India must look inward to find a solution to the trade deal quagmire with the US, said market expert and investor, Ajay Bagga. With tariffs card on the table, all the countries must play the same game, he said. India cannot depend on unpredictable external demand. He said that India must polish its policies to boost domestic consumption.
“For India, the real risk is not just tariffs — It’s the ripple effect on CAD (current account deficit), currency, consumption and job growth. Policy must get ahead of this wave — this is an opportunity for Big Bang Reforms and grabbing the moment to generate greatness,” he said in a series of posts on social media.
With tariffs as levers of “diplomacy, dominance, and dealmaking”, this is no longer only about trade. “It’s about rewriting the rules of globalisation,” he said.
“Countries must play the game — or risk being played. The US and China are the two dominant players. The rest of the countries are trying to be players and not pawns. India has done well but will need to up its act now,” he added.
India’s ambition to become a $10 billion economy must also factor in a world of tariffs, fragmentation, and supply chain realignments, he said. This leaves with India the only option of boosting domestic growth.
“Trump’s 25 per cent tariffs are a reminder: External demand is unpredictable. India must now pivot to domestic consumption as the core growth engine. A $4.2 trillion economy with 1.4 billion consumers is our biggest opportunity,” said Bagga.
He said India needs the following to boost domestic consumption:
- GST rationalisation, reduction of fuel costs
- Direct tax relief for the middle class
- Faster rural infrastructure rollouts
- Targeted MSME credit
- Cut LTCG and STCG to unleash a wave of optimism in the markets
Bagga said the government can make more only when the investors make more gains. “Demand stimulus must be frontloaded, not delayed,” he added.
India must not only aim but proactively work to attain 8 per cent GDP growth. Demographic tailwinds will fade by 2040, and hence India has a narrow window to achieving skilling of its workers, creating jobs, and increasing urban productivity.
“India must view Trump’s tariffs not just as trade threats — but as a push for economic reset. Strategic deregulation, trade diversification, and export support can reposition India as the trusted alternative to China,” he said.
Bagga also suggested the keys to managing Trump-era tariffs:
- Finalise free trade agreements (UK, EU, GCC)
- Expand rupee trade and barter deals
- Invest in export infrastructure
- Negotiate service sector access
India’s ambition to become a $10 trillion economy can be achieved by ensuring balanced growth across consumption, capital expenditure, and exports, but no single sector can sustain this growth alone, said Bagga.
To increase consumption, the government should focus on reducing the indirect tax burden on lower-income households. This includes simplifying the Goods and Services Tax (GST), lowering tax slabs for essential goods, and easing compliance requirements for small businesses. Such measures will help maintain demand without discouraging spending.
Despite weaker global economic conditions and rising geopolitical risks, India must rely on internal drivers such as reforms, productivity improvements, and trust-based growth, said Bagga.
