Billionaire Sridhar Vembu Weighs Trump Reciprocal Tariff on India
Billionaire Sridhar Vembu at Thoranamalai Murugan temple (image credit X.com)
India Must Cut Down Imports from China: Sridhar Vembu
By S Jha
New Delhi, February 15: Billionaire Sridhar Vembu cautioned that India must cut down on imports from China to avert blowback from US reciprocal tariff. The chief scientist of Zoho stressed that India must brace up for pitfalls of reciprocal tariff announced by US President Donald Trump.
The Tamil Nadu-based billionaire shared his views on the likely impact of the reciprocal tariff. Trump yesterday said that “it’s only fair that we charge what you charge us”.
The US President was addressing a press conference with Prime Minister Narendra Modi. India and the US set an ambitious target to double the bilateral trade by 2030.
“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,” said Vembu in a post on the social media platform X.
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Imports of electrical and electronic goods top the list of Chinese imports in India. China gets one-tenth of trade surplus from exports to India.
“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,” added Vembu.
The billionaire entrepreneur who is now settled in a village near Chennai urged upon the Centre to stake steps to spur domestic manufacturing of electronics goods. We need to increase domestic production, said Vembu.
“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,” added the Zoho founder.
He argued that “labour costs are much lower in India than China”. But, he added, the productivity of labour critically depends on capital goods and technology modernization in manufacturing.
Vembu sought focus on the small and mid-sized manufacturers “that collectively dominate the supply chain of consumer goods”. “That needs investment, particularly from our small to mid-sized manufacturers,” added Vembu.
India and the US announced that a trade deal will be signed this year. India in the Budget also lowered duties on several imported goods.
He stated that the “barriers to that investment are both financial (higher interest rates in India) and cultural (too conservative to adopt the latest production technology)”.
“Enabling the small and mid-sized manufacturers to overcome these barriers is the key to India becoming a great manufacturing power,” added Vembu.
Prakash Dadlani, an entrepreneur, replied to Vembu, saying that “the biggest advantage we have is our huge and growing domestic market for consumer products”.
“There is absolutely no reason to import such products,” Dadlani added.
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