From Look East to Act East - how Modiji's prudence will counter 50% tariff of USA...

 

1. From Passive Observation to Active Engagement

• Look East (1991–2014): Originated under Narasimha Rao, this policy focused on strengthening diplomatic and economic ties with ASEAN.
• Act East (Post-2014): Modi turned this into an action-oriented policy, focusing on infrastructure, trade, defense, connectivity, and cultural ties with Southeast Asia, East Asia, and beyond.

Strategic Benefit: Diversifying India's economic dependencies away from the US and EU — especially in manufacturing, electronics, and strategic minerals.

 2. Trade Diversification as a Shield

Modi’s policy has opened up trade corridors and Free Trade Agreements (FTAs) with:

• ASEAN nations
• Japan, South Korea
• Australia (through the Economic Cooperation and Trade Agreement - ECTA)
• UAE, Saudi Arabia, and Gulf countries (through CEPA and other agreements)

This diversifies export markets, reducing excess reliance on the USA.

Example: If the US imposes a 50% tariff on Indian textiles, India can increase exports to Vietnam, Indonesia, and UAE, which now offer favorable market access.

3. Act East + Infrastructure = Supply Chain Resilience

Under Act East:

• Development of Kaladan Multimodal Project and India-Myanmar-Thailand Trilateral Highway
• Investments in ports and industrial corridors in Northeast India
• Integration into regional value chains (e.g., electronics, automotive, semiconductors)

These boost India’s role as a production + logistics hub, especially for companies exiting China.

Result: Even if the US closes a trade window, India’s East-facing supply chains stay open.

 4. Strategic Balancing with the Global South

India leads Global South summits and South-South cooperation, advocating fairer global trade rules.

5. Energy and Currency Security from the East

• Oil purchases from UAE and Russia are increasingly in rupees.
• Digital payment systems (like UPI) are being exported to Singapore, Bhutan, UAE, reducing dollar dependence.
• Critical minerals cooperation with Australia, Indonesia, and Mongolia for EV and semiconductor industries.

India builds trade autonomy, insulating it from dollar-based shocks or tariff pressure.

6. Building Export-Led Self-Reliance (Atmanirbhar + Act East)

Modi’s strategy combines:

• PLI (Production Linked Incentives) to boost export competitiveness
• Act East to find buyers and partners
• FTA negotiations to open preferential access

If the US shuts the door with tariffs, India’s newly built industries can still find profitable markets elsewhere.

Conclusion: A Smart Counterstrategy to US Protectionism

While a 50% US tariff may appear devastating, India under Modi has quietly and strategically built a multi-vector, East-oriented, resilient economic strategy:

- Trade ties beyond the West
- Defense + diplomacy in Indo-Pacific
- Energy + financial autonomy
- Rising leadership in Global South
- Infrastructure linking India to Southeast Asia

Modiji’s Act East is not just foreign policy — it’s future-proofing India's economy. The West may build tariff walls, but India is already building bridges — to ASEAN, to the Indo-Pacific, to Africa, and to the future.