Latest news with #US-sanctioned
Mint
14 hours ago
- Business
- Mint
India's trade surplus with the US under threat as new tariffs bite
New Delhi: India's goods trade surplus with the US has doubled over the last decade, rising from $20 billion in 2015 to $40 billion in 2025. Now, that success may come at a steep price. The latest tariff imposed by US President Donald Trump on India, if fully implemented and combined with existing sector-specific tariffs on products like aluminium, steel and automobiles, could raise the average US import duty on Indian goods to 26.6 percentage points, according to Goldman Sachs Economic Research released on Thursday. "This would bring the tariffs closer to the original reciprocal levels announced on April 2," the Goldman Sachs Economic Research report said. The economic research division of the global investment banking major expected the US reciprocal tariffs to have a potential direct impact of around 0.2pp (percentage points) on its CY25 real GDP growth estimate for India. "If the new tariffs are enforced, that would constitute a potential incremental drag of around 0.3pp (annualised)," it said. This estimate is based on India's goods exports exposure of roughly 4% of GDP to US final demand and a "goods export demand elasticity of about 0.5", it added. In December, Goldman Sachs' economists expected India's economy to grow at an average of 6.5% between 2025 and 2030. Tariff Wednesday President Donald Trump, in a post on his Truth Social platform on Wednesday, announced that Indian exports to the US will face a 25% tariff starting 1 August, along with an additional penalty for buying oil and military equipment from US-sanctioned Russia. He, however, didn't elaborate on the additional penalty. Citing high Indian tariffs, "obnoxious" non-monetary trade barriers, and New Delhi's continued defence and energy ties with Russia, Trump said the move was necessary to address America's 'massive trade deficit" with India. To be sure, the US is not only India's largest trading partner but also one of the few major economies with which India enjoys a significant trade surplus. India's goods trade surplus with the US rose to $41.18 billion in fiscal year 2025 (FY25), up 16.6% from $35.33 billion a year ago. The increase was driven by an 11.6% rise in exports to $86.51 billion, while imports from the US grew 7.4% to $45.33 billion. In comparison, India's overall goods trade reported a deficit of $282.8 billion in FY25. A decade of gains at risk India's growing trade surplus with the US, largely driven by exports of electronics, pharmaceuticals, and textiles, has been a hallmark of the bilateral relationship. But Washington now views this imbalance through a tougher geopolitical lens. The latest tariffs are framed as retaliation not just for India's trade policies, but also for its reluctance to reduce imports of Russian oil, estimated at 650 million barrels annually, and its continued procurement of defence equipment from Moscow, which accounts for roughly 36% of India's defence imports. 'Even as the US slaps India with 25%+ tariffs, the trade saga is far from over. There is as much of a geopolitical angle to this as an economic one," financial services firm Emkay Global noted in its latest report, adding that the confrontation reflects both economic and geopolitical undercurrents. "While we believe a trade deal will be eventually negotiated between India and the US, we note that even nations that have cracked a US deal so far face unfavourable elevated tariffs, despite giving sweeping concessions to the US," it added. Sectors in the crosshairs The US is India's largest export market, accounting for around 18% of outbound shipments, equivalent to roughly 2.3% of India's GDP. Several high-value sectors are now exposed to significant risk. Indian shrimp exporters, who send 40–45% of their product to the US, face the harshest blow. With existing anti-dumping and countervailing duties already in place, the new tariff brings their total duty burden well above competitors such as Ecuador, Vietnam, and Indonesia. 'This higher tariff burden significantly compresses price competitiveness and could lead toloss of market share, particularly in the commodity and mid-value segments where pricing is a key determinant," Equirus Express wrote, warning of likely market share losses for mid-range producers. The apparel industry also faces headwinds. India commands just a 6% share of the US garment import market, far behind China, Vietnam, and Bangladesh. A 25% tariff could further slow its recent gains. The pharmaceutical and gems and jewellery sectors, once considered resilient due to their high value-add and regulatory complexity, aren't insulated either. "Pharmaceuticals, gems, and textiles are key sectors that are likely to be hit," said Aditi Raman, associate economist at Moody's Analytics. A point of contention is market access to the key agricultural and dairy sector, which India has historically been reluctant to grant, Raman added. An uncertain investment climate Beyond the direct trade effects, Indian policymakers worry about secondary impacts on investment and financial markets. According to Goldman Sachs Economic Research, policy uncertainty in the US has risen markedly since the new administration took office in January 2025. A spike in US trade policy uncertainty alone could reduce India's GDP by an additional 0.3pp, the bank warns, especially as companies delay investment decisions in response to the new rules. Jefferies Equity Research points to further macroeconomic ripple effects, as higher crude prices could widen the current account deficit, put downward pressure on the rupee, and reduce the Reserve Bank of India's (RBI) scope for interest rate cuts. "If India's US trade surplus were to halve, it would have about 25-40bps of GDP impact. Also, similar impact on CAD, combined with potentially higher oil prices, can drive further depreciation of the INR and likely put a pause to any near-term rate cuts," Jefferies Equity Research said in a report released on Thursday. "FPI (foreign portfolio investors) sentiment could stay weak as India's relative 'friend of US' / 'beneficiary of China +1' image takes some knock. We remain hopeful of an eventual trade deal and some of the above impact getting reversed," it added. Hope for resolution While the shock is real, many observers still believe the situation is negotiable. Past trade skirmishes between India and the US have ended in compromise, and sectoral carve-outs, especially for sectors like pharmaceuticals, may be on the table. DBS Bank suggests that the final effective rate may settle between 15% and 20% once exemptions and concessions are factored in. The government, for its part, has reaffirmed its commitment to securing national interest while pursuing a 'balanced and mutually beneficial" deal. In the interim, India is expected to accelerate efforts to diversify both its export markets and its sources of energy and defence procurement. Fresh trade agreements with the EU and others are already under discussion. "We had previously estimated around 25-30bp of impact on growth if rates were uniform across sectors. Downside risks are likely to be offset by fiscal support for labour-intensive industries and smaller exporting firms, besides further rate cuts," DBS Bank said in its latest report. But even with diversification underway, the short-term risks appear to be tangible. "Shifts in the global trade order are unlikely to be smooth. Near-term, brace for volatility in capital flows and asset classes, with the INR bearing the brunt and feeding into the RBI's reaction function," Emkay Global said in its latest report. "The RBI, like most EM (emerging markets) central banks, will need to confront various push and pull factors via the financial market route, even with the growingly easing bias," it added. Economic growth impacted India's economy is expected to remain strong, with the Reserve Bank of India (RBI) forecasting GDP growth for FY26 at 6.5%, slightly below the earlier estimates due toglobaltrade risks. The finance ministry expects growth at 6.3-6.8%, supported by structural reforms and stable macro fundamentals. The International Monetary Fund (IMF) recently raised its forecast to 6.4%, citing easing trade tensions and resilient domestic demand. However, while the outlook remains optimistic, these institutions flagged external risks as key downsides. Madan Sabnavis, chief economist atBank of Baroda, said a 25% tariff, excluding the penalty component, is not very different from April levels, when the tariffs were first announced by Trump, but will still put pressure on Indian exporters. "At this stage, some depreciation may be appropriate to support exports. Overall growth can be affected, and our forecast of 6.4-6.6% holds even now with the most negative impact leaving to 6.4%," he added.
Mint
a day ago
- Business
- Mint
US tariffs cloud outlook for Indian exports, trigger growth concerns
New Delhi: The US' imposition of a 25% tariff on Indian exports starting 1 August has cast a shadow over bilateral trade, creating fresh uncertainty for exporters. In addition, uncertainty over a potential penalty, tied to oil and defence purchases from Russia, may cloud pricing strategies and disrupt supply chain planning, making it harder to estimate landed costs. This was set to weigh on short-term business sentiment, analysts said. "Without clarity on the quantum of the penalty, Indian exporters and the US importers are left with no firm basis to calculate landed costs or assess how the tariff burden can be absorbed," said Ajay Sahai, director general and chief executive officer (CEO) at the Federation of Indian Export Organisations (FIEO). "This ambiguity disrupts supply chain planning and pricing strategies," he added. President Donald Trump, in a post on his Truth Social platform on Wednesday announced that Indian exports to the US will face a 25% tariff starting 1 August, along with additional penalty for buying oil and military equipment from US-sanctioned Russia. He, however, didn't elaborate on the additional tariffs. Citing high Indian tariffs, "obnoxious" non-monetary trade barriers, and New Delhi's continued defence and energy ties with Russia, Trump said the move was necessary to address America's 'massive trade deficit' with India. 'While India is our friend, we have... done relatively little business with them,' he added. The US is not only India's largest trading partner, but also one of the few major economies with which India enjoys a significant trade surplus. India's goods trade surplus with the US rose to $41.18 billion in fiscal year 2025 (FY25), up 16.6% from $35.33 billion a year ago. The increase was driven by an 11.6% rise in exports to $86.51 billion, while imports from the US grew 7.4% to $45.33 billion. In comparison, India's overall goods trade reported a deficit of $282.8 billion in FY25. Some economists flagged the development as a setback for India, noting that rival economies in Southeast Asia face lower duties despite operating in similar segments such as labour-intensive goods and electronics. Under Trump's new tariff regime, Vietnam was initially hit with a 46% duty due to its widening trade surplus with the US, but Trump later clarified that most Vietnamese exports would face tariffs below 20%, while transshipped goods from third countries would attract a 40% levy. Indonesia's proposed 32% tariff was trimmed to 19% by mid-July, and the Philippines' 20% duty was similarly eased to around 19% amid early bilateral talks. "The 25% tariff rate is certainly a negative development as it compares to lower rates for peers such as Vietnam, Indonesia and the Philippines, which compete with India in a similar category of labour-intensive products and electronic goods," said Garima Kapoor, economist and executive vice president at Elara Capital. Kapoor noted that while the exact tariff structure on exempted items like pharmaceuticals and sectors with differential rates—such as iron, steel and autos—remains unclear, any inclusion of pharma under the new regime would be a significant setback for India, given that over 30% of its pharma exports go to the US. However, even amid the turbulence, with talks on a bilateral trade agreement (BTA) gaining traction, the tariff setback could be temporary. "A well-negotiated deal that addresses all aspects of trade, investment and tariff and non-tariff barriers by September-October 2025 is likely to yield long-term benefits rather than a hurried deal," she added. Madan Sabnavis, chief economist at Bank of Baroda, said a 25% tariff, excluding the penalty component, is not very different from April levels, when the tariffs were first announced by Trump, but will still put pressure on Indian exporters. "At this stage, some depreciation may be appropriate to support exports. Overall growth can be affected, and our forecast of 6.4%-6.6% holds even now with the most negative impact leaving to 6.4%," he added. India's GDP growth for FY26 is projected to remain strong, with the Reserve Bank of India (RBI) forecasting 6.5%, slightly down from earlier estimates due to global trade risks. The ministry of finance expects growth at 6.3%-6.8%, supported by structural reforms and stable macro fundamentals. The International Monetary Fund (IMF) recently raised its forecast to 6.4%, citing easing trade tensions and resilient domestic demand. While the outlooks remain optimistic, these institutions flagged external risks as key downsides. Some agencies downgraded India's economic growth forecast for FY26 following rising external challenges. Rating agency ICRA Ltd downgraded India's growth forecast for FY26 to 6.2% from 6.5% last month on the back of external factors impacting the country's growth. The agency's chief economist, Aditi Nayar, said the tariff and penalty imposed by the US on Wednesday is higher than anticipated and is likely to pose further headwind to India's GDP growth. "The extent of the downside will depend on the size of the penalties imposed," she added.
Hindustan Times
09-07-2025
- Politics
- Hindustan Times
‘Million Abdul Raufs in Pakistan': Ex-minister Hina Rabbani Khar exposed on live TV over terrorist's funeral photo
Hina Rabbani Khar, Pakistan's former foreign minister, faced an awkward moment on live TV when she tried to portray a designated terrorist as a "common man", only to be promptly fact-checked by the host. Former Pakistan foreign minister Hina Rabbani Khar during her interview with Al Jazeera, where she was fact-checked over remarks dismissing a US-designated terrorist's identity in a viral funeral image.(AFP and a screengrab from 'X') In an interview with Al Jazeera, Hina Rabbani Khar was defending Pakistan's position on Hafiz Abdur Rauf, a US-sanctioned global terrorist seen leading the funeral procession of terrorists killed in India's Operation Sindoor on May 7. The journalist then presented a widely circulated photograph of Rauf, the same photo was part of key evidence in India's global outreach in the wake of the Pahalgam terror attack, which killed 26 people. Trying to prove the claims as wrong, Khar insisted the man in the now-viral funeral image was not the Lashkar-e-Taiba-linked figure wanted by the US. She said, "There are a million Abdul Raufs in Pakistan." 'I am telling you, with authority, with evidence which has been shared with the whole world, that this is not the man that you (India) are claiming it to be. That is not the man you are claiming it to be,' she said, holding up the photo as part of her argument. Anchor counters with facts, ID match But the interview took a sharp turn when the news channel's anchor confronted her with evidence linking the man in the photo to the US-designated terrorist. The journalist said her and the Pakistan military's statements are different. 'They (Pakistan army) said that he's a member of a political party, and they released his national ID number. That ID number is the same one as on the US sanctions list. So, according to the US sanctions terrorist list, this man is a terrorist,' the journalist said, exposing the contradiction in Pakistan's narrative. Cornered by the evidence, Khar scrambled to draw a distinction between the individual defended by the Pakistani military and the person on the US blacklist. 'The Pakistani army is defending this man (in viral photo). The Pakistani army is not defending the person who is proscribed by the US,' she argued. However, the interviewer immediately pointed out that the identity card released by Pakistan's own army matched the ID number listed on the US sanctions list—leaving little room for denial. ISPR's details match US database After India's operation on Pakistan's terror hubs, at a press conference in May, Pakistan's Director General ISPR Ahmed Sharif Chaudhry had confirmed the man seen in the funeral video is named Hafiz Abdur Rauf. 'This man is Hafiz Abdur Rauf, who is leading the prayers. He has three daughters, a son, and he was born in March 1973. You can see his family details and everything,' Chaudhry said. Also Read | Who is Hafiz Abdul Rauf, man leading funeral of terrorists killed in Operation Sindoor? While he described the man as an ordinary Pakistani, the ID number and personal details presented by ISPR match those listed in the US Treasury Department's Office of Foreign Assets Control (OFAC) sanctions database. India cited the development as further proof of the nexus between Pakistan's state agencies and internationally sanctioned terrorist groups. A statement from India's Press Information Bureau at that time, said, 'The identity details shared by DG ISPR completely overlap with the details of Hafiz Abdur Rauf, a member of LeT's senior leadership since at least 1999 and part of the US Sanctions List.' Top officials attend funeral of slain terrorists Rauf, a close aide of 26/11 mastermind Hafiz Saeed, is also the former head of the Falah-e-Insaniat Foundation (FIF), an LeT front organisation banned in several countries. The funeral was held at the Lashkar-e-Taiba headquarters in Muridke, Punjab. Photographs and video footage show senior Pakistani police and military officials in attendance. A ceremonial wreath was sent by Punjab chief minister Maryam Nawaz, the niece of Prime Minister Shehbaz Sharif. Rauf is listed under various aliases and addresses in the OFAC database, including locations across Lahore such as 4 Lake Road, Choburji Dola Khurd, Jinnah Block, and Chamberlain Road. He held Pakistani passports CM1074131 and A7523531, issued in 2008 and expired in 2013 — details that further confirm his identity as per international records.
Business Times
02-07-2025
- Business
- Business Times
Major Chinese ports keep Iranian oil flowing despite sanctions
[SINGAPORE] Some of China's largest ports have received Iranian crude this year, supporting a multi-billion oil trade and highlighting a significant gap in US efforts to curb funds for Tehran's military and to uphold existing sanctions. From January to June, terminals in the port clusters around Qingdao, Dalian and Zhoushan – major import points that take industrial metals, agricultural and consumer goods, as well as oil – have helped China purchase almost 1.4 million barrels a day of Iranian crude, according to data analytics firm Kpler. In June alone, ports located around Qingdao received as much as 15.5 million barrels of Iranian crude, Kpler data show, equivalent to close to US$1 billion at current prices for the discounted oil, with sanctioned tankers used in different legs of the journey from the Persian Gulf to China. The same pattern was repeated elsewhere along China's eastern coast, with ports such as Dongjiakou and Lanqiao also taking Iranian cargoes. Though China does not officially recognise US sanctions and defends its right to trade with Iran, large companies with ties to international markets have typically been extremely conservative when it comes to dealing with Tehran and especially with sanctioned counterparts. They fear the prospect of getting tangled in Washington's enforcement efforts and being cut out of international markets. Earlier this year, ports in Shandong were urged by their parent company to keep sanctioned tankers away from their terminals. The continued use of large ports reflects China's pragmatic reading of mixed messages from the Trump administration, which has promised 'maximum pressure' and bombed nuclear sites, only for the US president to write days later on social media that China 'can continue to purchase oil from Iran'. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up While Washington has rolled out several rounds of restrictions on Chinese entities seen to be aiding the flows, the US Treasury Department has mainly focused its efforts on tankers and steered clear of bigger ports and refineries. To date, only one port terminal in Shandong's Dongying region has been blacklisted for receiving Iranian shipments, a move that was interpreted by traders as a deliberate signal meant to avoid collateral damage across other sectors. The resilience of the flows also reflects China's continued need for the discounted barrels, used by a vast private refining industry that has struggled with paper-thin margins as the economy cools. Officially, according to Chinese customs data, the country has not imported a single barrel of Iranian crude since mid-2022. But oil that loads at Iranian ports typically makes its way from the Persian Gulf to the waters off Malaysia or to another transfer point, where it is moved from one tanker to another at sea. US-sanctioned vessels are often used on the Iran-to-Malaysia leg of the journey, before transfers are made to other ships, often from the so-called dark fleet, for the remainder of their journey to China. BLOOMBERG
Indian Express
24-06-2025
- Business
- Indian Express
What are China's economic interests in Iran?
China, one of Iran's closest allies and the biggest buyer of its oil, has stayed on the sidelines of its conflict with Israel, urging a diplomatic solution. Beijing has long backed US-sanctioned Tehran as part of efforts to deepen its strategic and economic heft in the Middle East. In 2021, they signed a 25-year cooperation deal, though full details were never disclosed and analysts say follow-up implementation has been weak. However, Chinese investment in Iran lags what Beijing puts into other nations in the region. 'Chinese state-owned companies have largely stayed away, mostly out of fear of running afoul of US sanctions,' said Bill Figueroa, a China-Middle East expert at the University of Groningen in the Netherlands. The American Enterprise Institute estimates total Chinese investment since 2007 at just under $5 billion, while Chinese commerce ministry data shows its direct investments in Iran by the end of 2023 totalled $3.9 billion. By contrast, Beijing invested more than $8.1 billion in the United Arab Emirates between 2013-2022, and almost $15 billion in Saudi Arabia between 2007-2024, the think-tank says. China imports around 43 million barrels of oil per month from Iran – accounting for some 90% of Iran's oil exports and roughly 13.6% of China's crude purchases. Around 65% of total crude and condensate shipped through the Strait of Hormuz off Iran is destined for China, according to shipping data firm Vortexa. China National Petroleum Corp (CNPC) in 2016 signed a $4.8 billion deal with France's Total to develop the offshore South Pars gas field in the Gulf with an Iranian state firm. CNPC's stake of 30% was worth around $600 million. However, the state-owned petroleum giant pulled out of the project due to US pressure in 2019. CNPC also signed a deal in 2009 to develop the North Azadegan oil field, with the first phase valued at about $2 billion. The first cargo of 2 million barrels was shipped to China in 2016. China's biggest refiner Sinopec signed a $2 billion deal to develop the Yadavaran oil field in 2007. In 2017, Sinopec signed a contract worth about $2.1 billion to upgrade a refinery in Abadan near the Gulf coast. It remains under construction. In 2024, China's LDK Solar reached a deal with Iran's Ghadir Investment Group for a large-scale photovoltaic power plant with investment of around 1 billion euros ($1.16 billion). It was expected to generate 2 billion kilowatt-hours of solar power annually. In 2018, China National Machinery Industry Corporation signed a 5.3 billion yuan ($738 million) deal to expand and renovate a railway connecting Tehran with the cites of Hamedan and Sanandaj to improve connectivity in west Iran. Also that year, a subsidiary of China Railway Construction Corporation signed a contract worth 3.5 billion yuan for the 263 km Kermanshah-Khosravi railway project in west Iran, with a construction period of 48 months. China's Norinco International signed an agreement in 2018 to build the first tramway line in the Iranian city of Qazvin, at about $150 million. In 2017, China Eximbank and an Iranian state bank signed a $1.5 billion deal to upgrade and electrify a 926 km railway between Tehran and the eastern city of Mashhad as part of Beijing's Belt and Road Initiative. However, the project has stalled over financing negotiations. In 2017, China's Metallurgical Corporation (MCC) invested around $350 million in the Sepid Dasht steel plant and won a design contract for a pelletising project. However, local media reported that the projects were delayed by financing issues. ($1 = 7.1783 Chinese yuan renminbi) ($1 = 0.8623 euros)
