📰Tariffs Keep Coming | Daily India Briefing

India’s rupee is poised to remain one of Asia’s weakest currencies through year-end. Modi has struck a defiant tone with the US. Unilever struggles in a strong consumer economy.

If you have any questions about India, fill out this form or reach out to Shreyas at [email protected]

Macro

• President Trump reaffirmed today that he will “substantially” raise tariffs on Indian imports, accusing India of profiting from Russian oil resales while ignoring the war in Ukraine. He did not specify how high tariffs would go. Despite the warning, Indian officials told Reuters they will continue buying Russian oil.

• India’s central bank is expected to hold interest rates at 5.50 percent on August 6, but the odds of a cut have climbed after the U.S. imposed 25 percent tariffs on Indian exports. Analysts say the added trade shock, alongside cooling inflation, could pressure the RBI to ease policy sooner than planned.

• India’s largest refiner, Indian Oil Corp, has purchased 7 million barrels of crude oil from the U.S., Canada, and the Middle East to partly replace Russian supplies amid U.S. President Trump’s criticism and threats of tariffs over India’s continued Russian oil imports.

Equities

• Indian markets bounced back Monday, with the Nifty 50 rising 0.64 percent and Sensex gaining 0.52 percent, as metal and IT stocks surged on hopes of a U.S. rate cut despite tariff concerns. Weaker U.S. jobs data boosted Fed cut expectations, lifting sectors like metals (+2.5 percent) and IT (+1.6 percent), while small- and mid-cap stocks also rallied.

• VinFast kicked off production at its first overseas plant in India on Monday, aiming to build 50,000 EVs annually and expand local sourcing, with initial orders from Sri Lanka, Nepal, and Mauritius. The company sees India as a critical test market as it pushes toward its 2025 global delivery goal of 200,000 vehicles.

• Bharti Airtel launched new cloud and AI tools through its digital arm Xtelify on Monday, targeting businesses and telecoms with services like infrastructure-as-a-service and AI-driven customer engagement. The rollout includes partnerships with Singtel, Globe Telecom, and Airtel Africa, as India’s $8.3B cloud market eyes rapid growth through 2028.

• JSW Steel and Japan’s JFE Steel will jointly invest $669 million (₹58.45 billion) to expand electrical steel production across two plants in India, aiming to meet rising domestic demand for energy-efficient materials. The Nashik plant’s capacity will increase fivefold, while an upcoming Vijayanagar facility will also see a boost, with both projects funded equally through equity.

Alts

• Ant Group will fully exit Paytm by selling its remaining 5.84 percent stake for up to $434 million (₹38 billion) through block deals, according to a term sheet seen by Reuters. The sale, led by Goldman Sachs and Citigroup, marks the latest foreign investor retreat from the Indian fintech firm.

• Tata Motors has named Group CFO P.B. Balaji as the new CEO of Jaguar Land Rover, replacing Adrian Mardell, who is stepping down after three years in the role. Balaji will take over in November, marking a leadership shift at Tata’s most profitable division.

• Tata Capital, backed by Tata Sons, has filed for an IPO to issue up to 210 million new shares, while existing shareholders plan to sell up to 265.8 million shares, with Tata Sons proposing to sell 230 million shares. The fresh capital will support Tata Capital’s future lending needs, and Kotak Mahindra Capital, BNP Paribas, and Citigroup Global Markets are leading the offering.

Policy

• India and the Philippines conducted their first joint naval sail through the South China Sea this week, coinciding with President Marcos’ state visit to New Delhi. The two-day exercise, held within the Philippines’ exclusive economic zone, is part of Manila’s growing maritime cooperation with Indo-Pacific partners to counter China’s regional claims.

• India’s markets regulator SEBI proposed easing disclosure rules by exempting related-party transactions below $1.7 million (₹150 million) from reporting and introducing a revenue-based threshold for shareholder approval of higher-value deals. This move, under chairman Tuhin Kanta Pandey, aims to reduce compliance burdens and speed up approvals, marking a shift from the previous trend of tightening regulations.

• India’s markets regulator, SEBI, is pushing for structural reforms in the derivatives market to curb unfair practices and better protect small investors, following efforts to limit retail trading and a temporary ban on U.S. firm Jane Street for alleged manipulation, the Financial Times reported.

• Major labor and farmer unions have called for a nationwide protest on August 13 against U.S. tariffs and the India-UK trade agreement, accusing the government of undermining national interests and demanding a halt to trade deal negotiations and full parliamentary scrutiny of future agreements.

No wonder your teams are confused

The world is changing at breakneck speed. However, your comms haven't. Teams are starving for:

• Essential insight to stay aligned.

• An effective way to receive and read it.

Smart Brevity is keeping 1000+ orgs ahead — your team deserves the same advantage.

See best-in-class comms samples

Reach out to [email protected] to reach our audience and see your advertisement here.

1. The Trade Update

India’s rupee is poised to remain one of Asia’s weakest currencies through year-end, as new US tariffs add to structural economic headwinds and sap investor confidence. Analysts at Deutsche and Barclays forecast the rupee to fall to fresh record lows amid persistent foreign outflows, slowing domestic growth, and diminishing monetary policy support. By contrast, regional peers such as the Chinese yuan, Indonesian rupiah, and Malaysian ringgit are expected to appreciate modestly, underpinned by more stable external balances and progress on trade relations with the United States.

The imposition of a 25 percent tariff on Indian exports based on QCOs, data localization, foreign investment, and Russian oil has further strained India’s external position. With trade talks stalled, India stands isolated in Asia as most other economies finalize deals to avoid punitive tariffs. Equity markets have already seen $11 billion (₹946 billion) in outflows this year, and Barclays estimates that tariffs could subtract 30 basis points from GDP growth in the second half. The combined effect of weakening growth and capital flight has undermined the rupee’s resilience, raising concerns about imported inflation and external financing pressures.

The RBI’s limited space. Having already cut rates by 50 basis points in its last meeting to support growth, the RBI has limited room for further easing without risking currency instability. While India’s foreign exchange reserves remain robust, the RBI is unlikely to use them aggressively to defend the rupee given Gov. Malhotra’s stance against it. A sharp intervention could also reduce policy flexibility if trade tensions escalate further. 

Beyond the immediate tariff shock, the rupee’s weakness reflects deeper structural challenges. India continues to run a persistent current account deficit, driven in part by energy imports and limited high-value exports. FDI inflows have slowed amid regulatory hurdles, particularly in banking, insurance, and technology, where caps and compliance burdens deter capital. Meanwhile, India’s bond markets are unlikely to attract significant inflows given the RBI’s cautious stance on further rate cuts, and equity valuations remain stretched against a backdrop of decelerating growth.

No quick trade fix. While the government has signaled openness to resolving the trade dispute, the timeline for any agreement remains uncertain, with negotiations resuming on August 25th. Analysts warn that absent a breakthrough, the rupee may face further downside, particularly if global risk appetite deteriorates or oil prices rise.

2. Modi Breaks Away from US

Modi has struck a defiant tone with the US, urging citizens to prioritize domestic goods and defending India’s continued purchase of Russian oil. Despite mounting pressure from Washington, India has not instructed refiners to halt Russian crude imports, with purchases remaining a commercial decision, according to officials familiar with the matter.

A policy shift. The tariff threat, coupled with secondary penalties tied to Russian energy trade, marks a significant shift in relations. For years, the US tolerated India’s longstanding defense and energy ties with Moscow as part of a broader effort to court New Delhi as a counterweight to China. Now, Trump is leveraging trade and financial tools to force India to curtail its support for Russia, calling India’s economic partnership with Moscow a “financing of war” and threatening further punitive action.

India, now the largest buyer of Russian seaborne crude, has ramped up purchases to around 33 percent of its total oil imports, capitalizing on discounted prices amid global sanctions on Moscow. While the US has limited leverage over China (Russia’s primary partner) due to strategic dependencies like rare earths, Trump’s administration has focused on India, criticizing its tariffs, immigration policies, and participation in the BRICS bloc.

Unlike Trump 1.0… Modi, invoking his “Make in India” agenda, framed the tariff escalation as a moment to boost self-reliance and protect domestic industries. His speech called for resistance to US demand and also echoed earlier Indian official words on the Russia time-tested partnership. 

Trade talks with Washington are ongoing, with US negotiators expected in New Delhi later this month. However, Indian officials say concessions on sensitive sectors like dairy and agriculture are off the table due to political and religious constraints. Modi’s administration is exploring ways to placate Washington without appearing to capitulate, reportedly asking refiners to prepare contingency plans for non-Russian crude, though no formal shift has been ordered.

3. India’s Consumer Economy, Through the Lens of Unilever

The resilience of India’s consumer economy is often highlighted—but Unilever now faces a stark reality: weakening demand coinciding with a CEO transition. Priya Nair is under mounting pressure from investors frustrated by the company’s sluggish volume growth and its steady loss of market share to agile local competitors.

Macro downgrade: Urban demand, which accounts for two-thirds of sales, has softened as consumers shift spending to artisanal and premium alternatives. Meanwhile, rural demand remains volatile. Rising input costs, notably in palm oil and coffee, have constrained margins and kept sales growth subdued, though the June quarter showed signs of recovery. Market watchers view Nair’s appointment as a pivot: her leadership style is seen as more aggressive, with brokerages including Goldman Sachs and Citi upgrading their outlooks in anticipation of strategic shifts.

Idiosyncratic pressure: Unilever faces the task of revamping its product mix, refreshing distribution strategies, and confronting disruptive rivals like Mamaearth and L’Oréal, which are gaining ground in India’s beauty and personal care segment. Nair’s predecessor, Rohit Jawa, attempted to drive premiumization via the ASPIRE strategy, culminating in January’s $305 million (₹26.2 billion) acquisition of skincare startup Minimalist. Analysts now await clarity on whether Nair will double down on that path or chart a new course.

Global placement: Globally, Unilever is betting big on India. CEO Fernando Fernandez pledged disproportionate investment in India and the US, calling India a momentum market and praising Nair’s deep domain knowledge and international experience. The main risks are execution with the rapidly changing consumer landscape, but also the loss of market share for Unilever; both will be new challenges for Nair to overcome.

See you tomorrow.

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

Sponsor the next newsletter to reach tens of thousands of U.S.-based business-savvy professionals. Reach out to [email protected].

Could your business use expert insights to power growth in India? Reach out to [email protected] for a free introductory call.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.