📰Trump-Modi Breakdown

Good morning, 

Welcome to the best way to stay up-to-date on India’s financial markets. Here’s what’s in today’s newsletter:

• Main takeaways from U.S. President Trump and Indian Prime Minister Modi’s meeting on Thursday,

• and, how Trump 2.0’s relationship with India has fundamentally changed.

• Finally, we’ll close with Gupshup, a round-up of the most important headlines.

Have a question you want us to answer? Fill out this form and you could be featured in our newsletter.

—Shreyas, [email protected]

Market Update.

Main Takeaways from the Trump-Modi Meeting

Modi’s visit to Washington last week was a business-first engagement, lacking the grandeur of a state visit but delivering significant agreements on trade, defense, and energy. Here are the seven main takeaways:

Expanded US military sales to India  

• The US will sell F-35 fighter jets and other military equipment to India starting in 2025.  

• US-India defense trade has grown to $20 billion (₹1.7 trillion), making the US India’s third-largest arms supplier after Russia and France.  

• Despite the deal, India remains skeptical about the F-35 offer due to high maintenance costs.

US-India trade deal in progress  

• Both sides committed to negotiating a trade agreement by Autumn 2025.  

• The target is to double bilateral trade to $500 billion (₹43.5 trillion) by 2030 from $190 billion (₹16.5 trillion) in 2023.  

• It remains unclear whether the deal will be a full free trade agreement (FTA) or a more limited tariff-reduction pact.  

• Trump aims to make the US India’s top oil and gas supplier, leveraging sanctions on Russian shadow fleets to push India towards US energy.  

Tariffs: Experts are unsure if India will escape tariff hikes since Trump may factor in non-tariff barriers like VAT, subsidies, and procurement restrictions. Trump has ordered broad new reciprocal tariffs to be placed in April. India’s average tariff amount has gone from 13 to 11 percent in its recent budget but the US wants greater access to Indian government contracts, a challenge to Modi’s ‘Make in India’ initiative.

An extradition, a rare press conference, and a meeting with Elon: The US approved the extradition of Tahawwur Rana, an Indian-origin Chicago businessman accused in the 2008 Mumbai attacks.  

Modi answered two press questions, a rare move given his record of avoiding press Q&As. He confirmed India will continue taking back verified illegal Indian immigrants. He declined to comment on US bribery charges against Adani, stating that it was not discussed. 

Modi also spoke with Musk regarding AI and emerging technologies. There is still no announcement on Tesla’s India entry despite India offering EV tax cuts for firms committing $500 million (₹43.5 billion) plus local manufacturing within three years of investing. Starlink also remains uncertain due to a clash between Musk and Ambani: Musk is pushing for direct spectrum allocation while Ambani prefers government auctions.

The Coldness of Trump 2.0 and Modi

“Howdy Modi” is over. The warm camaraderie from Trump 1.0 during the 2017 Texas rallies was conspicuously absent. While India is enjoying diplomatic privileges—India’s foreign affairs minister was given a front-row seat at Trump’s inauguration, and Modi is the fourth world leader to visit Trump at the White House (after Israel, Japan, and Jordan)—the ambiance of this visit was far less celebratory and more focused on negotiation between opposing interests. Trump has called India a “tariff king,” intending it to be a major recipient of his retaliatory tariffs, which the president announced hours before Modi’s visit.

As renowned foreign affairs thinker and former United Nations Security Council President Kishore Mahbubani points out in his book, Has China Won?, the United States has taken a confusing stance on India. As the fifth largest economy and home to the world’s largest population, it is an obvious foil to Trump’s efforts to de-couple the U.S. from China. It is also a more ideologically aligned friend: not only is it a democracy of 1.5 billion people, and is among the few democracies in Asia to avoid single-party rule (unlike Singapore or Japan).

However, former presidents have consistently underprioritized India, often delaying trade negotiations, state visits, or attending ceremonious events. For example, Trump declined to be Modi’s chief guest at the 2018 Republic Day celebrations, despite most other top world leaders attending. While Trump has always taken a civil approach to describing Chinese President Xi Jinping, he has mocked Modi in public.

While the U.S. should embrace a free trade agreement with India, and symbolically present a strong partnership, signaling to markets to cycle investments from China into India, it has failed to present a clear long-term narrative of the future of US-India relations.

A tough deal.

The impending tariffs give Modi a narrow window to negotiate a trade deal with the US, but that likely means making additional concessions. Beyond lowering import duties, Trump may push for deeper structural changes, such as lifting regulatory barriers, easing restrictions on foreign investment, and even altering India’s VAT policies. While such demands could enhance India’s global competitiveness, they also pose challenges for domestic industries accustomed to protectionist measures. That does not include India’s inflated import bill when LNG starts to rise from the US — LNG currently is sourced from the Persian.

Despite trade tensions, Modi and Trump did discuss initiatives like the revival of the India-Middle East-Europe Economic Corridor (IMEEC), aimed at boosting infrastructure connectivity between the two regions. This project, first proposed in 2023, has seen little progress but could benefit Indian billionaire Adani, a close ally of Modi, who controls Israel’s Haifa port and has expansion ambitions in Europe. However, allegations of corruption against Adani remain a sensitive issue. Trump’s decision to pause actions under the Foreign Corrupt Practices Act could work in Adani’s favor, effectively sidelining US bribery charges against his conglomerate.

A particularly jarring moment came with the return of undocumented Indian migrants from the US on military planes, many of them in handcuffs and chains. Trump’s administration has ramped up deportations, including individuals from Modi’s home state of Gujarat. If Modi secured any assurances of better conditions for deportees in future removals, he did not disclose them. This issue, along with growing economic strains, is testing Modi’s ability to maintain nationalist sentiment at home while navigating an increasingly transactional relationship with Washington.

Message from our Sponsor

There’s a reason 400,000 professionals read this daily.

Join The AI Report, trusted by 400,000+ professionals at Google, Microsoft, and OpenAI. Get daily insights, tools, and strategies to master practical AI skills that drive results.

Sign up now for free and work smarter, not harder.

Gupshup.

Macro

• The rupee recently posted its best weekly gain in over 18 months, closing at 86.82 per U.S. dollar, due to easing concerns regarding tariffs after Modi's meeting with Trump. ​​The bond market will watch for central bank liquidity measures.

Equities

• An Indian court ruled against Reliance Industries and BP Plc, siding with the government’s claim that they unlawfully extracted gas from a state-run ONGC block. Reliance may escalate the case to India’s top court as the legal battle continues.

• Tata Communications now handles the recording and broadcasting of 80 percent of global sporting events, reaching two billion viewers, following its 2022 acquisition of Switch Enterprises. The company has expanded its live content production to cover major sports, concerts, and events worldwide.

• Indian electric aircraft startup ePlane has signed a non-binding deal to supply 788 eVTOL air ambulances to ICATT, valued at over $1 billion (₹86.7 billion). ePlane plans to produce 100 units annually to help address India’s urban traffic congestion.

• Indian authorities have fined Aviva’s local unit $7.5 million (₹650.2 million) for using fake invoices to pay illegal commissions and claim incorrect tax credits. Aviva plans to contest the order, which comes amid intense competition in India's insurance market.

Alts

• India plans to build its first offshore airport on an artificial island near Vadhvan as part of a major infrastructure push. The project aims to improve connectivity and support Mumbai’s growing air traffic.

• Indian buyers are defaulting on chickpea cargoes due to a supply glut that lowered domestic prices by over 30 percent. The surge in Australian production, driven by India’s removal of an import levy, has led to contract disputes affecting around 225,000 tons of shipments.

Policy

• Modi leaves Washington facing more tariff threats and increasing pressure to buy U.S. goods, despite offering trade concessions. While both leaders pledged to boost trade and defense ties, Modi now faces tough negotiations to address the U.S. trade deficit with India.

See you Tuesday.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

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.