Daily Briefing: A handy guide to India-US trade deal

The flip-flops: India was facing the steepest US tariffs at 50%, including a 25% penalty on its purchase of Russian oil. The Americans frequently chastised India, calling it the “tariff king”, and a top Trump aide even accused India of funding Russia’s war. Ties only began to improve last month with the arrival of the new US Ambassador to India, Sergio Gor. Ravi Dutta Mishra encapsulates the rocky road to the trade deal.

The fallout: The US tariffs had significantly impacted Indian exports, which declined in September and October. Labour-intensive sectors suffered the most, facing competition from cheaper producers like Vietnam. However, this pushed Indian exporters to diversify. The Indian government also introduced reforms, including overhauling its trade policies and stepping up imports from the US.

So, what now? Well, the deal reaffirms what had become hazy before. It reiterates that the US sees India as an ally and a counterweight to China. With deals with the UK and the European Union, India now has access to a large part of the Western markets, unlike East Asian economies that have surged ahead on Chinese investments. Read Ravi Dutta Mishra and Anil Sasi’s analysis.

Experts speak: Chief Economic Advisor V Anantha Nageswaran said the deal could bring back the “China+1 strategy”, where companies diversify supply chains through investments in China and another country like India or Vietnam. Nilesh Shah, Managing Director at Kotak Mahindra Asset Management, said the deal will likely spur capital flows. Read.

On that note, let’s get into the rest of today’s edition.👇

📰 From the Front Page

‘Hot potato’: Leader of Opposition Rahul Gandhi set off political fireworks in Parliament after he made references to the unpublished memoirs of former Chief of Army Staff General M M Naravane (Retd). He was citing instances related to China’s territorial aggression, which led to a sharp reaction from ministers Rajnath Singh, Amit Shah and Kiren Rijiju. They objected to Gandhi reading from an unreleased book, invoking Rule 349(i), regarding the conduct of business in the Lok Sabha.

Gen Naravane’s memoir, titled ‘In Four Stars of Destiny’, was slated for release in January 2024, but was not published as it was under review by the Indian Army with involvement from the Defence Ministry. The book mentions Gen Naravane’s conversations with the Defence Minister Rajnath Singh during the India-China standoff. Read the excerpts here.

🎧 For more on the controversial book, tune in to today’s ‘3 Things’ podcast episode.

Safety check: One of Air India’s Boeing 787 aircraft has been grounded after a pilot flagged a possible defect with its engine fuel control switch. The pilot reported that the switch failed to remain locked in the ‘RUN’ position on two attempts and moved towards the ‘CUTOFF’ position. Notably, the engine fuel control switches have been the focus of the probe into the fatal Air India plane crash.

Exit clause: The 16th Finance Commission has flagged a sharp surge in unconditional cash transfers by state governments, particularly of BJP-ruled Maharashtra and Odisha and the Opposition-run Jharkhand. It warned that growing reliance on cash handouts could destabilise state finances, and advised that such schemes should come with a sunset clause.

📌 Must Read

Cars may soon get costlier. Vehicle manufacturers like Maruti Suzuki India and Hyundai Motor India have flagged rising input costs. Turns out, aluminium and copper have become expensive now that they are vital to artificial intelligence infrastructure. We explain.

Unfazed: 37-year-old Deepak Kumar, now known as “Mohammad Deepak”, was thrust into the limelight after he helped an elderly Muslim shopkeeper who was being harassed by a group of men. Later, members of the Bajrang Dal gathered to confront Deepak, but were restrained by the police. Deepak now faces FIRs and threats of protests, but remains resolute: “someone has to speak up”.

⏳ And Finally…

Pakistan’s boycott of the match against India in the upcoming T20 World Cup would not only leave fans without a spectacle but also result in revenue losses to the tune of $250 million for stakeholders. At the same time, it severely complicates the math for the Pakistan team, which would have already forfeited two points by refusing to play India. This means they have no room for slip-ups.

That’s all for today, folks! Until tomorrow,
Sonal Gupta