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The U.S. Supreme Court has struck down President Trump’s tariffs on nearly every country, arguing he did not have the power to put them in place. We explain how this impacts India, and the months-long US-India trade negotiations, in today’s deep dive.
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Macro
The RBI monthly bulletin is bullish on India after landmark deals with the EU and the US peeling back tariffs. The report also added that inflation will likely remain benign, providing a positive growth environment. Investor sentiment, both foreign and domestic, was also noted as being positive.
The MPC is likely to keep rates at 5.25 percent, given the target inflation and positive growth seen in the economy.Multiple members of the 6-person committee said that price pressure remains at an appropriate amount while having properly buoyant economic activity.
Equities
Starbucks is investing in opening more stores in India, even at the expense of profit. The Indian subsidiary is a joint venture with Tata and is already the largest coffee chain in the country. Same-store sales and revenue grew at 3 percent and 4.6 percent, respectively, but losses were $16.5 million (₹1.5 billion). The company is fine with short-term pain to continue growing.
Alts
Peak XV has raised $1.3 billion (₹117.9 billion) across 3 funds to invest in AI startups in India. The fund, which controls more than $10 billion (₹907 billion), has previously been an early investor in Zomato and fintech company Pine Labs.
Sales of EV trucks and cars grew 17 percent y-o-y, resulting in 4.6 percent of all passenger vehicles being EV. Most industry experts say that 5+ percent is when mainstream adoption becomes a force. 2026 is expected to be another year of growth for the EV industry since car companies are enhancing their electric portfolios and European manufacturers have low tariffs to enter.
Sarvam, an LLM in 2 dozen Indian languages, is betting on sovereignty rather than having the most complex model.The company’s system operates on voice commands rather than only typing English; it also offers agentic models tailored for small Indian businesses. The company has raised more than $50 million (₹4.5 billion), valued at $200 million (₹18.1 billion).
Policy
Modi made it apparent that India is the leader of the Global South with the AI summit. By having backers like UN General Secretary Guterres and French President Macron, he bolstered his case for India being the hotbed for AI proliferation but also to be recognized as the 3rd largest superpower in the world.
India and the US signed the Pax Silica Declaration to protect key supply chains like critical minerals.It will establish a price floor on certain minerals to protect from China’s influence in selling cheap assets to gain market power.
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What the Supreme Court ruling means for India
The US Supreme Court reversed Trump’s widely sweeping tariffs from last year, finding the duties to be unlawful. Economies that bore the brunt of the tariffs — India, China, Brazil, etc — are now the beneficiaries of the ruling. The countries aforementioned, once targeted with some of the steepest rates, now face materially lower barriers on shipments to the US. Although Trump has since floated a new 15 percent across-the-board global tariff, Bloomberg Economics estimates that the resulting average effective tariff rate would settle around 12 percent, the lowest level since the “Liberation Day” measures unveiled in April.
Ironically, some of Washington’s closest allies now find themselves comparatively worse off. The UK and Australia, which had negotiated 10 percent “reciprocal” rates under the prior framework, would face a higher 15 percent levy under the new universal structure. Japan, which previously contended with a 15 percent rate that at least aligned it with competitors, loses that relative positioning advantage as others converge toward the same level. Canada and Mexico stand out as clear beneficiaries if exemptions under the USMCA Agreement remain intact, particularly as fentanyl-related duties are stripped away. In relative terms, North America could consolidate a stronger export position into the US market should those preferences endure.
Economists at Morgan Stanley project that the region’s weighted average tariff rate for Asia will fall to 17 percent from 20 percent, with levies on Chinese goods dropping to roughly 24 percent from 32 percent. For Beijing, the removal of the additional 10 percent fentanyl-related tariff compounds the relief, easing pressure on exporters already grappling with slowing global demand and structural headwinds at home.
For India, the removal of tariffs marginally improves its position from 18 percent to 15 percent across most goods. Some, like pharma and electronics, were exempt from all tariffs. The question is now how it should proceed on the proposed trade deal with the US. Quickly after the ruling, the BJP’s opposition called for Modi to renegotiate the previous deal and pull back trade officials since the baseline is better than India’s current reality. In a rare act of bipartisanship, Indian trade officials decided to delay their trip to the US; the government is waiting for Trump’s next move and to also evaluate the new developments and where it places India on the global stage.
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Written by Yash Tibrewal. Edited by Shreyas Sinha.
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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.