📰Zero Tariffs? | Daily India Briefing

Trump said that India has offered to reduce tariffs to zero, reopening trade talks. India eyes new markets for its pharma exports. India panel calls for steep increases on taxes on luxury electric vehicles.

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Macro

• Some of India’s biggest banks have told the RBI they are nearing internal limits on state bond holdings, raising concern over future demand. A slowdown could deepen the selloff, pushing up yields and restricting state and corporate funding access.

• Indian electronics manufacturers are gaining investor attention as warming ties between Modi and Xi spur expectations of trade and investment partnerships. Stronger collaboration with Chinese firms could help local players justify premium valuations, even as other sectors remain vulnerable to US tariff fallout.

• India’s power generation rose 4 percent in August, the fastest growth since March, driven by strong manufacturing demand, Grid India data showed. The increase boosted coal-fired output for the first time in five months, though renewables continue reducing coal dependency.

Equities

• Jaguar Land Rover, owned by Tata Motors, said a cyberattack has “severely disrupted” its global retail and production systems, forcing shutdowns across operations. The automaker is working to restore applications in a controlled manner but stressed there’s no evidence of customer data theft.

• ASML is seeking business in India as Modi pushes for domestic semiconductor production. CEO Christophe Fouquet said the firm will support India’s ambition through collaboration and talent, as the nation targets a $100 billion (₹8.8 trillion) chip market by 2030.

• Tesla’s long-awaited India debut has disappointed, with only about 600 orders since July despite strong showroom buzz. High import tariffs push prices above $68,000 (₹6 million), limiting reach and leaving Tesla far short of its 2,500-car annual quota.

• JSW Cement reported a sharply wider net loss of $154 million (₹13.6 billion) in April–June, its first results since listing in August, mainly due to a one-off charge from converting preference shares into equity. Excluding this, pre-tax profit rose significantly to $18.7 million (₹1.65 billion). 

• SEBI has cleared the IPO of boAt’s parent, Imagine Marketing, according to a regulatory filing. The Warburg Pincus-backed company, known for headphones and smartwatches, confidentially filed in April and is targeting a $1.5 billion (₹132 billion) valuation.

Alts

• India’s NCDEX has secured investments from Globe Capital Market and Groww parent Billionbrains Garage Ventures as part of a $87 million (₹7.7 billion) fundraising to support its equity-derivatives expansion. Globe will hold 2.88 percent, while Billionbrains Garage will own 2.82 percent.

• Russian Urals crude is becoming cheaper for India, now offered at a $3–$4 (₹264-352) per barrel discount to Brent for late September and October cargoes. Despite US pressure and tariffs, Indian refiners continue strong purchases, boosting ties with Moscow.

• EAAA India Alternatives has raised $510 million (₹45 billion) from domestic investors for its first private credit fund, surpassing its original target. The fund will focus on high-yield debt for acquisitions, recapitalizations, and special situations, targeting high-teen returns. 

• India’s largest lender, SBI, plans to raise at least $500 million (₹44 billion) through five-year dollar bonds just days after S&P upgraded the nation’s sovereign credit rating for the first time in 18 years, bankers said. Depending on demand, the issue could rise to $1 billion (₹88 billion).

• India’s Tata Consultancy Services secured a $644 million (₹56.7 billion) deal with Scandinavian insurer Tryg, its first mega contract this fiscal year. Over seven years, TCS will deploy AI and cloud solutions to transform Tryg’s entire IT operations.

Policy

• Indian retailer and farmer groups have urged the government to reject Amazon’s request to ease foreign investment rules for exports. Current laws bar Amazon and Walmart from directly stocking and selling goods to consumers, including in exports, allowing only marketplace operations.

• India will expand its LNG import capacity by 27 percent to 66.7 million tons annually by 2030, Oil Minister Hardeep Singh Puri said. The plan involves adding two new terminals to the current eight, supporting India’s goal of raising natural gas’s share in its energy mix to 15 percent from about 6 percent today.

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1. India Offered to Reduce Tariffs to Zero

India has offered to reduce tariffs on U.S. goods to zero, a move that could reopen the door to trade negotiations even as Washington’s steep duties on Indian exports take effect.

In a social media post on Monday, Trump claimed New Delhi’s concession came “too late” and should have been made “years ago.” Still, the remarks suggest some scope for talks after months of escalating tensions.

India’s Commerce Minister Piyush Goyal echoed that sentiment on Tuesday, saying both sides were “in dialog” for a bilateral trade agreement. Formal negotiations remain on hold after a U.S. team canceled its August trip to New Delhi, but officials have kept informal communication channels open.

Trump imposed tariffs of up to 50 percent on Indian exports to punish the country for what he called “obnoxious” trade barriers and its increased purchases of Russian oil. India had previously offered to cut levies on industrial goods such as auto components and pharmaceuticals if Washington reciprocated. Talks broke down, however, over U.S. demands to open India’s sensitive dairy and agriculture markets.

Analysts say Trump’s latest comments may signal a shift toward compromise. “This is his attempt to walk back on his earlier hardened stance,” said Abhijit Das, a former Indian trade official.

For now, both countries appear reluctant to let the dispute derail ties entirely, with negotiators still searching for common ground.

2. India Eyes New Pharma Markets

India is preparing to expand pharmaceutical exports to Russia, Brazil and the Netherlands, according to industry sources, in a push to reduce reliance on the U.S., its biggest market. India will raise regulatory issues with these countries at next month’s International Pharmaceutical Exhibition in New Delhi, where global regulators are to attend.

India is the world’s largest provider of generic medicines by volume, estimated at $50 billion in FY2024, and is often referred to as the “pharmacy of the world.” It is the 11th largest exporter of pharmaceutical products in dollar-value.

Currently, the U.S. accounts for over one-third of India’s pharma exports, with shipments up 20 percent in FY25 to $10.5 billion (₹924.7 billion), mainly driven by demand for cheaper generics. By contrast, exports to Brazil totaled $778 million (₹68.5 billion), the Netherlands $616 million (₹54.2 billion), and Russia $577 million (₹50.8 billion). Officials see room to lift sales in these markets by as much as 20 percent, helped by existing spare manufacturing capacity. The UK, India’s second-largest pharma market at $914 million (₹80.5 billion), also remains a focus, with expectations of a boost in NHS procurement following the free trade agreement signed earlier this year.

Still, analysts caution that no other market can match the scale of the U.S., making diversification additive rather than substitutive.

3. India Tax Panel Calls for Steep Levies on Luxury EVs

An Indian tax panel has recommended steep increases in levies on luxury electric vehicles, a move that could deal a blow to global automakers such as Tesla, BMW, Mercedes-Benz, and BYD just as they seek to expand in the country.

The panel, which advises the powerful Goods and Services Tax (GST) Council, proposed raising the GST rate on EVs priced between $23,000–$46,000 (₹2-4 million) to 18 percent from the current 5 percent. For vehicles priced above $46,000 (₹4 million), it suggested lifting the rate to 28 percent, arguing such cars cater to the “upper segment” of society and are largely imported.

The proposals come as Modi pushes through sweeping tax reforms aimed at boosting domestic consumption and curbing luxury imports. While his government is eliminating the 28 percent GST tier for most goods, officials may carve out a new 40 percent bracket for certain luxury products, which could further squeeze high-end EVs, according to a government source.

India’s EV market remains small, just 5 percent of car sales in April–July, but demand is growing rapidly, with sales nearly doubling to 15,500 units. Tesla only recently opened showrooms in India, with its Model Y priced from $65,000, while Mercedes and BMW are expanding their portfolios.

Automakers are warning that tax hikes could slow adoption. “It is imperative the 5 percent rate is retained,” Tata Motors said, while BMW and Mercedes cautioned that steeper levies risk derailing India’s clean-mobility ambitions.

See you tomorrow.

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

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