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Time of India
4 days ago
- Business
- Time of India
Trump hits India with additional 25% tariff: Breaking down US' latest move against New Delhi
US President Donald Trump imposed an additional 25% tariff on Indian goods over its purchase of Russian energy, the White House said Wednesday, hours after talks between Washington and Moscow over the war in Ukraine failed to yield a breakthrough. The new levy — which will stack on top of a 25% country-specific tariff set to be implemented overnight — will take effect within 21 days, according to an executive order signed by Trump. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program 'They're fueling the war machine. And if they're going to do that, then I'm not going to be happy,' Trump said Tuesday in an interview with CNBC, referring to India's purchases of Russian energy. ALSO READ: Trump doubles tariff on India to 50% over Russian oil purchase The move threatens to further complicate U.S.-Indian relations and comes shortly after an Indian government source said Prime Minister Narendra Modi would visit China for the first time in over seven years later this month. Live Events In tariff rankings, India now matches Brazil at the top with 50 per cent, followed by Switzerland at 39 per cent, Canada and Iraq at 35 per cent, and China at 30 per cent. US' latest attack India's importation of Russian Federation oil undermines U.S. efforts to counter Russia's harmful activities, said a statement by the White House. ALSO READ: India will take actions necessary to protect national interests: MEA reacts to Trump's 'unfair' 25% additional tariff India's subsequent reselling of this oil on the open market, often at significant profit, further enables the Russian Federation's economy to fund its aggression, it added. 'By imposing a 25% tariff, President Trump aims to deter countries from supporting the Russian Federation's economy through oil imports and impose serious economic consequences on the Russian Federation for its ongoing aggressions.' Exempted items Exemptions remain in place for items already covered by sector-specific tariffs, including steel and aluminium, as well as potentially affected categories like pharmaceuticals. Today's order decoded by experts At 50% rate, many Indian exports will face a handicap versus countries that are in the 15-30% bucket, said A. Prasanna, chief economist, ICICI Securities Primary Dealership, Mumbai. 'While Trump's order gives another 21 days for a deal to breakthrough, in case it does not we will have to significantly lower FY26 GDP growth forecast to below 6%, baking in a 40-50 bps hit. This would be double our earlier estimates (of GDP hit from higher tariffs),' Sakshi Gupta, Principal Economist, HDFC Bank, Gurugram told Reuters. The pressure is mounting on India to come to a trade agreement. India may agree to significantly reduce Russian purchases over a phased manner and diversify to other sources, stated Teresa John, lead economist, Nirmal Bang Institutional Equities, Mumbai. New Delhi's stance: Indian officials have hit back, accusing the US and Europe of double standards. In a blistering response, the Ministry of External Affairs (MEA) earlier said: 'It is unjustified to single out India… The very nations criticizing India are themselves indulging in trade with Russia.' Who is saying what? Trump: 'India's economy is dead... they're buying massive amounts of Russian oil and reselling it for big profits.' The MEA: 'India will take all necessary measures to safeguard its national interests and economic security.' Eric Garcetti (former US ambassador): 'India bought Russian oil because we wanted somebody to buy Russian oil at a price cap… It was the design of the policy.' Ashok Malik, the Asia Group: 'Fast and loose statements are putting 25 years of bipartisan effort at risk.' Indrani Bagchi, Ananta Centre: 'Trump wants Modi to call and fold. That's not India's style.' India-US ties facing crisis U.S.-India ties are facing their most serious crisis in years after talks with India failed to produce a trade agreement. Trump has escalated his fight with India over trade, unilaterally imposing a tariff rate after months of negotiations failed to secure a deal. He accused New Delhi of refusing to ease access for American goods and criticised its membership in the BRICS group of developing economies. Despite the volatility, New Delhi is not looking to escalate. Instead, it's working behind the scenes on a multi-pronged strategy to contain economic fallout and stabilize relations. 1. No subsidies - but sectoral support Commerce minister Piyush Goyal met exporters and ruled out direct subsidies, but floated other 'innovative' measures: Banks may recalibrate risk models to reduce borrowing costs for MSMEs. The government could cut testing and certification fees for small firms. An Export Promotion Mission with additional funding is on the table. According to EEPC India, engineering exports alone may drop $4–5 billion under the current tariffs. The textile sector fears closure of units and job losses. 'Some American buyers say they'll buy from Chinese suppliers despite higher tariffs because they're more cost-competitive,' said Sudhir Sekhri, AEPC chairman. 2. Dairy diplomacy & import trade-offs As per a Bloomberg report, in a significant policy shift, India may offer limited market access in dairy - a long-standing US demand. Officials are exploring options to import: Cheese not produced in India Condensed milk - with labeling confirming plant-based feed (to respect Indian religious sensitivities) This would mark a major concession, especially since India denied similar access to the UK in its free trade talks. 3. Strategic messaging to the West India has reframed its Russian oil purchases not as defiance, but necessity: Global oil routes shifted after Europe began cornering Gulf supplies. India's refineries kept global prices stable by purchasing Russian barrels. New Delhi argues it shouldn't be punished for global realignments it didn't cause - especially when other BRICS countries like China continue similar purchases without facing equivalent penalties. 4. Exporters pivot to branding, niche markets The government is urging exporters to build strong Indian brands that can weather tariff shocks and reduce dependency on price-sensitive segments. "It is important for Indian exporters to do brand building and promotion to come out of the clutches of any subsidies amid the US tariffs," a government offical told the ET. Sectors like marine exports are also being encouraged to propose employment-linked schemes to retain jobs and capacity. A representative from an export promotion council told ET: 'Clients won't shift overnight - Ecuador, for example, lacks scale to replace India in shrimp exports.' 5. Back-channel diplomacy and restraint The Modi government is keen to avoid public confrontation, even as Trump doubles down on pressure. National security adviser Ajit Doval and foreign minister S Jaishankar are expected to continue planned visits to Moscow, signaling no policy reversal - but also no inflammatory rhetoric aimed at Washington. 'My sense is the government will contain this... and will not escalate,' said Bagchi. The goal: de-escalate quietly, while protecting key sectors and trade ambitions. Between the lines Analysts see Trump's threats as both policy and performance. His demands - halt oil from Russia, lower tariffs, and give market access - may be part of a high-stakes negotiation strategy rather than fixed policy. India is betting on Trump's volatility - hoping it's tactical bluster ahead of the November 2025 US elections, not a permanent break. But if tariffs stick, it risks upending Modi's narrative of having secured India's global stature and could trigger long-term shifts in India's export map. (With TOI inputs)
Time of India
5 days ago
- Business
- Time of India
B. Prasanna, head of ICICI Bank's treasury, to move to securities unit
The head of treasury at India's ICICI Bank will move to the private lender's securities arm, according to two sources familiar with the matter. B. Prasanna , who has headed the bank's treasury for nearly nine years, will move as head of corporate finance and investment banking at unlisted unit ICICI Securities , the sources said. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program He will be replaced by Shailendra Jhingan , who currently heads ICICI Securities Primary Dealership, they added. Anubhuti Sanghai, currently non-executive director at the primary dealership, will take over from Jhingan, the sources said. ICICI Bank did not immediately respond to a Reuters query on the moves. Live Events In a stock exchange notice earlier in the day, the bank said that Prasanna will cease to be a senior management personnel at the bank due to a transfer within the group, without sharing details.
Economic Times
25-07-2025
- Business
- Economic Times
India is rolling in cash: What it tells about the economy
India is awash with cash -- both the lending mechanism and the real economy. Pointing at a liquidity tide, banking system funds in liquid demand deposits, such as current and savings accounts, more than doubled to Rs 3.79 lakh crore at the end of the June quarter. Not just the banks, people too are rolling in cash. Currency with the public surged to Rs 91,000 crore from Rs 31,000 crore, the latest Reserve Bank of India (RBI) data rise reflects the impact of policy measures such as liquidity easing by the central bank, a pickup in rural activity that is largely cash-driven, and possibly higher disposable incomes due to tax sops. But the cash splash is more about rising action in the rural economy. "The rise in currency leakage was seen since Q4FY'25 onward, which coincided with a rise in rural consumption," said Gaura Sengupta, chief economist, IDFC First Bank, as quoted in an ET report. "The pickup in deposits reflects substantial liquidity infusion by the Reserve Bank via Open Market Operations-OMO purchases. Banking system liquidity has turned positive from April 2025 onwards." "The significant increase in currency in circulation points to a strong recovery in rural economic activity" Dilip Modi, founder and CEO, Spice Money, was quoted as saying in the ET report. "This growth is fueled by multiple factors, including improved agricultural output, higher wages from employment schemes like MGNREGA, and government subsidies being delivered directly to Jan Dhan accounts." Additionally, the easing of inflation in essential goods has enhanced rural purchasing power, leading to greater cash flow and consumption. While cash is still widely used in rural India, digital payments like UPI are becoming more popular, Modi said. Rural consumption is poised to remain a bright spot in the Indian economy, supporting growth in the ongoing fiscal year, economists said after fourth-quarter GDP growth beat estimates. For the fiscal year ending March, inflation-adjusted consumption growth of 7.1% outpaced broader economic expansion of 6.5%, reflecting a rural consumption recovery, Citibank said last month in a note. "High frequency data indicates rural demand is faring better even as urban demand is patchy," A. Prasanna, head of research at ICICI Securities Primary Dealership, had told Reuters. "Given rural consumption is a bigger part of overall consumption pie compared to urban consumption and was generally hurting from Covid shock in last few years, it is likely consumption growth will stay resilient."Above-average monsoon rains this year and the resultant rise in farm incomes are likely to boost rural demand as well as easing inflation, as per economists. Tractor and two-wheeler sales, the bellwether of demand in rural India, have been rising in recent quarters while sales of fast-moving consumer goods have been robust. Rural wage growth, adjusted for inflation, is at its highest in four years, data from ICICI Securities Primary Dealership showed, with demand for jobs under a rural jobs scheme has fallen in recent months, as per a recent JP Morgan report. Over the last two fiscal years, consumption growth in India has risen while investment growth has eased, and the trend may continue, Dhiraj Nim, an economist at ANZ, told Trading India last month. "For consumption, to be honest, rural demand can be a source of hope... I think consumption growth can beat GDP growth, but not by a large gap." The RBI sees economic growth at 6.5% this fiscal year. India's unemployment rate remained steady at 5.6% in June, unchanged from May, but an improvement in rural areas offset a rise in urban joblessness, official data shows. Rural unemployment declined to 4.9% in June from 5.1% in May, while urban unemployment increased to 7.1% from 6.9%."The decrease in the unemployment rate for rural areas for both males and females can be attributed to an increase in the share of own-account workers (self-employed) in June compared to May, along with a reduction in the number of unemployed persons," the statistics ministry said in a statement. "The rise in own-account work during this period may be driven by seasonal factors, prompting individuals to engage in small-scale or self-initiated activities (e.g., petty trade, repair work, or services)," it sales, a barometer of economic activity in India's rural markets, are expected to touch record levels in this financial year on the back of a favourable southwest monsoon, higher minimum support prices for key crops and increased government spending on development programmes in the country's villages, company executives told ET in May. The industry estimates FY26 sales will cross the 1 million mark for the first time, beating the record 945,311 units sold in FY23. That's against 867,597 units sold in FY24 and 939,713 units in FY25. Among other factors, healthy reservoir levels and a strong rabi crop are expected to bolster sentiment among buyers, spurring sales in rural areas. The decline in interest rates is also expected to push salesRural India is undergoing a quiet revolution. Once heavily dependent on agriculture, the rural economy is now being rapidly reshaped by the services sector. A report by HDFC Securities reveals that 112 rural districts, home to 291 million people, have surpassed the $2,000 per capita income threshold—a milestone that signals growing prosperity and consumer report, titled "Rural India – Shifting Economic Foundations," offers a bottom-up analysis of 250 districts across eight major states, accounting for 72% of India's rural GDP (Rs 109 lakh crore). It shows that rural regions are not just catching up—they're driving India's consumption engine, especially as urban demand remains muted under the weight of inflation. Among the standout districts are Dakshina Kannada in Karnataka and Namakkal in Tamil Nadu, where per capita incomes have exceeded $5,000, buoyed by strong contributions from manufacturing, livestock, aquaculture, and real sector is the key growth drivers, the fastest-growing, clocking an 8.8% CAGR, led by trade & hotels (9.8%), financial services (9.1%) and real estate (8.3%). Industry comes second with a stable 7.1% CAGR, driven by mining (13.5%) and construction (8.7%). Agriculture trails with 3.9% CAGR, hampered by slow crop growth (2.8%).The report underscores stark inequalities across districts—some thriving above $5,000 per capita income while many in Uttar Pradesh remain below $1,000. Still, this growing pool of higher-income rural consumers is poised to fuel demand for discretionary goods and services, offering a compelling opportunity for businesses and policymakers as urban slowdown persisted, rural demand for India's fast moving consumer goods (FMCG) declined in the January-March '25 quarter year-on-year, though it was still four times faster than in cities, research firm NielsenIQ said in its quarter update in May. Smaller manufacturers drove growth of the sector for the second consecutive quarter, while rural markets outpaced urban growth for the fifth consecutive markets, which contribute over a third of overall consumer goods sales in India, grew 8.4% year-on-year by volume compared to 2.6% growth in urban sector powered small manufacturers with annual turnover below Rs 100 crore which grew 11.9% by volumes, while companies with a turnover between Rs 100 crore to Rs 1,000 crore reported volume growth of 6.4% in the quarter. 'Small manufacturers grew twice as fast than the overall FMCG market, gaining ground due to a low base, rural growth and changing market dynamics, though their long-term momentum remains to be seen,' Roosevelt D'Souza, head of customer success – FMCG, NielsenIQ India, trends show that the rural could become the new urban for India's businesses, especially FMCG, as villages come up on the consumption ladder, even as rural-contiguous areas, the small towns, are also witnessing resurgence in India's business and economy.
Mint
09-06-2025
- Business
- Mint
India bond investors favour short-end after central banks policy surprise
MUMBAI, June 9 (Reuters) - Indian investors are opting for shorter-duration government bonds and swaps after the central bank cut rates by a surprise 50 basis points and lowered the cash reserve ratio (CRR) for lenders last Friday. The policy support will steepen the yield curve, with short-term rates falling and longer-term rates stabilising or rising, four investors told Reuters on Monday. "We continue to see front-end of the yield curve to be well supported," said A. Prasanna, head of research at ICICI Securities Primary Dealership. Prasanna, however, sees limited scope for a rally in longer-duration bonds as the CRR cut would limit the need for more debt purchases by the Reserve Bank of India (RBI), a tool that would have otherwise lowered long-term yields. Expectations of a steeper curve are being reflected in markets as yields on up to three-year bonds have declined 4-5 bps since Friday, while the 10-year benchmark yield has risen nearly 18 bps from the low hit on that day. The outsized rate cut and surplus liquidity are also pushing shorter-tenor swap rates lower. The one-year OIS swap rate was around 5.45%, while the five-year rate rose to 5.70%, more-than-doubling the spread between the two. "With more liquidity and lower overnight rate fixings, there is still some room for receiving in one-year swap, but long-end should see some paying," said VRC Reddy, treasury head at Karur Vysya Bank. Reflecting the shift in sentiment, most investors now expect the 10-year bond yield to stabilise or rise. Citibank, which held a long position on the 10-year bond, said its conviction level on this trade has reduced due to limited scope for more rate cuts. Dhawal Dalal, president & CIO - fixed income - at Edelweiss MF, has turned "neutral" from "accommodative" on bonds and expects the 10-year yield in the 6.15%-6.25% band. ($1 = 85.6210 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Sonia Cheema)
Yahoo
02-06-2025
- Business
- Yahoo
Rural consumption to drive India's GDP growth this fiscal year, economists say
MUMBAI (Reuters) - Rural consumption is poised to remain a bright spot in the Indian economy, supporting growth in the ongoing fiscal year, economists said after fourth-quarter GDP growth beat estimates. India's economic growth rose to a one-year high of 7.4% in the January-to-March quarter, higher than forecast, data showed on Friday. Personal consumption grew 6% during the three months after an 8.1% rise in the previous quarter. For the fiscal year ending March, inflation-adjusted consumption growth of 7.1% outpaced broader economic expansion of 6.5%, reflecting a rural consumption recovery, Citibank said in a note on Friday. "High frequency data indicates rural demand is faring better even as urban demand is patchy," said A. Prasanna, head of research at ICICI Securities Primary Dealership. "Given rural consumption is a bigger part of overall consumption pie compared to urban consumption and was generally hurting from Covid shock in last few years, it is likely consumption growth will stay resilient." Above-average monsoon rains this year and the resultant rise in farm incomes are likely to boost rural demand as will easing inflation, economists said. Tractor and two-wheeler sales, the bellwether of demand in rural India, have been rising in recent quarters while sales of fast-moving consumer goods have been robust. Rural wage growth, adjusted for inflation, is at its highest in four years, data from ICICI Securities Primary Dealership showed, with demand for jobs under a rural jobs scheme has fallen in recent months, as per a recent JP Morgan report. Over the last two fiscal years, consumption growth in India has risen while investment growth has eased, and the trend may continue, Dhiraj Nim, an economist at ANZ, told Trading India on Monday. "For consumption, to be honest, rural demand can be a source of hope... I think consumption growth can beat GDP growth, but not by a large gap." India's central bank sees economic growth at 6.5% this fiscal year. GROWTH RISKS Even as the rural economy hums along, global uncertainties could hold back wider momentum at a time when trade wars and geopolitical tensions threaten global growth and financial flows. "While India is a domestically-oriented economy, it will not be entirely insulated from a global growth slowdown," said Aastha Gudwani, chief India economist at Barclays. "Given the Indian economy's domestic orientation, where private consumption accounts for more than 55% of GDP, domestic demand is indeed the key driver," she said. India's corporate capex is likely to remain tentative amid heightened uncertainty created by U.S. tariffs and the uncertainty on urban consumption outlook, Gaura Sen Gupta, chief economist at IDFC First Bank, said. Good monsoon rains, along with a pickup in government spending and rate cuts by the central bank could offset some of this hit to growth, economists said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
