Trump Slaps 50% Tariffs on India New Delhi Pushes Back As Russia-China-India Axis Rises N18G
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The Hindu
26 minutes ago
- The Hindu
Doubled U.S. tariffs to increase risks to India's growth, inflation, says Moody's
The 50% tariff imposed by U.S. President Donald Trump is expected to increase risk to India's growth and inflation, rating agency Moody's said on Friday. 'Should India continue to procure Russian oil at the expense of the headline 50% tariff rate on goods it ships to the U.S., which is currently its largest export destination, we project that real GDP growth may slow by around 0.3 percentage points compared with our current forecast of 6.3% growth for fiscal 2025-26,' Moody's said. On the other hand, a decision to curtail Russian oil imports to avoid the imposition of the penalty tariff could pose difficulties in procuring alternative sources of crude petroleum in sufficient amounts and in a timely fashion, proving disruptive to economic growth if the overarching supply of oil to the economy is interrupted, it stated. 'Since India is among the world's largest oil importers, a shift toward non-Russian oil would tighten supply elsewhere, raise prices and pass through to higher inflation. The consequently larger import bill would also contribute to a wider current account deficit against the backdrop of weaker tariff competitiveness that potentially undermines investment inflows,' it said. However, since India retains sufficient foreign-reserve currency buffers it could weather external volatility. 'The magnitude of the drag on growth from tariff obstacles will influence the government's decision to pursue a fiscal policy response, although we anticipate the government will adhere to its focus on gradual fiscal and debt consolidation,' the rating agency said. While India has been imposed with 50% tariff, other countries in Asia-Pacific are bearing 15-20% tariff rates and this will provide them competitive advantage. India has been able to purchase Russian oil capped at ($60 a barrel) at below global prices, which has helped insulate India's inflation from the pass-through of global commodity price movements, while preempting pressures on its current account deficit. If India stopped oil imports from Russia during the rest of FY26, then India's fuel bill might increase by only $ 9 billion in FY26 and $11.7 billion in FY27, according to estimates by SBI Research. Russia accounts for 10% of global crude supply, if all the countries stopped buying from Russia the crude price may increase by 10% if no other countries increase their production, the research arm of State Bank of India (SBI) said. India's imports of Russian crude rose to $56.8 billion in 2024 from $2.8 billion in 2021, corresponding to a rise in India's share of total crude oil imports to 35.5% from 2.2%. Today India is Russia's biggest oil importer. In terms of volume, India imports 88 MMT from Russia in FY25 from the total import of 245 MMT, SBI said adding besides Russia, India buys oil from Iraq - its top supplier before the war in Ukraine followed by Saudi Arabia and the UAE. Since Mr Trump's executive order stipulates an effective date of 21 days after the signing of the order, it indicates room for negotiations in coming weeks. 'India's response to these developments will ultimately determine the effect on its growth, inflation and external position,' Moody's said. Since 2022, India has increasingly ramped up its crude oil imports from Russia as demand from the latter's traditional offtakers dried up amid sanctions tied to its invasion of Ukraine. According to Moody's beyond 2025, the much wider tariff gap compared with other Asia-Pacific countries would 'severely curtail India's ambitions to develop its manufacturing sector, particularly in higher value-added sectors such as electronics, and may even reverse some of the gains made in recent years in attracting related investments.'
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Business Standard
26 minutes ago
- Business Standard
Govt aims to accelerate pace of highway construction to 100 km/day: Gadkari
Union Road Transport and Highways Minister Nitin Gadkari on Friday said the government's aim is to accelerate the pace of highway construction to 100 km a day from 38 km/day at present. Speaking at the Business Today India@100 event, Gadkari said so far this year, the road ministry has awarded highways projects worth ₹2.5 lakh crore, and by March next year, it will award highways projects worth ₹10 lakh crore. "Currently, the pace of National Highways construction in India is 38 km/day. We aim to accelerate the pace of highway construction to 100 km a day. This is our target, whether it will happen next year, I can not say," he said. The ministry constructed 10,660 km of national highways in 2024-25, 12,349 km in 2023-24 and 10,331 km in 2022-23. Responding to the growing concern over social media about E20, rolled out by the government, is damaging the vehicle and there is no reduction in fuel cost, Gadkari rejected the claim, saying that the petroleum sector is lobbying against this move. "I challenge, if anyone has faced difficulty in his vehicle on account of mixing of ethanol in petrol," Gadkari, who is known for his frank views, said. The minister further said that Pune-based Automotive Research Association of India (ARAI) conducts trials and comes up with reports before the government takes a call on ethanol blending. Currently, Indian vehicles can run on E20 petrol with minor changes to the engine to prevent corrosion and other issues. In 2023, Prime Minister Narendra Modi launched petrol blended with 20 per cent ethanol. The Indian government will introduce guidelines for 27 per cent ethanol blending in petrol by the end of August. Ethanol, which can be produced from sugarcane, broken rice and other agricultural products, is expected to help reduce India's dependence on foreign oil. India is currently the world's third-largest oil consumer and imports about 88 per cent of its crude oil requirements, making it vulnerable to geopolitical vagaries that can impact crude prices. Gadkari reiterated that his aim is to make India's automobile industry number one in the world. The size of the Indian automobile industry is now ₹22 lakh crore. Presently, the size of the US automobile industry is ₹78 lakh crore, followed by China (₹47 lakh crore) and India (₹22 lakh crore). According to the minister, the automobile industry has created 4.5 crore jobs till now -- the highest in the country. Gadkari also said the days are not far away when prices of electric vehicles (EVs) will be less than those of petrol vehicles in the country within six months. The minister also said India's logistics cost will come down to 9 per cent by December this year. In China, the logistics cost is 8 per cent, and in the US and European countries, it is 12 per cent, the minister said. Gadkari also emphasised the need to increase the productivity of the agriculture sector. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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Business Standard
26 minutes ago
- Business Standard
India must not yield to US pressure in trade talks: Amitabh Kant
India should never lose its strategic autonomy, never yield to pressure while negotiating trade deals with the US, former G20 Sherpa Amitabh Kant said on Friday, while suggesting that the country should look at a long-term perspective and behave in a calm and collected manner. Speaking at the Business Today India@100 event, Kant said India should use trade-related uncertainties as a unique opportunity to carry out very vigorous reforms in the economy. "We still have 20 days for these (US) tariffs to kick in. We should never yield to pressure, but we should negotiate in a very rational manner, in a sensible manner, and I think there is plenty of time to be able to arrive at an agreement," he said. On August 6, the United States announced an additional 25 per cent tariff on all Indian imports, on top of an existing 25 per cent duty, taking the total duty to 50 per cent effective August 27. The White House said the measure was in response to India's continued purchase of Russian oil. "My view is that we should never lose our strategic autonomy. We have never lost that strategic autonomy, even during the Cold War period. "And India should never bend, but we should behave in a very cool, calm and collected manner, as is being done at present. And we should look at a long-term perspective on this," Kant said. The former NITI Aayog CEO also said there is a critical need to simplify the goods and services tax (GST) regime and eliminate unnecessary rules and procedures -- especially at the state level. "Even startups are taking too long just to register. My key message: no rules, no policies, no laws more than two pages," he said. Kant also pitched for radically improving the personal income tax on which a lot of work has already been done. US President Donald Trump's "dead economy" jibe, he said India is anything but a dead economy because India is the fastest-growing large economy. "We are the fourth largest economy in the world. "We will shortly be the third largest economy in the world, more than anything else, India has carried out very major structural reforms in its economy," Kant said. Kant suggested that the government should give a massive thrust to travel and tourism, because it is tariff proof. "We should be getting tourists from abroad, because... there is no tariff," he pointed out. Noting that India is bigger than 24 countries of Europe, Kant said every state of India must have its brand and every state must push for tourism. Kant emphasised that India needs just 12 champion states growing at 10 per cent to lift national growth to 9 per cent. "You already have growth coming from the south and west. Now the opportunity lies in the east... These are mineral-rich states. There's no reason they should not be growing at 9-10 per cent per annum," he said.
