Indian PM pushes for consumers to buy local goods amid economic rift with US

Indian Prime Minister Narendra Modi has called on citizens to prioritize locally made goods, aiming to bolster the domestic economy amid increasing global economic uncertainty.

His appeal comes just days after US President Donald Trump imposed a 25% tariff on Indian exports to the US and raised duties on several other nations, fuelling fears of a global economic slowdown and heightened market volatility. Though Modi did not mention US tariffs specifically during his rally in the northern state of Uttar Pradesh this weekend, an article by Bloomberg highlights that his message was clear.

“The world economy is going through many apprehensions, there is an atmosphere of instability,” he said. “Now, whatever we buy, there should be only one scale: we will buy those things which have been made by the sweat of an Indian.”

Modi’s renewed push for domestic production and consumption aligns with his long-standing “Make in India” initiative, though the rhetoric has gained new urgency in light of recent US actions.

Trump has accused India of maintaining disproportionately high tariffs compared to other Asian nations and hinted at further penalties. He cited India’s ongoing defence and energy partnerships with Russia as a point of contention. In a post on Truth Social following the tariff announcement, Trump stated, “I don’t care what India does with Russia. They can take their dead economies down together, for all I care.”

This development places India in a delicate position. Its decades-long relationship with Russia dates back to the Cold War, when Washington aligned more closely with India’s rival, Pakistan. Though India officially remained non-aligned, the publication recalls that the US’s support for Pakistan during the 1971 civil war that led to Bangladesh’s independence pushed New Delhi closer to Moscow. Over the following decades, India and Russia deepened cooperation in space, nuclear energy, and defense.

In recent years, India has worked to balance these historic ties with stronger relations with the US, particularly as both nations view China’s growing assertiveness as a shared strategic concern. Under Modi, India has maintained its longstanding relationship with Russia while expanding military and economic ties with the West.

One of the most significant areas of India-Russia cooperation is energy. India, now the world’s third-largest oil consumer, sources approximately 35% of its crude oil from Russia—up sharply from just 1% before Russia’s full-scale invasion of Ukraine. The appeal lies in discounted seaborne oil, making it more attractive than market-priced alternatives.

Historically, India depended heavily on Middle Eastern suppliers like Saudi Arabia. A shift away from Russian oil could force a return to these sources, likely increasing import costs.

In defence, Russia remains India’s top weapons supplier, as reported by the Stockholm International Peace Research Institute in March. As the article cites, India has bought a range of military equipment from Russia, including fighter jets, tanks, and missiles, and has even launched joint ventures such as the domestic production of Kalashnikov rifles.

Still, India — the world’s second-largest arms importer — has been gradually reducing its reliance on Russian arms. No major new defense deals have been signed in recent years, and the country’s diversification efforts appear poised to continue, especially given delivery delays of Russian S-400 air defence systems.

The economic implications of reducing Russian oil imports are mixed. According to Standard Chartered economist Anubhuti Sahay, the article cites that if India stops importing Russian oil and higher fuel prices are passed entirely to consumers, inflation would rise by only 3–5 basis points. The impact on economic growth would be similarly modest, with a projected decline of 4–5 basis points.

Still, the geopolitical stakes are considerable. A report by Bloomberg Economics notes the risk of rising tensions between India and the US “Trump’s move to link arms and energy imports from Russia with trade talks is likely to inject fresh friction into the relationship, especially coming after the recent conflict with Pakistan.”

By Nazrin Sadigova