India's Budget Bets on Self-Reliance Amid Global Trade Tensions
NEW DELHI (Financial Dispatch) — India unveiled a budget on Sunday designed to fortify its economy against escalating global trade tensions and the specter of protectionist policies from key partners, most notably the United States under a potential second Trump administration.
Finance Minister Nirmala Sitharaman's presentation to parliament framed the spending plan as a necessary shield. "We operate in an external environment where trade winds have shifted, multilateralism is under strain, and access to critical resources is no longer guaranteed," she stated during her 90-minute address. The government's response: a focused push to make domestic industry more competitive and self-sufficient.
The budget avoids sweeping stimulus, instead targeting support for exporters grappling with US tariffs—including a 50% duty on some goods imposed last August—and channeling fresh funding into semiconductors, rare earths, and critical minerals. Defense spending saw a significant 18% increase, a move analysts view as a direct response to strategic pressures from China and Pakistan.
"This isn't a budget for boom times; it's a budget for bunkering down," observed Priya Sharma, a senior economist at the Centre for Strategic Studies in Mumbai. "The government is walking a tightrope—trying to inject resilience into specific sectors without spooking the bond market or abandoning its fiscal consolidation roadmap."
Markets reacted with caution. Stocks fell in a special Sunday trading session, partly driven by a new tax on equity transactions aimed at curbing speculation. On Monday, the 10-year government bond yield rose to 6.78%, its highest in over a year, after the government outlined higher-than-expected borrowing for the coming fiscal period.
The budget's emphasis on "self-reliance" extends beyond rhetoric. It includes initiatives to develop mining and processing clusters in mineral-rich eastern and southern states, aiming to reduce dependency on imports for vital industrial inputs. This comes alongside continued efforts to deepen trade ties with the European Union, United Kingdom, and New Zealand as counterweights to US economic pressure.
Rajeev Mehta, a veteran textile exporter from Surat, offered a blunt assessment: "More talk, not enough traction. These sectoral schemes are fine, but they won't bring back the orders we've lost overnight. The US tariffs are crushing us, and this budget feels like applying a bandage to a broken leg."
Conversely, Ananya Desai, a technology policy analyst in Bangalore, struck a more optimistic note: "The strategic focus on semiconductors and critical minerals is overdue and visionary. In a fragmented world, building domestic capacity in these areas is national security. This budget finally puts serious money behind that idea."
While the government projects growth between 6.8% and 7.2% for the coming year, independent forecasts hover around 6.6%. The key challenge remains generating sufficient employment for India's vast youth population, a point opposition leaders highlighted as a glaring omission in the budget's framework.
As Professor K. Raman, a public policy expert at Delhi University, summarized: "This is a holding budget with strategic pockets of ambition. Its success won't be measured by immediate market cheers, but by whether it can quietly build the industrial base needed to navigate an increasingly volatile global order."