While the global economy is recalibrating in the wake of shifting geopolitics and protectionist policies amidst the uncertainty on the back of US reciprocal tariffs, former RBI Governor Raghuram Rajan said, “India needs to be a lot more proactive than reactive.”
While interacting with CNBC TV18 on the sidelines of a UBS Conference, Raghuram Rajan said US President Donald Trump’s tariff policy, once touted as a catalyst for revitalizing American manufacturing jobs, has fallen short of expectations. He further added that global investors are reassessing risks and opportunities and there is a possibility of ‘significant reset in global portfolio holdings’, with some portfolio managers looking to reduce their overexposure to the US.
In this shifting landscape, Raghuram Rajan maintained, India is emerging as a potential beneficiary provided it can offer policy stability and a welcoming business environment. “A red carpet and policy stability can lead to significant foreign direct investment (FDI) into India,” he said while adding that India must move beyond reactive measures to truly capitalize on this moment.
Meanwhile, India received $81.04 billion in gross FDI during 2024–25, reflecting a 14 per cent rise from the previous year, according to provisional government data. FDI equity inflows alone surpassed $50 billion, up 13 per cent year-on-year. The momentum, however, slowed in the final quarter of the fiscal year, with gross FDI declining 24.5 per cent to $9.34 billion.
Earlier in April, Doanld Trump had announced a pause for 90 days on most of his country-specific tariffs. The 10 per cent blanket duty on almost all US imports stayed in place. Meanwhile, India and US are negotiating on a trade deal and a team of US officials is expected to visit New Delhi in the coming weeks for the next round of discussions, per sources as cited by PTI. The visit comes at a critical juncture as both sides push to finalise the deal before the July 9 deadline. India is seeking full exemption from the 26 per cent reciprocal tariff imposed by the US on domestic goods.