The Budget bears striking similarities to Trump’s economic strategies, particularly in trade and taxation
Finance Minister Nirmala Sitharaman recently set a new record by presenting India’s budget for the eighth consecutive term. This year’s budget primarily aims to provide tax relief to the Indian middle class while boosting domestic consumption and investment. Additionally, it takes into account the evolving geopolitical landscape, particularly the policies of US President Donald Trump, who has returned to office. The Modi government’s first full Union Budget in its third term has drawn comparisons to some of Trump’s economic strategies. While the economic environments of India and the US differ significantly, echoes of Trump’s first-term policies—especially in trade, taxation and economic positioning—are evident in several aspects of the budget.
Trump, in line with his campaign promises, has announced new tariffs on countries with whom the US has trade deficits, targeting China, Mexico and Canada. However, the latter two have been granted a temporary reprieve due to ongoing negotiations. India has been cautiously observing these developments, especially as Modi prepares for a visit to Washington later this month. This year’s budget takes a strategic approach, addressing some key concerns regarding US exports to India while reinforcing India’s domestic economic agenda. One of the most significant aspects of the budget is its focus on taxation and incentives for domestic industries. Trump’s economic policies in the US emphasised corporate tax cuts and encouraging American companies to repatriate jobs and manufacturing.
Similarly, India’s budget introduces corporate tax reforms and personal income tax reductions to create a more competitive domestic business environment. The aim is to attract multinational corporations to manufacture in India rather than outsourcing jobs overseas. The budget also underscores economic nationalism by promoting self-reliance through the “Atmanirbhar Bharat” initiative. This aligns with Trump’s “America First” policy, emphasising domestic production, particularly in defence, technology and energy sectors, to reduce reliance on imports and generate employment. However, with Trump threatening tariffs on foreign companies that do not relocate manufacturing to the US, India’s domestic industrial policies could face challenges. Additionally, the budget introduces tariffs and duties on select imported goods, aiming to shield domestic industries from external competition.
This protectionist approach mirrors Trump’s trade strategies and represents India’s broader ambition to establish itself as a global manufacturing hub to rival economic powerhouses like China and the US. Another notable parallel is the focus on infrastructure investment as a means of economic stimulation and job creation. Trump’s administration prioritised infrastructure spending to spur growth and India’s budget follows a similar path.
Significant funds have been allocated to highways, railways and ports, aiming to accelerate development and generate employment, particularly in rural areas. However, unlike Trump’s isolationist trade stance, India remains committed to fostering strong international relations. The budget reflects a careful balancing act—pursuing economic self-reliance while maintaining global trade and diplomatic ties, especially with the US. While India’s 2025-26 budget is not a direct replica of Trump’s policies, it reflects global trends toward self-sufficiency and economic protectionism. The challenge ahead lies in leveraging these strategies effectively while navigating the complexities of a globalised economy.
(The writer is a policy analyst; views are personal)