- The Modi government has been largely protectionist on global trade
- Prime Minister Modi has curbed imports, hiked tariffs and stalled trade negotiations to protect domestic industry
- Still, exports have failed to increase despite a sharp drop in the value of the rupee, and the current account deficit has widened
- The present policy is unsustainable in the view of many economists
India’s economy is experiencing healthy growth, but not because of trade. The export of goods and services contributed a mere 18.9 percent to India’s gross domestic product (GDP) in 2017, down from a peak of 25.45 percent in 2013. On September 26, the Indian government announced import curbs on “nonessential” imports, part of a larger strategy to stem a widening current account deficit and a falling rupee. One key reason for the problems is a surging trade imbalance. Even after subtracting oil and gold, two commodity imports partly offset by re-exporting as refined crude and jewelry, the trade deficit jumped to a five-year high in July – an 18.4 percent increase year-on-year. Prime Minister Narendra Modi’s government has been largely protectionist on the trade front.