US Tariffs: Former Reserve Bank of India Governor and eminent economist Dr Raghuram Rajan has termed the heavy duties imposed by the US on Indian exports as worrying and said that this is a warning for India to reduce its dependence on any one trading partner.

America has imposed a 50 percent tariff on Indian goods. Speaking on this, Rajan warned that in today's global system, trade, investment and finance are increasingly being weaponized and India should take steps with caution.

Avoid Overdependence On One Country

Raghuram Rajan said that this is a warning. We should not depend too much on any one country. We should look towards the East, towards Europe, towards Africa and move forward with America. While India has faced stiff tariffs by the Trump administration for buying Russian crude oil, China, the largest importer of Russian oil, and Europe which is buying a lot of energy products from Moscow, have escaped similar treatment at the hands of Washington.

Raghuram Rajan suggested India to re-evaluate its policy on Russian oil imports and said that we have to ask who is benefiting from this and who is losing. Refiners are making huge profits, but exporters are paying the price for it through tariffs. If the benefit is not that much, then we have to consider whether we should buy or not.

Investment has been weaponised

Comparing India with China, Rajan said the issue is not one of fairness but of geopolitics. He said, "We should not depend too much on anyone. Trade has been weaponised. Investment has been weaponised. Finance has been weaponised. We have to diversify our supply sources and export markets." The former chief economist of the International Monetary Fund (IMF) further argued that India should look at this crisis as an opportunity.

Shrimp And Textile Industries Affected

Rajan said, "By all means, work with China, Japan, the US or anyone else. But don't depend on them. Make sure you have options, including self-reliance as far as possible." Calling it a setback for US-India relations, Rajan expressed concern that the move would particularly hurt small exporters such as shrimp farmers and textile manufacturers and put their livelihoods at risk.