The world this week | India, Japan boost ties; Trump accused of sabotaging relations with Delhi; Israel declares Gaza ‘dangerous combat zone’

As the steep 50 per cent tariff strains India-US relations, New Delhi has shifted its diplomatic focus to other countries, including Japan and China. On Friday, India and Japan announced a significant boost in economic cooperation and agreed to raise the Japanese investment target in India to 10 trillion yen ($67.9 billion), with special emphasis on small and medium enterprises and startups. 

This comes amid concerns in India that US tariffs may hit its Micro, Small and Medium Enterprises (MSMEs) sector in the coming days. Prime Minister Narendra Modi, who was in Japan (August 29-30) for the 15th India-Japan Annual Summit, said the two countries also agreed to launch initiatives on economic security cooperation, and expand collaboration in digital partnership, artificial intelligence, high-speed rail, and other technologies. 

After bilateral talks with his Japanese counterpart, Shigeru Ishiba, Modi also said India and Japan will exchange about 5 lakh people in the next 5 years, including 50,000 skilled professionals from India.

Alongside the economic partnership, Modi underlined the significance of green partnership and called the joint credit mechanism between the two countries a big win for energy. He said the countries are also launching the sustainable fuels initiative and the battery supply chain partnership. 

Besides, the two leaders pledged to boost defence cooperation in the Indo-Pacific over the next decade, as they have common interests in defence and maritime security. China’s assertive behaviour prompted enhanced India-Japan collaboration in the Indo-Pacific region, including the South China Sea, as the two nations share the vision of a free, open and rules-based Indo-Pacific. Japan and India are members of the Quad grouping along with the US and Australia.

India and Japan also agreed on an annual dialogue of their National Security Advisors who will take a comprehensive stock of the security situations facing India and Japan.

Beyond all this, the India-Japan ties are also rooted in deeper, cultural and spiritual bonds. Japanese Prime Minister Ishiba traced the long-shared relationship to the 6th century and said, “Our relationship dates back to the 6th century, when Buddhism was introduced to Japan. We have a long shared relationship culturally and spiritually, we are able to influence each other.”

Prime Minister Modi was also presented with a Daruma doll, an iconic cultural symbol of Japan.

Centre backs exporters hit by 50% US tariff

In the meantime, the 50 per cent US tariff came into effect on Wednesday (August 27), sparking concerns among Indian exporters. However, New Delhi has refused to yield to the “unjustified” oil penalty and is instead evaluating measures to support exporters facing the brunt of the new tariff, which could impact 55 per cent of the $87 billion in exports to the US. 

In a related development, a US appeals court on Friday (Aug 29) ruled that a majority of Trump’s tariffs derived from powers under the International Emergency Economic Powers Act (IEEPA) are illegal. However, the court said that the tariffs will continue to remain in place until October 14, giving the Trump administration a window to appeal to the US Supreme Court.

The Indian exporting community says that the additional 25 per cent tariffs over and above the reciprocal tariffs of 25 per cent will cause liquidity crunch and strain sectors ranging from shrimps to diamonds, gold and jewellery, textiles, leather and footwear. It will also have an adverse impact on market access, competitiveness, and even employment generation. 

Textiles and apparel manufacturers in Tirupur, Noida, and Surat have already halted production amid worsening cost competitiveness and uncertainties over flow of fresh orders, while the employment sector is expected to be affected disproportionately because of the labour-intensiveness of India’s export basket to the US.

But the government has reassured exporters that it stands firmly behind them. In view of the concerns over job losses in the textile industry, it has extended the exemption of 11 per cent import duty on cotton till December 31. Notably, the cotton value chain provides direct employment to nearly 35 million people and contributes around 80 per cent to India’s total textile exports.

The government is also considering measures to address the liquidity crunch and extend a relief package. At the same time, India has refused to yield to the mounting pressure and has rather remained firm on its stance – talks on the trade deal with the US may resume only after the additional 25 per cent oil penalty is addressed; it will continue to buy oil from wherever it gets the best deal, including Russia. 

Although the US remains unjustifiably fixated on India’s import of Russian oil, the impact of US tariffs has also made the need to diversify markets for Indian exports startlingly clear. As of 2024, the US accounted for around 18 per cent of India’s total exports, a rise from 15 per cent in 2017.

In this context, analysts draw attention to countries in Africa, Latin America and South East Asia, with some deliberating whether the possibility of entering a global trade alliance has its merits. And the Japan-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP is seen as the most obvious possibility, where China is not yet in.

Democrats accuse Trump of ‘sabotaging’ India-US ties

All the while, Peter Navarro, trade advisor to President Donald Trump, described the Russia-Ukraine war as “Modi’s war”, and said “the road to peace runs, at least partly, right through New Delhi”. He even criticised India over its moves to repair ties with China.

Interestingly, Navarro’s remarks fell flat as Democrats on the United States House Foreign Affairs Committee hit out at Trump for “singling out India with tariffs, hurting Americans and sabotaging the US-India relationship in the process”. 

They also reiterated the fact that China, one of the largest importers of Russian oil, faces no similar penalty, and added, “it’s not about Ukraine”.

Even Chinese ambassador to India, Xu Feihong, has reportedly said that Beijing firmly opposes the 50 per cent US tariff. India-China ties of late have gathered momentum. Prime Minister Narendra Modi will be in Tianjin, China to attend the 2025 Shanghai Cooperation Organisation (SCO) Summit (August 31-September 1), and meet Chinese President Xi Jinping to build closer ties between the two countries.

However, experts like Udit Misra argue that choosing China over the US may be akin to jumping out of the frying pan into the fire if protecting domestic producers is the central goal of Indian policymakers. Compared to a trade surplus of over $40 billion with the US, India suffers a trade deficit of nearly $100 billion against China, which also has a far stronger manufacturing base. 

Ahead of his meeting with Xi, Modi said “India is ready to advance bilateral relations from a strategic and long-term perspective on the basis of mutual respect, mutual interest and mutual sensitivity…” He added, a stable relation between India and China is also crucial for a multi-polar Asia and a multi-polar world”.

On the sidelines of the SCO Summit, Prime Minister Modi will also meet Russian President Vladimir Putin, who is slated to visit India in December this year.

Gaza dangerous combat zone

Beyond SCO Summit, developments in West Asia also drew global attention this week, as Israel has declared Gaza City a “dangerous combat zone” and intensified its attack on the coastal enclave, killing more than 20 across Gaza on Saturday, alongside the 10 deaths “due to famine and malnutrition”. 

At the same time, the US has barred Palestinian Authority President Mahmoud Abbas from attending the UN General Assembly session in New York next month, where some of its allies are set to recognise Palestine as a state.

The US’s decision invoked reactions from countries like France, saying there should be no restrictions on access to next month’s UN General Assembly meeting, a concern echoed by others, too, Al Jazeera reported.

Under an agreement as host of the United Nations in New York, the US is not supposed to refuse visas for officials heading to the world body.

All the while, Israel continues its heavy bombardment in Gaza City, as the UN’s agency for Palestinian refugees warned that it could re-displace one million people. Since October 7 attacks, Israel has killed at least 63,025 people and wounded 159,490 in its war on Gaza. 

Gaza’s Health Ministry has recorded the total number of hunger-related deaths since the war began in Gaza as 332, including 124 children. A total of 54 hunger-related deaths, including those of nine children, have been recorded since a global hunger monitor confirmed famine earlier this month.

Israeli Finance Minister Bezalel Smotrich has also called for phased annexation of the Gaza Strip if Hamas refuses to disarm, Al Jazeera reported.  

In the meantime, European nations grapple with their differences over imposing sanctions on Israel, with Germany, Austria, Italy and Hungary arguing that this is not the time to do it, and Spain, Ireland, some Baltic states, and Scandinavian nations asserting that now is the time to impose sanctions and to recognise Palestine.

At the same time, France, Germany and the UK move to reimpose United Nations sanctions on Iran over its nuclear programme, further isolating Tehran and squeezing its reeling economy. 

The process, termed a “snapback” by the diplomats who negotiated it into Iran’s 2015 nuclear deal with world powers, was designed to be veto-proof at the U.N. and could take effect in a month.

The sanctions would again freeze Iranian assets abroad, halt arms deals with Tehran and penalize any development of Iran’s ballistic missile programme, among other measures, The Associated Press reported. 

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