February 16, 2025: Zoho Corporation founder Sridhar Vembu has cautioned that India may face economic challenges as U.S. President Donald Trump pushes for reciprocal tariffs to balance bilateral trade. He warned that India might have to significantly increase its imports from the U.S., which could put pressure on the country’s current account deficit unless domestic production is swiftly scaled up.

Taking to social media platform X, Mr. Vembu highlighted the current trade dynamics, stating, "As a slightly oversimplified mental model, India exports software services to America and imports consumer goods from China. The surplus with America is more than matched by the deficit with China."

He further explained that in response to Mr. Trump's demands, India might have to import a range of high-value goods from the U.S., including iPhones, GPUs, LPG, nuclear plants, fighter jets, and whiskey, to maintain trade balance.

This shift, Mr. Vembu noted, could exacerbate India's current account deficit unless domestic production is ramped up. "In order not to blow up the current account deficit, India has to find ways to reduce consumer goods imports from China, and that means increasing domestic production," he stated.

However, he cautioned that such a transformation cannot happen overnight. "In the short run, imported consumer goods prices could go up—that shows up as inflation," he warned. He urged Indian manufacturers to step up, enhance production capacity, and acquire necessary technological expertise to mitigate economic pressures.

Mr. Trump’s push for reciprocal trade policies has sparked global concerns, with India now facing a critical challenge to balance its trade commitments while protecting its economic stability.