India’s space sector can weather Trump’s reciprocal tariff with strategic partnerships

By Anil Prakash

When US President Donald Trump announced a steep 26% tariff on Indian imports, the move sent ripples of concern through Indian industry. Branded as a “reciprocal tariff” in response to what Trump described as high Indian import duties, the measure, effective from 5 April with expanded duties from 9 April, is part of a broader strategy to rebalance trade relationships with countries the US accuses of maintaining unfair barriers.

While textiles, automobiles, and agriculture may feel the immediate heat, India’s space sector is better positioned to withstand this pressure. A combination of strategic sourcing, policy support, and expanding global partnerships provides the industry with resilience against such disruptions.

The tariffs are widely viewed as a pressure tactic to push India towards further trade liberalisation, particularly in politically sensitive areas like agriculture. Despite this, the US remains India’s largest trading partner, with bilateral trade reaching USD 127 billion in 2023, and both sides aiming for USD 500 billion by 2030. The broader economic relationship—encompassing energy, defence, and technology—remains largely intact.

Building Resilience in India’s Space Sector

For India, the way forward lies in accelerating its diversification strategy. This includes enhancing domestic manufacturing, exploring new markets, and leveraging alternative trade routes such as the Europe–Middle East–US corridor. The space industry, in particular, benefits from a globally distributed supply chain. It sources critical components from countries, including those in the European Union, Israel, and Japan, limiting its direct dependency on US imports.

Recent reforms have further reinforced the sector’s resilience. The government’s decision to permit 100% FDI in space manufacturing under the automatic route has unlocked significant investment opportunities. This not only reduces reliance on imports but also spurs indigenous innovation and capabilities. Indian start-ups and private players are increasingly playing a central role in strengthening the country’s space ecosystem.

To address the broader trade imbalance, India has increased imports of US oil, LNG, and defence equipment, indicating its willingness to engage constructively. It has also pre-emptively reduced tariffs on more than 8,500 industrial items, opening space for negotiation. Global financial institutions, including SBI, Goldman Sachs, Nomura, and Fitch, have all projected that the tariff impact will be limited, given India’s relatively lower trade exposure to the US and its robust GDP growth prospects.

Still, navigating the road ahead will require a delicate balance. India needs to play a balancing act, offering trade concessions while maintaining a strong stance on its strategic interests. And while a trade agreement is likely, India may not fully yield to all US demands, particularly in politically sensitive areas.

In this context, I strongly believe that both governments must ensure space collaboration remains insulated from restrictive trade measures. The India–US partnership in space, whether in satellite communications, launch services, or deep space exploration, is too strategically important to be caught in the crossfire of short-term trade disputes. Preserving and expanding this cooperation is essential for maintaining our shared leadership in space innovation and global security.

India’s space sector has consistently shown resilience and adaptability. With sustained policy backing, expanded international engagement, and a continued push for domestic capability-building, it is well-positioned to rise above short-term disruptions and help shape the future of the global space economy.

The author is the Director General of 
the Satcom Industry
Association-India (SIA-India).