Shivanand Pandit
On August 2, 2025, Prime Minister Narendra Modi urged Indians to prioritise Indian-made, Swadeshi goods in response to mounting global economic uncertainty and the United States’ decision to impose a 25 per cent tariff on Indian exports. Speaking in his Varanasi constituency, Modi appealed for a cross-party, grassroots movement to reinforce domestic manufacturing and consumption under the banners of his Make in India and Vocal for Local campaigns.
Although he stopped short of naming the new US duties, Modi framed his message as a defence of economic self-reliance. “In a world where every country pursues its interests,” he remarked, “we must ensure that whatever we buy is made by the sweat of an Indian.” He called on shopkeepers, traders, and consumers alike to champion Indigenous products—an imperative he tied to both economic resilience and the cultural legacy of Mahatma Gandhi.
Modi reminded his audience that while the government will continue to support farmers, small industries, and youth employment, true national progress depends on active citizen participation. His rallying cry comes just days after the Trump administration announced 25 per cent duties on textiles, pharmaceuticals, and engineering goods—part of a broader protectionist sweep affecting nearly 70 countries. Faced with potential disruptions to key export sectors, Indian exporters have voiced deep concern, underscoring the urgency of energising internal demand.
Is this rhetoric or a roadmap?
For over a decade, Prime Minister Narendra Modi’s economic vision has focused on growth, scale, self-reliance, and global competitiveness. But with rising global protectionism, Modi has repositioned swadeshi—economic self-reliance—not just as policy, but as a cultural and strategic imperative. His swadeshi call, echoed by ministers like Ashwini Vaishnaw and Piyush Goyal, came shortly after the US imposed a 25% tariff on Indian exports and warned of consequences over India’s continued oil and defence imports from Russia. This wasn’t a spontaneous move—it was a calibrated response to geopolitical pressure, signalling that India won’t bow to external coercion.
The move marks a shift from previous balancing acts like Make in India and Aatmanirbhar Bharat, which blended global integration with local ambition. Modi’s overt embrace of the term swadeshi—long championed by the RSS and the Swadeshi Jagran Manch (SJM)—suggests deeper alignment with nationalist economic thought. Beyond symbolism, the timing is critical. India is in sensitive trade negotiations with the US, EU, and GCC. Talks are stalled or tense over issues like market access, digital sovereignty, and local content. Modi’s phrasing—such as avoiding goods entering “every home”—offers Delhi’s negotiators a rhetorical shield and signals tougher stances on industrial policy.
This swadeshi thrust mirrors global trends: the US’s Inflation Reduction Act, the EU’s selective decoupling from China, and Germany’s industry subsidies. India’s own PLI schemes are set to deepen, with political backing now extending to sectors like electronics, defence, solar, and FMCG. Foreign investors are watching closely. While India’s market remains attractive, the message is clear—foreign firms must localise, create value in India, and respect its economic sovereignty. Modi’s mention of a BrahMos facility and oil sourcing rights ties swadeshi to a broader economic security doctrine—strategic, not sentimental. Monetary policy, too, aligns. India is expanding rupee-settled trade with Russia, UAE, and African nations, indicating a move toward swadeshi financial architecture and reduced dollar dependence.
However, key questions remain: Will swadeshi translate into concrete policies like higher import duties or formalised local content norms? Or is it mainly a political nudge ahead of elections?
Sectors like MSMEs, which face stiff competition from under-priced imports, could benefit. The government is reviewing older trade agreements with ASEAN, Japan, and Korea. Swadeshi may serve as moral cover for more defensive industrial policies, particularly in politically sensitive sectors. In the digital space, India’s push for data localisation aligns with this vision. As trade partners press for open data flow rules, India may increasingly frame tech policy as part of economic self-rule. Politically, Modi’s Varanasi speech turned US pressure into a sovereignty narrative. It energises domestic industry, appeals to nationalist sentiment, and puts the Opposition in a difficult spot. The challenge lies ahead: if swadeshi becomes policy, it must avoid inefficiency and protectionist pitfalls. If it stays rhetorical, it still needs clarity for investors and partners. For now, it effectively consolidates economic nationalism in a changing global order—and redefines India’s place within it.
Beyond lip service
The Prime Minister was expressing a commendable vision, but the government must recognise that promoting local manufacturing need not conflict with exposing industries to healthy competition. Competition can serve as a catalyst, encouraging companies to improve efficiency and innovation. As Moody’s has rightly noted, restricted access to US markets could hurt domestic manufacturing. With the manufacturing sector’s contribution to GDP stagnating at around 17–18% for years, India urgently needs a well-defined strategy to raise this share. It’s also essential to weigh the benefits and limitations of local production. Not all products can be manufactured cost-effectively in India, which is why many intermediate goods continue to be imported. While the goal of self-reliance is laudable—particularly to reduce dependence on countries like China—India must avoid producing goods that are too expensive to be viable. Without sufficient demand, such manufacturing would fail to achieve economies of scale and profitability.
Although India enjoys the advantage of relatively low labour costs, this is often offset by inefficiencies such as inadequate infrastructure, bureaucratic hurdles, rigid labour laws, and high borrowing costs. These factors diminish competitiveness, leading companies to seek subsidies and protectionist measures. Rather than reinventing the wheel, the focus should be on producing competitively priced goods that can serve both domestic and export markets. To achieve this, the government must reassess the current import duty structure, which averages a steep 17%. While the US may impose barriers on Indian exports, India has an opportunity to tap into alternative markets through the China Plus One strategy—provided it remains cost-competitive. Ultimately, any short-term revenue loss from lowering import duties could be offset by the gains from increased export volumes.
A large portion of consumer products used in India—from everyday staples to apparel—is manufactured domestically, with only a few items being imported. With the production of consumer electronics now gaining momentum under the Production-Linked Incentive (PLI) scheme, imports in this segment are also expected to decline. While overall demand for consumer goods has remained subdued due to factors such as high inflation and sluggish growth in household incomes, it is likely to rebound, driven by tax relief measures and festive season spending.
To further strengthen domestic manufacturing, India must attract greater foreign direct investment (FDI). As of March 2025, the PLI scheme has drawn investments worth ₹1.76 lakh crore. However, disbursements under the ₹1.97-lakh crore initiative have amounted to only around ₹21,534 crore so far. It is also essential to extend support to small-scale manufacturing units, as the Prime Minister rightly pointed out; their interests must be safeguarded. While the PM’s appeal to support local enterprises is well-founded, such support should be grounded in commercial viability rather than emotional appeal.
Swadeshi is a mindful and strategic path
Supporting local industries serves as a strong driver of grassroots economic empowerment. It plays a vital role in fostering the growth and stability of small enterprises, traditional artisans, and farming communities—key pillars of the Indian economy that are frequently exposed to the risks of global market volatility and corporate dominance. Choosing locally made products and services is more than a transaction; it is a conscious commitment to sustaining livelihoods, strengthening community resilience, and promoting indigenous talent and craftsmanship.
This patronage helps preserve time-honoured traditions and indigenous skills that are deeply embedded in India’s cultural fabric. By creating demand for handmade products, regional specialities, and locally grown produce, consumers contribute to the survival of age-old practices that might otherwise vanish in the face of mass production and cheap imports. Moreover, strengthening regional enterprises encourages decentralised economic growth, which reduces the over-dependence on urban centres and promotes balanced development across rural and semi-urban areas.
At a broader level, this conscious support for domestic production echoes the ideals of economic nationalism—a philosophy that values self-reliance, economic sovereignty, and national pride in the country’s productive capacity. It is a call to recognise and elevate the potential within our borders rather than defaulting to foreign alternatives. In doing so, it fosters a sense of collective responsibility toward building a more robust, inclusive, and self-sufficient national economy.
However, this push for Swadeshi—while noble in intent—must not evolve into economic isolationism. In an increasingly interconnected world, India must continue to embrace international trade, technological innovation, and globally accepted quality standards. Engaging with the global marketplace provides access to new ideas, better technologies, and larger export opportunities, all of which are essential for India’s long-term competitiveness and economic resilience.
Swadeshi, therefore, should be viewed as a strategic and balanced approach—one that nurtures and strengthens the domestic economy without shutting the door on foreign collaboration or competition. The ultimate objective should be to achieve inclusive and sustainable growth, where every segment of society—rural and urban, traditional and modern—has the opportunity to thrive and contribute meaningfully to the nation’s progress.
