ISLAMABAD, Jan 16 (APP): As US President Donald Trump’s 50% tariffs continue to hammer Indian exports since August 2025, Prime Minister Narendra Modi’s government has rolled out a series of belated and superficial economic “reforms” that critics describe as timid patches on a deeply flawed system rather than genuine liberalization.
These measures—prompted largely by the punishing tariffs on key sectors like textiles, jewelry, shrimp, and more—include amendments to speed up insolvency and bankruptcy cases, a long-overdue simplification of the complex Goods and Services Tax (GST), removal of quality-control orders on 25 industrial inputs, consolidation of 29 outdated labor laws into four codes, opening the nuclear power sector to private and foreign players for the first time, and raising foreign direct investment (FDI) limits in insurance to 100% from 74%. A proposed electricity law aims to introduce more private competition in power distribution.
Yet, these steps are widely seen as marginal fixes to self-inflicted problems created by years of bureaucratic overreach and protectionism under the Modi administration.
The Wall Street Journal, in an opinion piece by Sadanand Dhume, labeled them “long-overdue fixes to problems [the government] created in the first place,” arguing that India lacks a consistent push for true free-market principles after nearly 12 years of Modi’s rule.
The GST, introduced in 2016 amid widespread criticism for its complexity, high rates, and exemptions that burden small businesses, took nearly a decade to simplify—and remains more cumbersome than value-added taxes in many other countries.
Labor reforms only modestly raise the threshold for easier worker firings from firms with 100 employees to 300, described as far from transformative.
Quality-control orders, which ballooned from just 14 in 2014 to 156 by 2025 (affecting nearly 700 products), proliferated under Modi’s watch as domestic lobbies pushed nontariff barriers—precisely the kind of protectionism that drew Trump’s ire and the steep tariffs in the first place.
Power sector promises of bold reform date back to 2015, yet patchy electricity supply and irrational pricing persist a decade later.
The article contrasts these incremental changes with Modi’s withdrawn 2020 agricultural liberalization attempts, which could have unlocked major growth but were abandoned amid backlash.
Experts argue India’s overregulated economy requires a radical overhaul: slashing bureaucratic hurdles, easing land acquisition, unleashing market forces in agriculture, cutting wasteful fuel and fertilizer subsidies, and privatizing inefficient public-sector enterprises. Without such sweeping changes, India risks prolonged stagnation, even as US tariffs expose its vulnerabilities and force reactive tinkering rather than visionary reform.
The ongoing trade crisis highlights the limitations of Modi’s approach, with India’s exports to the US suffering sharp declines in labor-intensive sectors while the economy grapples with self-imposed inefficiencies. True progress demands more than crisis-driven tweaks—it needs a bold commitment to free markets.