There are at least three reasons why, despite facing so many challenges, India may be in a better place now than it has been at any point in living memory: an excellent set of FTAs, growing prowess in advanced manufacturing, and that it’s well-placed to take advantage of AI.
The ‘framework for an interim agreement regarding reciprocal and mutually beneficial trade’ between the US and India released by the White House last weekend was a long time coming. But it was worth the wait. The deal should open up a $30 trillion market to Indian exporters, reducing tariffs on Indian imports to the US from 50 per cent that was imposed last year to 18 per cent. India would have increased access to advanced technologies like semiconductors, aircraft, equipment for AI, and tech that’s necessary for data centres.
But more important than the prospective deal’s details is what it says about India at a time when global trade is in retreat. Signing of such an extensive and important deal would go on to confirm that India is emerging as a global trade superpower. The latest US announcement has followed a trade agreement with the UAE in 2022, FTAs with Britain and the EU in 2025 and last month, respectively, the last one being hailed by European Commission president Ursula von der Leyen as the ‘mother of all deals’. As a result of these agreements, markets will open in unprecedented ways for India from trade access to R&D collaboration and labour mobility. Millions of jobs would be created in manufacturing, services, and research and innovation as a result.Consider also how India’s economy is poised to take advantage of these deals. In recent years, car — especially SUV — sales, domestic air passenger traffic, services exports and digital transactions have all passed record milestones. India’s world-class financial inclusion architecture has helped lift nearly 270 million people out of extreme poverty in the past decade.
India is also moving from assembly to invention, and securing resources, thereby deepening its role in global supply chains. Manufacturing clusters for vital components are emerging. New semiconductor facilities will advance materials research and produce IP. Defence corridors will make India self-reliant in research and manufacturing. And India’s strategic needs will be met by a new rare earths corridor that was announced in the latest Union budget.
In recent years, pragmatism has guided India’s approach to policy. When the pandemic struck in 2020, India bolstered its supply chains and invested in advanced manufacturing capabilities. Today, in less than 6 years, products from those advanced manufacturing lines have tripled. For example, high-end mobile phone manufacturing has grown so rapidly that India’s mobile phone exports to the US have already surpassed China’s in recent quarters.
Similarly, chip designs that originate at Indian design centres constitute about 20 per cent of the world’s capabilities. India dominates the specific niche of design verification — rigorous testing of a chip’s blueprint before it’s manufactured. This process hinges on labour and proficiency, and is vital to next-generation smartphones, data centres and 5G infrastructure. Next comes creating the ecosystem for semiconductors.
In AI, too, India is well placed to lead. It has embraced AI faster, and more comprehensively, than any other nation. Voice, not text, has emerged as the dominant mode of interaction with AI tools, allowing users to leap over literacy hurdles. There are over 700 million weekly active users of ChatGPT globally, and India is the second largest market by usage for OpenAI. About 92 per cent of Indian office workers use AI tools regularly, compared with 64 per cent in the US.
There is already a clear focus on developing indigenous AI tools at extremely low cost. IndiaAI Mission has become one of the world’s largest public-funded AI compute platforms, with over 38,000 GPUs deployed at less than $1/GPU hour. It also has the world’s second-largest population of developers on GitHub.
With mass adoption of AI and a focus on low-cost development, right conditions and elements exist for India to be a different kind of AI superpower: a producer and leader of affordable AI services that help common people bridge the access gap, wherever they live.
Effects of the various deals, agreements and frameworks will take time to be felt. But, for now, there is optimism. New possibilities are emerging — from trade corridors in West Asia and digital embassies, to green energy partnerships and new markets for gas. This optimism is partly because India has found a viable path through instability. But in large part, it’s also because these deals represent a changed mindset. A change in how we see ourselves and our circumstances is also reform of a kind.
We’ve decided, clearly, that collaboration is essential if billions of people are to progress. India’s partners feel the same way — that in the tumult, there are new opportunities to be found.>
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