India facing Trump plus.

"India's economy is on the verge of crossing the $4 trillion mark in FY25, with the latest nominal GDP estimate standing at Rs 331 trillion, or approximately $3.942 trillion, Chief Economic Adviser (CEA) V Anantha Nageswaran said." "The final figure will depend on the exchange rate." CNBC. "The World Bank has estimated that India will need to grow 7.8% on an average over the next 22 years to become a high-income economy by 2047 and underlined the need for a series of reforms to achieve the goal." The key is to increase productivity which needs a more open economy. TOI. "Future growth trajectory of the country will be led by revival in private investment, according to the State Bank of India (SBI)." SBI said that "gross capital formation - which represents overall investment in the economy - dropped from 32.6% of GDP in FY23 to 31.4% in FY24." Government and public sector investment reached an all-time high of 8% of GDP in FY24, but private sector investment fell to 24% from a 10-year high of 25.8% of GDP in FY23. ET. Mr Nageswaran also asked the private sector to increase investment in India so that capital formation rises from  30% to mid-30s of GDP. "RBI data showed outward foreign direct investment in equity from India in April-January at $11.3 billion, against $7.7 billion in the same period a year ago." Mint. The private sector is scared to invest because, since 2022, "'predatorily priced' Chinese imports - where the landed cost of imports is either lower than the cost of production or locally sold price - started flooding the Indian market. Prices tanked." If President Donald Trump imposes 60% tariff on China, "Chinese exports to the US are expected to fall by 85%. This output will find its way into other markets, including India." India's anti-dumping measures, at 15%, are far higher than the global rate of 2.4% but still it cannot compete. Mint. "US average MFN (most favored nation status) tariff on agriculture goods is 5%. But India's average applied MFN tariff is 39%." "All Indian commerce ministers from Kamal Nath onwards sought to keep India as closed as possible, and would return from WTO meetings claiming triumphantly that they had protected Indian interests." This has made the WTO irrelevant," wrote Swaminathan SA Aiyar. "To get our economy to top speed, we have gone from encouraging vocational training, to handholding MSMEs, to export promotional policies to Production Linked Incentive (PLI) schemes," following the Korean model of encouraging chaebols, but we forget that "Korea spends 5% of its GDP on R&D, whereas India only 0.7%. Of this small sum, the Indian private sector contributes a niggardly 41% against Korea's 79%. Tellingly, Samsung invests 8-11% on R&D, but Reliance a paltry 0.6%," wrote Prof Dipankar Gupta. "India is home to 1.4 billion people but around a billion lack money to spend on any discretionary goods or services," and "The country's consuming class, effectively the potential market for startups or business owners, is only about as big as Mexico, 130-140 million people, according to the report from Blume Ventures." BBC. That is one-and-a-half times the entire population of Germany at 82.23 million (worldometer). Why bother with R&D when there is a huge market at home, shielded by protection from the government? By forcing India to reduce tariffs Trump is doing us a favor, says Aiyar. But, how will our companies cope with a flood of Chinese goods? Some companies might fail. That will be devastating for the children of tycoons. "Modern scions believe in passive income, active vacations and aggressive networking at yacht parties," wrote Harsh Goenka. Must protect children.