India Must Negotiate With US, Cut Tariffs, Says Mohandas Pai

​In response to U.S. President Donald Trump's recent announcement of a 26% reciprocal tariff on Indian imports, former Infosys CFO and investor Mohandas Pai has urged India to adopt a strategic approach by lowering import duties on American goods. Pai believes that such a move could enhance India's market presence in the U.S. while keeping its exports competitive.

Mohandas Pai Advocates Response

Former Infosys CFO and investor Mohandas Pai has urged India to respond strategically by reducing tariffs on U.S. imports. He argues that this approach could help India expand its market in the U.S. while maintaining its export competitiveness.

“This is the beginning of a negotiated reduction in tariffs. India should reduce her tariffs on many American imports, and expand her market in the US. Israel has already eliminated her tariffs on US imports,” Pai tweeted.

Trump’s Tariffs: A Global Shake-up

Pai explained that Trump has imposed tariffs on almost all countries in the world, introducing a 10% base tariff on all imports to the U.S. and higher rates based on trade deficits with individual nations.
“For each country, about 50% of their total trade deficit divided by their exports to the U.S. has been used as a formula for setting tariffs. While some countries are facing heavier tariffs, India has received a 26-27% duty rate, which is lower than China’s 34% tariff but still significant" he said. A Fair Trade Move?

Pai sees Trump’s tariffs as a legitimate move to counter trade imbalances.
“America has become the dumping ground for all countries to push their goods,” he said, adding that China has taken maximum advantage of this situation.

He pointed out that China has grown into a $20 trillion economy, with a trade surplus of $1 trillion last year, largely by exporting aggressively to the U.S. and Europe. According to Pai, Trump’s tariffs are a negotiating tool to push countries toward fair trade. He cited Israel and Vietnam as examples of nations that have eliminated tariffs on U.S. imports to maintain strong trade relations. This, he believes, would help Indian companies expand exports to the U.S., boost revenue, and strengthen trade relations.

“India also has told the U.S. we could reduce tariffs. India should work out a free trade agreement and abolish or lower tariffs on many American goods,” Pai suggested.

China’s Role in the Global Economy

Pai was particularly critical of China’s economic practices, saying that its market-less economy has harmed industries worldwide. He supported Trump’s efforts to rebalance global trade, arguing that, in the long run, India could benefit by making strategic trade adjustments.

“Thirty to thirty-five percent of global manufacturing is concentrated there. They are destroying industries all over the world,” he said.

Is There an Opportunity for India

While Trump’s tariffs pose challenges, Pai believes they also present an opportunity for India to restructure its trade policies. By reducing tariffs on American goods, India could gain greater market access to the U.S., making it more competitive in global trade.

“The big enemy for the whole world economy is China, which has been dumping goods with a $1 trillion surplus. It’s good that President Trump is taking this step. In the medium to long run, India will benefit,” Pai concluded.

As the trade war escalates, India faces a crucial decision either maintain high tariffs and risk U.S. retaliation or lower them strategically to secure its export markets.