India’s economy, valued at $4.19 trillion in 2025, is poised to become the world’s third-largest. However, the proposed 50% tariffs by the United States on $40 billion of Indian exports threaten to disrupt this growth. Sectors like textiles, gems, leather, and footwear, which employ millions of women, face severe setbacks. This challenge marks the urgent need for India to empower its female workforce to sustain economic momentum.
Economic Impact of US Tariffs
The US tariffs target labour-intensive exports, potentially reducing India’s GDP by nearly 1%. Indian exporters risk losing competitiveness to countries like Vietnam due to increased costs. The US accounts for 18% of India’s exports, making this threat. Labour-intensive sectors with high female employment will be disproportionately affected, risking job losses for millions of women.
Female Labour Force Participation in India
India’s female labour force participation rate (FLFPR) remains low, between 37% and 41.7%, far below the global average and China’s 60%. Cultural norms, safety concerns, and inadequate infrastructure constrain women’s employment opportunities. Many rural women work unpaid in family businesses, while urban female participation has stagnated. This underutilisation of women is a major economic liability.
Demographic Dividend and Gender Gap
India is nearing the peak of its demographic dividend, a window closing by 2045 when working-age population growth slows. Harnessing this requires integrating women fully into the workforce. The International Monetary Fund estimates closing the gender gap could boost India’s GDP by 27%. Failure to do so risks replicating growth stagnation seen in countries with low female workforce participation.
International Lessons on Women’s Employment
Countries like the US, China, Japan, and the Netherlands demonstrate how investing in women’s employment drives growth. The US improved female labour during WWII with equal pay and childcare. China’s reforms raised FLFPR to 60% through state-backed care. Japan increased female workforce participation, boosting GDP per capita by 4%. The Netherlands’ part-time work model suits women’s preferences and could be adopted in India.
India’s Policy Initiatives and Structural Reforms
India has begun targeted interventions like Karnataka’s Shakti scheme offering free bus travel for women, increasing female mobility by over 40%. Rajasthan’s Indira Gandhi Urban Employment Guarantee Scheme created millions of jobs with 65% for women. Digital platforms like Urban Company provide gig work with social protections for women. Redirecting welfare funds to targeted schemes, tax incentives, and skill development can further empower women.
Challenges and the Way Forward
India needs structural reforms rather than short-term populism. Formalising gig and part-time work, improving safety, and expanding care infrastructure are critical. Empowering women is essential for export competitiveness, demographic dividend capture, and inclusive growth. The economic future depends on recognising women as key contributors, not just social beneficiaries.
Questions for UPSC:
- Point out the economic and social impacts of low female labour force participation in developing countries with suitable examples.
- Critically analyse the role of demographic dividend in economic growth and the challenges faced by India in utilising it fully.
- Underline the significance of targeted social policies and infrastructure development in enhancing women’s workforce participation in India.
- Estimate the effects of international trade policies like tariffs on emerging economies and discuss strategies to mitigate such external shocks.
