Context

India''s economic rise has been swift and substantial. With its economy now valued at $4.19 trillion, India has emerged as a formidable global force, well on its way to becoming the world’s third-largest economy. This growth trajectory, while promising, is increasingly being tested by emerging challenges—most notably, the United States'' proposed imposition of 50% tariffs on Indian exports. These tariffs, which target approximately $40 billion in trade, threaten to erode nearly 1% of India’s GDP. The impact is expected to be most severe in labour-intensive sectors such as textiles, gems, leather, and footwear—industries that are notable not just for their export contributions but also for employing a disproportionate number of women. Consequently, this tariff-induced disruption risks becoming not just an economic shock but a deeply gendered crisis.

The Gendered Vulnerability of India''s Economy

·       India’s economic exposure contrasts sharply with China’s more resilient position. While China has been able to weather similar U.S. tariffs thanks to its vast manufacturing capacity and diversified export base, India lacks that cushion. With 18% of its exports destined for the U.S., India’s exporters could face a cost disadvantage of 30–35% compared to competitors like Vietnam, should the tariffs be enacted.

·       This external vulnerability is compounded by an internal inefficiency: the chronic underutilisation of India’s female workforce. Women''s participation in the economy is not merely a question of fairness—it is a strategic imperative. The sectors at greatest risk from the tariffs collectively employ nearly 50 million people, with millions of women potentially facing job losses. India’s female labour force participation rate (FLFPR) has remained stagnant, fluctuating between 37% and 41.7%, significantly below the global average and China’s 60%. The International Monetary Fund estimates that closing this gender gap could increase India’s GDP by as much as 27% over the long term. Yet, deep-seated cultural norms, policy inertia, and structural barriers continue to impede women''s entry and retention in the workforce. The looming tariff crisis thus exposes not just economic fragility but a broader neglect of gender-inclusive development.

The Demographic Dividend Dilemma

·       India is currently benefiting from a demographic dividend—its expanding working-age population. However, this window of opportunity is finite, expected to begin closing by 2045. Nations like China, the U.S., and Japan used similar demographic booms to power sustained economic growth. In contrast, India risks squandering its advantage, primarily due to low female workforce participation.

·       In rural India, women’s participation has inched upward, but largely in unpaid, low-productivity family roles. In urban areas, participation rates have stagnated, hindered by inadequate public safety, unreliable transportation, insufficient sanitation, and the disproportionate burden of unpaid domestic and caregiving responsibilities. If left unaddressed, these challenges could transform India’s demographic dividend into a demographic liability—an issue that has already plagued countries like Italy and Greece, where low female labour participation has been a persistent drag on economic growth.

The Way Forward

1.     Learning from Global Models: During World War II, the United States incorporated women into the workforce through policies that mandated equal pay and offered childcare support. China''s economic reforms post-1978 included major investments in care and education, boosting female workforce participation to 60%. Japan improved its FLFPR from 63% to 70%, resulting in a 4% rise in GDP per capita. The Netherlands pioneered flexible part-time employment with full benefits, offering a particularly relevant model for India, where many women prefer such work arrangements due to familial and societal constraints.

2.     Implementing Structural Reforms: India currently lags in three key areas: legal safeguards for women workers, investment in care infrastructure, and comprehensive skill development. Rather than relying on short-term populist measures or undifferentiated welfare schemes, India must pursue structural reforms that treat women not as passive recipients of aid but as central, active agents in economic development. Some promising initiatives already offer a glimpse of what is possible. Karnataka’s Shakti scheme, which provides free bus travel for women, has led to a 40% increase in female ridership since 2023, enhancing both mobility and autonomy. Platforms like Urban Company employ over 15,000 women, offering them not just income but also insurance, maternity benefits, and opportunities for skill advancement. Rajasthan’s Indira Gandhi Urban Employment Guarantee Scheme has generated millions of jobs, with women comprising 65% of the workforce—many of whom are entering the labour market for the first time. These examples illustrate that when governments and businesses prioritise safety, mobility, and flexible work arrangements, women are more than capable of contributing meaningfully to economic growth.

Conclusion

·       The proposed U.S. tariffs should not be viewed in isolation as a trade dispute but rather as a critical inflection point for India. External threats such as trade barriers starkly reveal internal deficiencies, especially the persistent underemployment of women. Empowering women is not just an act of social justice—it is essential to India’s economic resilience and long-term prosperity.

·       India now finds itself at a pivotal juncture. By choosing to invest in its women, the country can unlock sustainable and inclusive growth. Ignoring this imperative, however, risks consigning the nation to economic stagnation and structural vulnerability.