US Tariffs An Opportunity, Manufacturing Needs Big Push: Accel’s Prashanth Prakash

The Indian manufacturing ecosystem needs a big push to weather the US tariff storm, according to Accel partner Prashanth Prakash.

“The biggest push has to come in manufacturing and this is abundantly clear given the current geopolitical situation,” Prakash said at the Startup Mahakumbh 2025 event today.

The comments came against the backdrop of US President Donald Trump slapping a 26% reciprocal tariff on imports from India. The move has stoked fears of a market downturn, higher inflation and slower growth in the US and the rest of the world, including India.

The US has smacked all trading partners with reciprocal tariffs. The Trump administration has announced two sets of tariffs. First, a base tariff of 10% against all countries, a sharp increase from 2.5% earlier. Then, it has also announced country-specific tariffs, based on estimates of how much duties those countries levy on US goods. 

However, Prakash sees the reciprocal tariffs as an “opportunity” and not a crisis. “We have seen the US implement tariffs on countries like India. This is not a crisis but an opportunity. A lot of the existing supply chain is about to be disrupted and as a result, India can step up and fill the gaps wherever they may be,” the Accel partner said.

The Case For India Becoming A Global Manufacturing Gub

India aims to become a $10 Tn economy over the next decade. To achieve this vision, the country would need to boost domestic manufacturing in sectors such as semiconductors, EVs, defence tech, climate tech, among others.

“India has the talent, data and a massive consumer economy, but we need to bring in patient capital to back long-term innovation and research to supplement the opening up of the manufacturing sector,” Prakash said.

At the Startup Mahakumbh, Peak XV Partners MD Rajan Anandan also described deeptech as the final frontier for the Indian startup ecosystem. While deeptech is still at a nascent stage in India, Anandan expressed confidence that the country would establish itself as a leader in the sector on the back of  the availability of a vast talent pool, fast-growing economy, and favourable government policies.

The government has indeed taken a number of measures in recent years to enhance domestic manufacturing capabilities, including launch of PLI schemes, Make In India, Skill India, Indian Semiconductor Mission, IndiaAI Mission, among others. 

In the budget this year, finance minister Nirmala Sitharaman also announced that the Centre would explore setting up a “fund of funds” for the deeptech sector.

The government’s initiatives have resulted in India attracting a number of global giants, such as Google, Apple, Samsung, among others, to set up manufacturing plants in India.

Despite all these, the growth in manufacturing has largely been stagnant. As of 2023, manufacturing contributed only 17% to India’s GDP and 12% to employment. To handle these challenges, there is a need to facilitate access to capital, improvements in infrastructure, and simplify labour laws to make the most of the country’s demographic dividend.