Amid growing concerns over potential economic headwinds, billionaire Uday Kotak has called on the Indian government to provide urgent support to help the country withstand the shock of rising US tariffs. Kotak, the founder and director of Kotak Mahindra Bank, emphasized the need for proactive measures to shield India's economy from the potential fallout of increased trade barriers.
Kotak specifically urged Prime Minister Modi's government to bolster small and medium-sized enterprises (SMEs) with fiscal support. He views the current situation as an opportunity for economic transformation, but warned against complacency, despite India's strong macroeconomic fundamentals. Instead, he advocated for enhanced productivity and global competitiveness to avoid the middle-income trap.
The call for government intervention has been echoed by other industry leaders. Concerns have been growing about the potential impact of escalating trade tensions and protectionist measures on global supply chains and emerging markets like India. The US President's administration has already imposed tariffs on several countries, including Canada, Mexico, and China, raising concerns about potential ripple effects on global markets.
Kotak's comments came in the wake of sweeping executive orders imposing tariffs on imports from various countries. These actions have raised concerns about their potential to dent global growth, reignite inflation, and cause severe disruptions to already fragile supply chains worldwide. The US administration has signaled an aggressive stance on tariffs, naming India and Brazil as high-tariff countries.
Kotak has outlined strategies for India to respond to the US tariff threats, emphasizing diplomatic and economic steps to protect trade interests while maintaining stable relations with the US. He suggests that India should find what makes sense for its self-interest. India has strategically decided to move closer to the US, but it needs to consider its options if the US continues on its current path.
Kotak has stressed the importance of building raw power, including economic strength. He notes that trust in a country's economy and currency takes a long time to build but can be eroded quickly. He also suggests that the US approach may serve it in the short run but will have a price in the long run and that the US is playing into China's hands. He underscored that India should not get caught in the crossfire between the US and China but find its own journey independent of these two.
According to recent reports, the US has imposed tariffs ranging from 10 to 41% on 92 countries, with the new rates taking effect on August 7. India is facing the highest tariffs in the region. The Indian government has stated that its effort will be to resolve and not retaliate against the United States. The government aims to address the tension points in the relationship without compromising the long-term strategic partnership between India and the US.
Kotak advises every Indian to assume that there will be rough weather and prepare to do very well in rough weather. He urges Indians to wake up and get out of their comfort zone, maintaining a sense of paranoia and preparing for potential attacks from the global side. He draws a parallel to the 1980s and 90s when India was very insecure about its global position.
