With two weeks left before US president Donald Trump’s April 2 deadline for imposing reciprocal taxes on imports, India is already in damage-control mode, bracing for potential economic disruptions.
Signs of a strategic shift are emerging, as seen in the sudden embrace of Elon Musk’s Starlink Inc. by two of India’s largest telecom companies—whose billionaire owners had previously opposed his market entry.
A top government minister even posted (and later deleted) a message on X welcoming Starlink, despite the satellite broadband service still awaiting regulatory approvals.
While prime minister Narendra Modi has not responded to the opposition Congress Party’s claims that these deals were orchestrated “to buy goodwill with Trump,” recent developments indicate a notable change in India’s approach to trade and its billionaire class.
Last month’s discussions about reducing Tesla’s import duty from 110 per cent to a significantly lower rate further suggest a shift away from long-standing protectionist policies.
For the past decade, Modi’s economic strategy has relied on shielding a select group of Indian business giants from foreign competition. Tariffs that had dropped close to China’s 7 per cent levels in 2011 were raised to 12 per cent by 2022—among the highest in the world.
In addition to tariffs, these billionaires benefited from favorable government contracts and non-tariff barriers, such as stringent regulations for foreign-backed businesses.
Robert Lighthizer, the U.S. Trade Representative under Trump 1.0, had a clear understanding of this dynamic. In his 2023 book, he revealed that he kept biographies of about 15 Indian business tycoons on his desk while negotiating with New Delhi. “In predicting Indian government positions, I would look to the interests of these men,” he wrote.
Research confirms the growing dominance of India’s top business conglomerates. The share of non-financial assets held by Mukesh Ambani, Gautam Adani, Tata Group, cement tycoon Kumar Mangalam Birla, and telecom mogul Sunil Mittal rose from 10 per cent in 1991 to 18 per cent by 2021.
Former Reserve Bank of India deputy governor Viral Acharya has noted that these groups expanded rapidly post-2014, acquiring dominant positions in sectors such as telecom, media, retail, ports, airports, building materials, and automobiles. With high tariffs limiting foreign competition, they have flourished in a largely protected domestic market without having to compete internationally.
The return of Trump could disrupt this carefully constructed economic order. With the April 2 deadline looming, India’s Commerce Ministry is urging exporters to “come out of their protectionist mindset.” But it’s not just exporters who need to adapt—the government itself faces mounting pressure to recalibrate its stance.
Trump’s push for India to buy more from the U.S. has put Modi’s administration in a difficult position. The U.S. has highlighted India’s steep 39 per cent tariffs on agricultural products—eight times higher than what Washington imposes.
However, Modi’s uneasy relationship with North Indian farmers, who rejected his previous attempts at market-based pricing reforms, makes it politically risky to lower agricultural trade barriers. Instead, the burden of accommodating Trump’s demands may fall on India’s billionaire class.
India’s corporate giants are unlikely to accept these changes without a fight. Reports suggest that New Delhi has asked manufacturers to replace Chinese components with American alternatives—a costly transition that has already sparked resistance.
Within India’s bureaucratic circles, concerns are growing that the country has leaned too far toward the West, potentially compromising its strategic autonomy.
If Tesla is granted special entry into India, some argue that China’s BYD Co. should also be given the green light to set up local manufacturing with an Indian partner. This raises broader questions about India’s trade policy: should it continue prioritizing Western partnerships at the expense of strengthening regional economic ties?
India’s long-standing ambition to emulate China’s economic success—while keeping Beijing at arm’s length—now faces serious hurdles. Despite its push for domestic manufacturing, factory output contributes just 13 per cent to GDP, its lowest share since 1960.
Meanwhile, India’s trade deficit with China has doubled over the past decade, underscoring its deep economic reliance on its northern neighbor.
At the same time, Trump is targeting India’s nearly $50 billion trade surplus with the U.S.—its largest export market.
This pressure comes at a challenging moment, with domestic demand slowing and stock markets reeling from a $1.3 trillion decline. Modi’s government may attempt to delay reciprocal tariffs to buy time for broader trade negotiations with Washington.
But the recent surge in enthusiasm for businesses aligned with Trump’s economic vision sends a clear message to India’s billionaires: the state’s protective embrace is loosening.
