India's new chip fab rises from the dust
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Reuters
an hour ago
- Reuters
India-US tariff standoff: What are New Delhi's options and risks?
NEW DELHI, Aug 7 (Reuters) - India is likely to be among the countries worst hit by U.S. President Donald Trump's trade offensive, with tariffs on Indian imports set to surge to 50% if a deal is not struck in three weeks. Below are various options for India to deal with the crisis. India was expected to be among the first countries to sign a trade deal with Trump's team, but talks fell through after five rounds of negotiations over disagreements on opening India's vast farm and dairy sectors and stopping Russian oil purchases. New Delhi has reacted strongly to the 50% tariff on U.S. imports from India, which could virtually stall trade. Still, Indian officials are hopeful that closed-door talks will address some differences. A U.S. trade team is expected to visit the Indian capital later this month. But Prime Minister Narendra Modi said on Thursday, without referring to the tariffs, that he was ready to "pay a heavy price" for not compromising on the well-being of the country's farmers, dairy sector and fishermen. Indian officials, however, have said they are open to cutting tariffs for some U.S. farm and dairy goods like almond and cheese. CUT RUSSIAN OIL IMPORTS India, the world's third-biggest oil importer and consumer, previously said it was confident of meeting its oil needs, opens new tab from alternative sources if imports from Russia become impractical due to sanctions or other reasons. It bought little Russian oil before the Ukraine war that began in 2022, but now gets more than a third of its oil imports from its old trade and defence partner. Reuters reported late last month that Indian state refiners such as Indian Oil ( opens new tab, Hindustan Petroleum ( opens new tab, Bharat Petroleum ( opens new tab and Mangalore Refinery Petrochemical ( opens new tab had stopped buying Russian oil as discounts narrowed and pressure from Trump mounted. Officials have, however, warned of spikes in global prices without Russian oil in the market. Besides Russia, other big suppliers to India are Iraq, Saudi Arabia and the United Arab Emirates under annual deals with the flexibility to request more supply every month. In total, India buys from about 40 countries, including the United States. Along with India, the other big target of Trump's tariffs is Brazil. The two countries are founding members of the BRICS bloc that also includes China, Russia and South Africa. Brazilian President Luiz Inácio Lula da Silva, who holds the presidency of BRICS, told Reuters that he would call Modi on Thursday and China's Xi Jinping and other leaders afterwards to discuss the bloc's response to the tariffs. One Indian government source said India needs to gradually repair ties with the U.S. while engaging more with other nations that have faced the brunt of Trump's tariffs and aid cuts, including the African Union and BRICS. India is already making some forays with Russia and China. Ahead of Russian President Vladimir Putin's expected visit to New Delhi this year, India's national security adviser is in Moscow and the foreign minister is due to follow. On Tuesday, Russia said the two countries discussed further strengthening defence cooperation "in the form of a particularly privileged strategic partnership". India has also boosted engagement with China, a change after years of tensions following a deadly border clash in 2020. Modi is set to visit China in weeks for the first time since 2018 for the summit of a regional security conference, which could see the coming together of Modi, Putin and China's Xi Jinping. The Indian defence and foreign ministers visited China recently. India exported goods of around $87 billion in the fiscal year ended March 2025 to the U.S., including garments, pharmaceuticals, gems and jewellery, and petrochemicals. They account for about 2% of India's GDP. If the proposed 50% duty on Indian goods is enforced, pharmaceutical exports — subject to a different duty structure - may be the only products still shipped from India to the U.S. And it's not just trade that will be in the firing line. Analysts expect tensions to spill over to areas like work visas for tech professionals and the offshoring of services. India has long been a major beneficiary of U.S. visa programmes and the outsourcing of software and business services, a sore point for Americans who have lost jobs to cheaper workers in India.
Reuters
an hour ago
- Reuters
India's Modi vows no compromise on farmers interests amid Trump's tariff salvo
NEW DELHI, Aug 7 (Reuters) - Indian Prime Minister Narendra Modi said on Thursday he will not compromise the interests of the country's farmers even if he has to pay a heavy price, in his first comments after U.S. President Donald Trump's salvo of a 50% tariff on Indian goods. "For us, our farmers' welfare is supreme," Modi said at an event in New Delhi. "India will never compromise on the wellbeing of its farmers, dairy (sector) and fishermen. And I know personally I will have to pay a heavy price for it," he said. Trump announced an additional 25% tariff on Indian goods on Wednesday, raising the total duty to 50% — among the highest imposed on any U.S. trading partner. The new tariff, effective August 28, is meant to penalise India for continuing to buy Russian oil, Trump has said. While Modi did not explicitly mention the U.S. or the collapsed trade talks, his comments marked a clear defence of India's position. Trade talks between India and the United States broke down after five rounds of negotiations over disagreement on opening India's vast farm and dairy sectors and stopping Russian oil purchases. India's foreign ministry has called the U.S. decision 'extremely unfortunate' and said it would 'take all necessary steps to protect its national interests.' The U.S. has yet to impose similar tariffs for China, the biggest buyer of Russian oil. Experts say China's dominance in rare earth minerals — critical to high-tech industries — gives it leverage that India currently lacks. "The U.S. tariff hike lacks logic," Dammu Ravi, secretary of economic relations in India's foreign ministry, told reporters. "This is a temporary aberration, a temporary problem that the country will face, but in course of time, we are confident that the world will find solutions." India is already signalling it may seek to rebalance its global partnerships. Modi is preparing for his first visit to China in over seven years, suggesting a potential diplomatic realignment amid growing tensions with Washington. Brazilian President Luiz Inacio Lula da Silva said on Wednesday he would initiate a conversation among the BRICS group of developing nations about how to tackle Trump's tariffs. He said he planned to call Modi and China's Xi Jinping. The BRICS group also includes Russia and South Africa. India's Ravi added that "like-minded countries will look for cooperation and economic engagement that will be mutually beneficial to all sides." Both supporters of Modi and the opposition Congress party have called on him to respond firmly to the U.S. tariffs, urging action "with self-respect and dignity." "India's national interest is supreme. Any nation that arbitrarily penalises India for its time-tested policy of strategic autonomy, rooted in the ideology of non-alignment, does not understand the steel frame India is made of," Congress party president Mallikarjun Kharge said. Indian industry, already struggling with global headwinds, has expressed alarm. Sudhir Sekhri, chairman of the Apparel Export Promotion Council, said: "There is no way the industry can absorb such a steep hike". He demanded fiscal support from the government. Indian billionaire Mukesh Ambani's Reliance Industries ( opens new tab in its annual report said continuing geopolitical and tariff-related uncertainties may affect trade flows and demand-supply balance. India's equity market, which has been weakening due to tariff risks and muted earnings growth slipped another 0.5% on Thursday to three-month lows. The reaction was muted as investors bet on the tariffs being negotiated down.
Reuters
an hour ago
- Reuters
Adani to build India's biggest privately funded coal power plant in a decade
Aug 7 (Reuters) - Indian billionaire Gautam Adani's group will build and operate a $3 billion coal-fired power plant in Bihar state with a 2.4 gigawatt capacity, it said on Thursday, the biggest coal plant constructed in India via private investment in a decade. The first of three units at the plant will be commissioned within four years, with the last expected to come online in five years' time, Adani Power ( opens new tab said. The move marks a return of private investment to India's greenfield coal-based power projects after more than a decade of absence. Prime Minister Narendra Modi's government is targeting increasing the country's coal-based capacity by 80 GW, or more than a third, by 2032 to more than 290 GW, saying it was necessary to ensure reliable, round-the-clock power. Coal's share in India's power mix is starting to significantly decline due to a quick buildout of renewables, following rapid growth in coal use after the COVID-19 pandemic. The world's second largest coal producer and consumer still generates about three quarters of its electricity from coal annually, however, unlike top coal user China which has progressively reduced its dependence on the polluting fuel. The project in Pirpainti, eastern Bihar, will be Adani Power's largest new plant since its 3.3 GW Tiroda project was fully commissioned in 2014. The company will supply power at just over 6 Indian rupees ($0.0684) per kilowatt hour to Bihar's state-run distribution companies from the Pirpainti plant, it said in a statement. Adani currently operates 18.1 GW of coal-fired power capacity in eight states and 12 plants across the country, and won bids to build and operate a 1.5 GW plant in the northern Uttar Pradesh state in May and a 1.6 GW capacity facility in Maharashtra in September 2024. ($1 = 87.6975 Indian rupees)
