INDIA NEEDS TO EXPAND ITS TRADING BASE

• GS-3: Economy (Trade & Growth, Services Sector, AI Disruption)
• GS-2: International Relations (Tariff Policies, Global Trade)

Key Highlights

India’s Economic Momentum:

• Services PMI rose to 59 in February (from 56.5 in January), indicating strong sectoral growth.
• Manufacturing PMI fell to a 14-month low (56.3 in February), reflecting global slowdown concerns.
• Q3FY25 GDP growth (6.2%) confirms economic resilience despite capital outflows.

Challenges for India’s Trade & Growth:

• Reciprocal tariffs by the US (effective April 2) threaten India’s manufacturing exports.
• The AI revolution is reshaping the services sector, reducing IT earnings and disrupting hiring & training models.
• NASSCOM’s 2025 Strategic Review cites geopolitical instability & tariff hikes as key trade barriers.

IT Sector Growth Concerns:

• India’s IT industry (16% annual growth) faces a slowdown, with growth projections at 5.1% in FY25 (down from 3.8% in FY24).
• $283 billion IT sector valuation expected in FY25, despite AI-driven disruptions.

Analysis & Way Forward

• India must diversify its trade base to reduce dependency on the US & EU markets.
• Strengthening AI upskilling programs will ensure workforce adaptability.
• Negotiating trade pacts can mitigate tariff risks & secure stable export markets.

Mains Mock Question:

“How can India balance its economic growth amid global trade disruptions and technological shifts? Suggest policy measures for resilience.”