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Zoho’s Sridhar Vembu warns of higher inflation after Donald Trump’s reciprocal tariffs threat
India will also have to find ways to cut consumer goods imports from China and increase domestic production, said Zoho Corporation’s co-founder Sridhar Vembu
Zoho Corporation’s co-founder Sridhar Vembu on Sunday raised concerns of higher inflation in the coming months as India is likely to increase imports from the United States, following President Donald Trump’s reciprocal tariffs threat.
India will also have to find ways to cut consumer goods imports from China and increase domestic production, said Vembu.
In a post on social media platform X, Sridhar Vembu said: “As a slightly oversimplified mental model, India exports software services to America and imports consumer goods from China. The surplus with America is more than matched by the deficit with China. Now India will (have to) import more iPhones, GPUs, LPG, nuclear plants, fighter jets, whiskey and so on from America to balance the bilateral trade.”
“In order not to blow up the current account deficit, India has to find ways to reduce consumer goods imports from China, and that means increasing domestic production. Since this cannot happen overnight, in the short run imported consumer goods prices could go up - that shows up as inflation. Indian manufacturers have to step up and set up capacity and acquire the know how when needed,” he added.
India's trade surplus with the US has doubled, rising from $17.30 billion in 2019-20 to $35.33 billion in 2023-24.
While traditional exports such as gems, jewellery and garments remained largely unchanged, exports of electronic and engineering goods increased.
In fiscal year 2024, India's trade deficit with China hit $85.1 billion, with imports witnessing a 9.8 per cent growth year-on-year between April and October.
Trump’s reciprocal tariffs
On February 13, Trump had announced reciprocal tarriffs on countries, including India.
“On trade, I have decided that for the purpose of fairness, I'll charge reciprocal tariffs - meaning, whatever countries charge the United States of America, we will charge them - no more, no less. They charge us with tax and tariffs, it's very simple we will charge them with exact tax and tariffs,” Trump had said.
He signed the memo “Fair and Reciprocal Plan”, and said: "They charge us a tax or tariff and we charge them the exact same."
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Business NewsNewsIndiaZoho’s Sridhar Vembu warns of higher inflation after Donald Trump’s reciprocal tariffs threat
First Published:16 Feb 2025, 07:48 PM IST
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