AI could be a bigger problem.

Following President Donald Trump's 26% tariff on Indian goods, "Analysts say while the headline number of 26% might appear massive, it comes as a relief because of no incremental impact on large exporting sectors like IT services, pharma and autos." Still, "Most analysts see IT services to be the biggest casualty of Trump's tariffs war, This impact will not come directly from tariffs imposed on India but rather from a slowdown in the form of US discretionary spending as a result of these measures." Mint. Can India take advantage of higher tariffs on other countries? "High tariffs on Chinese and Bangladeshi exports open space for Indian textile manufacturers," and "While Taiwan leads in semiconductors, India can tap into packaging, testing and lower-end chip manufacturing." "India's share of global exports is a mere 1.5%." BBC. Global Capability Centers (GCCs) set up by multinationals "have progressed from cheap outsourcing to the most complex design and R&D." GCCs could be generating revenues of $121 billion and exporting $102 billion, wrote Swaminathan SA Aiyar. "For now, Indian workers provide value-for-money services, such as debugging code, writing algorithms, checking legal documents, or providing basic financial advice." But soon AI will be able to do this work much faster and more accurately. "For India to remain a global leader in high-skill services, its quality of human capital must be upgraded," wrote Rohit Lamba & Raghuram Rajan. Which means concentrating on education and training in technology. "India will face much more hostility from the rest of the world, as it tries to grow, than China did during the last few decades," wrote Prof Aswath Damodaran. China was a clear winner from globalization and "now accounts for nearly 38% of global GDP growth (2010-2023). Already, "India's services declined for the second month in row in February to USD 31.62 billion," from "USD 34.72 billion in January against USD 36.96 billion in December 2024." ET. The latest National Trade Estimate Report on Foreign Trade Barriers in the US says, "India has conducted a number of localized shutdowns of internet in recent years. These shutdowns restrict access to information and services, disrupting commercial operations, and thereby undermining a free and open internet and impeding trade in digital economy." TOI. India has the proud record of the highest number of internet shutdowns for six years running. In 2024, India had 84 shutdowns, just second to the 85 by the military junta in Myanmar. "Goldman Sachs has reduced price targets on information technology (IT) stocks by 3% to 32% citing lower revenue growth forecasts driven by macroeconomic uncertainty in the US." The US accounts for 60% of India's IT revenues. ET. Tariffs are a problem. But AI could be a bigger one. Unless we wake up.