📰250 Percent Tariff | Daily India Briefing

India, often called the “pharmacy of the world,” could see the White House place a flat 250 percent tariff on all pharma imports. Trump threatens substantially higher tariffs on India for buying Russian oil. India’s services sector expanded at its fastest pace in nearly a year in July.

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Macro

• India must focus on domestic growth drivers like deregulation and infrastructure investment to sustain 7 percent–8 percent growth amid rising global protectionism, junior minister Rao Inderjit Singh told parliament.

• India’s corporate earnings stayed weak for a fifth straight quarter, with Nifty 50 profit growth at 7.5 percent. Banks and IT firms are disappointed, and Trump’s new tariffs threaten to worsen the outlook for export-heavy sectors.

Equities

• Bharti Airtel’s quarterly profit jumped 43 percent, beating estimates, driven by rising 5G subscribers in India and higher charges in Nigeria. Revenue surged 28 percent as the premium user base grew, though analysts say another price hike is needed to sustain momentum.

• IndusInd Bank named Rajiv Anand, former Axis Bank deputy MD, as CEO from Aug. 25 for three years, aiming to restore confidence after fraud allegations and leadership turmoil. Shares rose over 5 percent on optimism over the new leadership.

• Titan may shift some manufacturing to the Gulf, leveraging lower UAE tariffs to maintain U.S. market access, after Trump imposed a 25 percent tariff on Indian imports; the move follows its $283 million (₹24.9 billion) purchase of Dubai-based retailer Damas.

• Prestige Estates’ Q1 profit rose 26 percent to, driven by strong NCR apartment demand, which made up 59 percent of bookings. Revenue climbed 24 percent to on record high sales from the region.

• Dalmia Bharat Sugar’s Q1 profit fell nearly 30 percent on lower sugar production, with revenue down 2 percent, as India’s sugar output is set to drop below consumption for the first time in eight years.

• Britannia Industries missed first-quarter profit estimates but reported improving urban demand. Easing inflation and rising packaged food sales are aiding a modest consumption recovery despite higher raw material costs.

Alts

• NTPC Green Energy, India’s top state-run renewable firm, may sell $230-340 million (₹20–30 billion) in local bonds after the RBI’s policy decision, joining a surge in corporate debt sales amid lower borrowing costs and holding a AAA rating from Crisil.

• Flash floods triggered by a cloudburst in a Uttarakhand village swept away the settlement, killing at least four people, with many missing. Officials warn that the Himalayan state’s steep terrain, deforestation, and unplanned construction are amplifying climate-driven extreme weather risks.

Policy

• India and the Philippines agreed to deepen defense ties, signing a strategic partnership to boost military training, information sharing, and maritime cooperation. The move comes amid rising tensions with China and growing bilateral trade exceeding $3 billion (₹263.4 billion).

• Trump’s new tariffs on India are pressuring the RBI ahead of its rate decision, with some economists now forecasting a 25-bps cut to support growth, while others expect a hold to monitor trade talks and past policy impacts.

• India scrapped its central renewable energy pricing pools to speed up power deals, after developers warned they were delaying contracts; the move aims to address growing stranded capacity amid transmission and regulatory bottlenecks.

• India’s insurance regulator fined Policybazaar $569,000 (₹50 million) for regulatory lapses. Violations included policy tagging and premium remittance issues, though PB Fintech said operations remain unaffected.

• India and the Philippines upgraded their military and economic partnership on Tuesday, following Prime Minister Modi’s meeting with President Marcos Jr. in New Delhi. The announcement came a day after their navies held joint drills in the South China Sea and included plans for deeper trade, defense, and maritime cooperation. Nine agreements were signed, and talks are underway to develop submarine infrastructure.

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1. Trump Tries to Sever India’s Purchase of Russian Oil

President Trump has once again confirmed he will “very substantially” increase tariffs on India within 24 hours, again citing New Delhi’s purchase of Russian oil. The Kremlin has also condemned the White House’s attempts to sever Russian-Indian relations as “illegal.”

The US had already imposed a 25 percent duty on Indian exports last week, but Trump is now threatening a sharper hike to punish what he calls India’s role in “fueling the war machine” of Russian President Vladimir Putin. His comments come ahead of an Aug. 8 deadline for Russia to reach a truce with Ukraine, after which Washington has warned of potential secondary sanctions on countries buying Moscow’s energy.

The tariff threat follows months of failed bilateral trade talks, with Washington pressing for greater access for US goods and criticizing India’s alignment within the BRICS bloc. For India, the risk is twofold — a direct hit to export competitiveness in its largest market and heightened uncertainty over energy policy.

India has defended its oil purchases as essential for energy security but has signaled willingness to expand imports of US natural gas, communication equipment, and gold as a potential offset. Officials in New Delhi say negotiations with the US remain ongoing in hopes of tempering tariff levels.

A sharper US duty could weigh on India’s trade balance, corporate margins in export-heavy sectors like textiles and engineering goods, and investor sentiment — particularly with the rupee already under pressure from last week’s 25 percent levy.

2. How Will India Navigate a Potential 250 Percent Tariff on Pharma?

President Donald Trump’s latest tariff warning, potentially raising duties on imported pharmaceuticals to as high as 250 percent within 18 months, could strike at the heart of India’s $24 billion (₹2.1 trillion) drug export industry. The U.S. is India’s largest pharmaceutical market, taking in a significant share of its generic medicines, including life-saving antiretrovirals, antibiotics, and chronic disease treatments.

Trump stated he would begin with a “small tariff” before escalating to 150 percent and ultimately 250 percent, framing the move as an effort to force drug manufacturing back to U.S. soil. While the timeline is not certain, the president has shifted positions on past tariff threats, and the potential scale marks the most aggressive protectionist signal yet for the sector.

For India, often called the “pharmacy of the world,” such duties could make cost-competitive generics unviable in the U.S., forcing companies like Sun Pharma, Dr. Reddy’s, and Cipla to reroute supply chains to less profitable markets. Pharmaceutical hubs in Hyderabad, Ahmedabad, and Visakhapatnam could face investment slowdowns and job risks.

The tariffs would also carry global repercussions. India’s vast production capacity supports medicine affordability in Africa, Latin America, and Southeast Asia, often through U.S. distribution channels. Disruption here could ripple through international health systems.

With the U.S. Section 232 investigation on pharmaceuticals still underway, New Delhi is likely to press for exemptions during broader trade talks. But if Trump follows through, the combination of punitive duties and his revived “most favored nations” drug pricing plan could significantly weaken India’s export momentum and reshape the global pharmaceutical supply chain.

3. India’s Services Growth Hits 11-Month High.

India’s services sector expanded at its fastest pace in nearly a year in July, with resilient domestic sales and a sharp pickup in export demand bolstering overall business activity, according to the HSBC India Services PMI. The index rose marginally to 60.5 from June’s 60.4, defying expectations of a slowdown.

The standout driver was international demand; the new export business sub-index logged its second-strongest reading in a year, underscoring India’s growing footprint in global services trade. Finance and insurance led sectoral gains, while real estate and business services lagged.

Despite buoyant demand, hiring slowed to a 15-month low, suggesting that firms are cautious on capacity expansion even as order books remain healthy. Inflationary pressures ticked higher, with service providers citing rising costs for food, freight, and labour. These were largely passed through to customers, keeping output price inflation slightly above input cost growth — a potential consideration for the RBI, which meets August 4–6 and is expected to keep its repo rate at 5.50 percent.

The composite PMI, which includes manufacturing, inched up to 61.1, the highest since April 2024, highlighting broad-based economic momentum. Business confidence strengthened on expectations of gains from marketing efforts, technology upgrades, and online expansion, signaling that service providers see scope for growth even against a backdrop of global trade uncertainty.

See you tomorrow.

Written by Eshaan Chanda & Yash Tibrewal. Edited by Shreyas Sinha.

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