(Archana Chaudhary & Anirban Nag – Bloomberg)
Less than a month after he declared to the World Economic Forum that India was open for business, Prime Minister Narendra Modi has raised import duties to their highest in three decades, setting the stage for a protracted trade war.
As he prepares to seek re-election next year, Modi has been ensnared by a global wave of protectionism that could threaten the foreign direct investments India needs to achieve double-digit growth. He has made it more expensive to import parts for automobiles, cameras, televisions, electricity meters and smartphones, risking trade disputes from allies like the U.S. and Germany to rivals like China.
“India has taken a dramatic protectionist turn,” Richard Rossow, an Indian policy expert at the Washington-based Center for Strategic and International Studies, wrote in a note. “The scale of India’s protectionist leap is surprising and likely to elicit a strong response from the United States and other major trading partners.” Click here to read more.