In the late 1990s, India faced one of its most significant diplomatic and economic challenges following its nuclear tests in May 1998. The international community, led by the United States, imposed a series of sanctions aimed at isolating India economically and diplomatically.
Fast forward to the Trump era, where tariff wars and protectionist policies once again tested the resilience of global economies, including India’s. This article explores how India navigated the post-1998 sanctions and draws parallels to its strategies amid global trade tensions during the Trump administration.
Background: The 1998 Nuclear Tests
On May 11 and 13, 1998, India conducted five underground nuclear tests in Pokhran, Rajasthan, under the codename Operation Shakti. These tests marked India’s formal entry into the group of nuclear-armed nations and were a bold assertion of its strategic autonomy.
- Immediate Global Reaction
- United States: President Bill Clinton invoked the Glenn Amendment, imposing economic sanctions that included cutting off military and economic aid, banning the export of sensitive technology, and opposing loans from international financial institutions.
- Japan and EU: Suspended aid and froze bilateral cooperation.
- World Bank and IMF: Pressured to halt funding for Indian development projects.
India’s Response to Sanctions
Despite the severity of the sanctions, India managed to withstand the pressure through a combination of strategic diplomacy, economic resilience, and domestic reforms.
- Strategic Diplomacy – India launched a global diplomatic campaign to explain the rationale behind its nuclear tests:
Jaswant Singh–Strobe Talbott Talks: A series of 14 high-level dialogues between Indian External Affairs Minister Jaswant Singh and U.S. Deputy Secretary of State Strobe Talbott helped ease tensions and rebuild trust.
Non-Aligned Movement (NAM): India leveraged its leadership in NAM to garner support from developing nations.
Russia and France: Continued cooperation with India, refusing to join the sanctions regime.
- Economic Resilience and Reforms – India’s economy in 1998 was more liberalized than in the early 1990s, providing a buffer against external shocks.
Forex Reserves: Though modest, India had sufficient reserves to manage short-term shocks.
IT and Services Boom: The nascent IT sector began to show promise, with companies like Infosys and Wipro gaining global traction.
Domestic Reforms: India continued liberalizing its economy, attracting foreign investment in non-sensitive sectors.
- Public Sentiment and National Unity – The nuclear tests were widely supported domestically, seen as a matter of national pride and security. This unity helped the government withstand external pressure without significant political backlash.
Parallels with Trump-Era Tariff Wars
During Donald Trump’s presidency (2017–2021), the U.S. adopted a protectionist stance, imposing tariffs on several countries, including India. In 2019, the U.S. revoked India’s Generalized System of Preferences (GSP) status, affecting $5.6 billion worth of Indian exports.
India’s Strategy Amid Tariff Pressures
Diversification of Trade Partners: India expanded trade with the EU, ASEAN, and African nations.
Self-Reliance Push (Atmanirbhar Bharat): A renewed focus on domestic manufacturing and reducing import dependency.
Retaliatory Tariffs: India imposed tariffs on 28 U.S. products, signaling its willingness to defend its interests.
Bilateral Engagements: Despite tensions, India maintained dialogue with the U.S., culminating in defense and energy deals.
Lessons from 1998 Applied in the Trump Era
Conclusion
India’s ability to withstand global restrictions after the 1998 nuclear tests was a testament to its diplomatic agility, economic resilience, and strategic foresight. These same qualities were evident during the Trump-era tariff challenges. While the nature of the crises differed—one rooted in security, the other in trade—the underlying response showcased India’s growing maturity on the global stage.
As the world continues to grapple with geopolitical and economic uncertainties, India’s past offers valuable lessons in resilience and strategic autonomy.
