Content
- With tariffs, India’s growth rate needs a careful watch
- Industrial accidents, the human cost of indifference
With tariffs, India’s growth rate needs a careful watch
Context & Background
- Trigger:
- Aug 7, 2025 – U.S. imposes a 25% reciprocal tariff on Indian exports.
- Aug 6, 2025 – U.S. announces an additional 25% penal levy on certain Indian exports (effective Aug 29), citing India’s continued Russian oil imports.
- Strategic Intent by U.S.:
- Reduce India’s merchandise trade surplus with the U.S. ($41.18 bn in 2024–25).
- Nudge India away from Russian crude toward more U.S./allied sources.
- Apply policy pressure via trade measures — a form of “economic statecraft.”
Relevance : GS 2(International Relations) , GS 3(Indian Economy)
Practice Question : The recent imposition of reciprocal and penal tariffs by the United States on Indian exports represents a convergence of trade and geopolitics. Analyse the likely economic, strategic, and policy implications for India. Suggest a multi-pronged strategy to mitigate the adverse impacts while safeguarding strategic autonomy.(250 words, 15 marks)
Understanding the Tariffs
- Reciprocal Tariff (25%):
- Broadly targets Indian goods exported to the U.S.
- Justified as “reciprocal” to Indian tariffs on U.S. goods.
- Penal Levy (Additional 25%):
- Punitive measure linked to India’s Russia oil imports.
- Discriminatory — not equally applied to other major Russian oil importers.
- Combined Effect:
- In many cases, Indian goods could face 50% extra duty in the U.S. market.
- Could severely erode price competitiveness.
Trade Elasticity & Direct Export Impact
- Import Elasticity w.r.t. Tariffs:
- Assumed -1 (high elasticity) — means a 1% tariff rise → ~1% fall in imports.
- Projection:
- 25% tariff → ~25% fall in India’s exports to U.S. (worst-case).
- Given U.S. share in India’s total exports, this translates to 0.56% of GDP hit to trade balance.
Macroeconomic Impact (2024–25 Estimates)
- Trade Deficit:
- Widening from 7.28% to 7.84% of GDP (↑ 0.56%).
- GDP Growth:
- Fall from 6.5% to 5.9% (↓ 0.6%).
- Current Account Deficit (CAD):
- Rise from 0.6% to 1.15% of GDP.
2025–26 Specific Scenario
- Tariffs not in force for first 4 months → Impact slightly lower.
- GDP hit: ~0.4% this year.
- CAD rise: smaller but still significant.
Secondary Transmission Channels
- Oil Import Diversion:
- Penal levy acts as indirect non-tariff barrier on Russian oil imports.
- Shifting to U.S./other sources = higher crude cost →
- Worsens CAD.
- Potentially fuels inflation.
- Depreciates rupee.
- Global Price Effects:
- Rising world oil prices amplify import bill shock.
- Geopolitical uncertainty adds volatility.
Caveats & Offsetting Factors
- Trade Diversification:
- Recent India–UK trade agreement.
- Ongoing EU FTA talks.
- Could partly offset U.S. market losses.
- Competitor Impact:
- If U.S. tariffs hit rival exporters harder, India’s loss could be moderated.
- Exchange Rate Depreciation:
- Rupee at ₹87.5/USD could aid export competitiveness — though inflation risk remains.
- Selective Exemptions:
- Some commodities spared from penal levy, softening blow.
Strategic Risks
- Precedent Risk:
- Sets an example of using tariffs for foreign policy leverage — outside WTO norms.
- Persistent Tariff Regime:
- Longer-term structural drag on India–U.S. trade.
- Inflationary Pressure:
- Via higher energy import costs.
- External Financing Pressure:
- Higher CAD → need for stable capital inflows → vulnerability to global financial tightening.
Possible Indian Response & Mitigation
Short-Term
- Negotiation Window:
- Use the 3-week gap before penal levy to seek exemptions or rollbacks.
- Mobilise diplomatic pressure by highlighting discriminatory nature.
- Targeted Tariff Adjustments:
- Reduce India’s own import tariffs that hurt its export competitiveness (due to high import content in exports).
- Selective Market Diversification:
- Push sectors with established networks into EU, ASEAN, Africa.
Medium to Long-Term
- Energy Strategy Shift:
- Enhance sourcing diversity — Middle East, Latin America — without fully yielding to U.S. pressure.
- Boost renewable energy capacity to reduce oil dependence.
- Export Competitiveness:
- Lower logistics costs, streamline GST refund & RoDTEP schemes.
- Allied Bloc Formation:
- Build coalitions in WTO or plurilateral forums against coercive trade tactics.
Bottom Line
- Economic Hit:
- Worst-case → GDP ↓ 0.6 percentage points, CAD ↑ 0.55% of GDP.
- Strategic Signal:
- U.S. willing to weaponise trade for geopolitical goals.
- Policy Choice for India:
- Balance between resisting coercion and limiting economic fallout.
- Use this as impetus for export market diversification and tariff rationalisation.
Industrial accidents, the human cost of indifference
Context & Author’s Perspective
- Industrial safety crisis – India witnesses thousands of preventable industrial fatalities each year, reflecting systemic apathy rather than technological incapacity.
- Human toll – Over 6,500 worker deaths in the past five years, with countless more in the unorganised sector going unrecorded.
- Widespread scope – Accidents span factories, construction sites, mines, and chemical plants, often in small and medium enterprises operating below regulatory visibility.
- Nature of problem – Rooted in regulatory non-compliance, weak enforcement, unsafe work practices, and cultural neglect of safety.
- Underlying reality – Industrial disasters are largely man-made, arising from governance gaps and a cost-cutting mindset that undervalues human life.
Relevance : GS 2(Social Issues , Labour Laws)
Practice Question : Industrial accidents in India reflect not technological limitations but systemic indifference. Analyse the causes, socio-economic implications, and policy gaps in India’s industrial safety regime. Suggest a way forward that balances economic growth with worker safety.(250 words, 15 marks)
Scale of the Problem
- 6,500+ worker deaths in the last five years in factories, construction sites, and mines (Labour Ministry + RTI data).
- Equivalent to ~3 deaths every day in peacetime.
- State-specific tolls: Andhra Pradesh & Tamil Nadu → 200+ fatalities in a decade in major industrial accidents.
- Informal/unregistered sector deaths → largely unrecorded and invisible in official data.
- CSE study (2022): 130+ major chemical accidents in 30 months post-2020 → 218 deaths & 300+ injuries.
- Majority in SMEs operating below regulatory visibility.
- Gujarat (2021): 60+ major industrial fires/gas leaks in one year.
Core Causes — Elementary & Avoidable
- Regulatory non-compliance:
- No Fire NOC from fire departments.
- Missing/dysfunctional firefighting equipment (alarms, extinguishers, sprinklers).
- Unsafe work practices:
- No permit-to-work system.
- No hazard identification or job safety analysis.
- Workforce vulnerability:
- Migrant & contract workers without training.
- Language barriers to understanding safety signage.
- Physical safety lapses:
- No fire exits or exits blocked/locked.
- Weak enforcement:
- Safety audits reduced to “tick-the-box” exercises.
- Rare convictions; minimal penalties.
Systemic & Cultural Failures
- Safety as afterthought: Seen as a compliance hurdle, not a core value.
- International contrast:
- Germany/Japan: Safety embedded in design & culture.
- India: Focus on operational excellence overshadows basic safety.
- Pattern of apathy:
- Tragedy → Outrage → Compensation → Inquiry Committee → Silence → Repeat.
- Regulatory limitations:
- DGFASLI data → one serious accident every two days in registered factories.
- No comprehensive data for unregistered units.
Socioeconomic Dimensions
- Class bias:
- Lapses in elite workplaces unlikely to be ignored.
- Deaths of migrant/contract labourers → low societal outrage.
- Workers as ‘disposable’ assets:
- Cost-cutting mindset sees safety as expense, not obligation.
- National indifference:
- Public silence, regulatory inertia, corporate negligence sustain the crisis.
Framing & Accountability
- Rejecting “Act of God” framing:
- Disasters are man-made, due to negligence.
- Global legal models:
- South Korea & Singapore → Corporate manslaughter laws hold executives criminally accountable.
- India’s gap:
- No legal provision targeting corporate leadership for gross safety failures.
Reform Agenda — Author’s Call to Action
- Cultural shift: Safety as a right, not a “favour”.
- Regulatory strengthening:
- Empower & modernise labour safety boards.
- Digitise risk reporting systems.
- Protect whistle-blowers.
- Corporate accountability:
- Move beyond compliance checklists to design-integrated safety culture.
- Public conscience:
- Civil society, media, and industry leaders must reject indifference.
Policy Relevance
- Labour & Industrial Safety Policy: Intersects with Labour Codes, Factories Act, 1948, Occupational Safety, Health and Working Conditions Code, 2020.
- Ethics & Governance: Duty of care, corporate ethics, valuing human life.
- GS-3 Linkages:
- Industrial disasters (Bhopal Gas Tragedy legacy).
- Disaster management cycle failures.
- Role of regulatory institutions (DGFASLI, CSE reports).
- Comparative governance:
- Learning from Japan, Germany, South Korea, Singapore.
Key Takeaway
India’s industrial accident crisis is not about lack of technical means, but lack of care, enforcement, and value placed on human life.
The author’s question — “Do we care enough to act?” — is both a moral and policy challenge.
