Category: Trade

US NSA Announces Easing of Export Controls on Indian Entities, Stresses on Shared Democratic Values

Jake Sullivan acknowledged that the vision for civil nuclear cooperation, outlined two decades ago by former US president George Bush and Indian prime minister Manmohan Singh, has not yet been fully realised.

New Delhi: In his final overseas trip as National Security Advisor, Jake Sullivan announced that the Joe Biden administration will remove restrictions on Indian entities from US export control lists to enhance cooperation in the civil nuclear field between the two countries, but emphasised that the bilateral partnership can only reach full potential by adhering to shared democratic values.

Sullivan made this announcement during his visit to New Delhi on Monday, January 6, just two weeks before the administration’s transition in Washington. The change comes as president-elect Donald Trump prepares to take office for his second term on January 20.

The senior Biden administration official made a public announcement of the decision at a speech delivered at the Indian Institute of Technology, Delhi.

He acknowledged that the vision for civil nuclear cooperation, outlined two decades ago by former US president George Bush and Indian prime minister Manmohan Singh, has not yet been fully realised.

“So today, I can announce that the United States is finalising the necessary steps to remove long-standing regulations that have prevented civil nuclear cooperation between India’s leading nuclear entities and US companies,” he stated.

Sullivan also noted that the formal paperwork would be completed soon, allowing entities previously on restrictive lists in the US to be removed and for them to enter into deeper collaboration with the US, its private sector, and its scientists and technologists, in order to advance civil nuclear cooperation.

He described this as the result of “India’s open and transparent engagement with our administration over the course off four years.”

According to the Entity List, India’s Department of Atomic Energy’s Atomic Research Center (BARC), Indira Gandhi Atomic Research Center (IGCAR), and Indian Rare Earths were subject to export controls, requiring case-by-case licence approval. This also extended to non-IAEA safeguarded nuclear power plants, fuel reprocessing and enrichment facilities, heavy water production facilities, and their collocated ammonia plants.

The presence of Indian organisations on US export control lists is not the sole obstacle to attracting more US firms to develop nuclear power plants in India. The primary challenge is often identified as India’s civil nuclear liability law, which permits plant operators to seek legal recourse against suppliers in the event of an accident.

Missile export control policies

A readout of the meeting between Jake Sullivan and his Indian counterpart, Ajit Doval, noted that the announcement was part of the briefing provided by the US official. Sullivan also highlighted recent changes to US missile export control policies under the Missile Technology Control Regime, announced last month, which are expected to enhance cooperation in civilian space initiatives.

In his speech, Sullivan not only listed the achievements in US-India cooperation, but outlined a vision for its future expansion through deeper collaboration, not only in emerging critical technologies but also in shaping international regulations for strategic technological domains.

“We’ve had to navigate our fair share of turbulence, legacy relationships, tensions over trade, as well as over human rights and the rule of law at home and abroad, but we’ve navigated these issues together with our eye on the long game, and our ability to do so reflects the deep and enduring resilience between the US and India,” he said.

However, he underlined, that deepening this collaboration can only be done on the foundation of shared “values.”

“And finally, our partnership can be most effectively sustained and can actually only reach its full potential if we live up together to the values that lie at the core of our democracies, respect for the rule of law that creates the conditions for dynamic growth, respect for pluralism and tolerance that powers innovation, and the protection of basic freedoms that unleash the human spirit,” said Sullivan.

The state of ties

Over the last year, the US has been repeatedly seeking “accountability” from the Indian government over ‘murder-for hire’ charges against an Indian government agent for attempting to assassinate a US-Canadian citizen, who is the legal counsel for pro-Khalistan organisation banned by Indian home ministry. Additionally, there has also had been criticism through US state department’s annual human rights country report about deteriorating human rights situation in India, which MEA had termed as being “deeply biased.”

Before his departure, Sullivan also called on prime minister Narendra Modi who posted that bilateral ties had “scaled new heights, including in the areas of technology, defence, space, biotechnology and Artificial Intelligence.”

The official US readout is largely similar to the Indian version. It says that Sullivan briefed Doval about the efforts to finalise
necessary steps to delist Indian nuclear entities, and updated export control policies under the MTCR that could boost commercial space
cooperation.

Note: This report was updated to include details on the White House readout.

Switzerland Suspends India’s Most Favoured Nation Status in Agreement to Avoid Double Taxation

Asked for comment, the external affairs ministry said it did not have further details on the subject.

New Delhi: Switzerland’s federal finance department said on Wednesday (December 11) that it was suspending India’s ‘most favoured nation’ (MFN) status under a treaty between the two countries on avoiding double-taxation.

It made this decision as it had determined India did not reciprocate Switzerland’s understanding of the MFN clause in the treaty.

Asked about the Swiss government’s suspension of India’s MFN status, the external affairs ministry said it did not have further details on the subject.

According to the MFN clause, which was added to the 1994 treaty by an amendment in 2010, rates of taxation at source agreed to between India and a third OECD country on dividends, interest, royalties or fees for technical services that were lower than that mentioned in the 1994 treaty would apply between Switzerland and India as well.

But a September 2023 ruling by the Indian Supreme Court in which the Switzerland-based Nestle was a respondent said that a notification under Section 90(1) of the Income Tax Act would be necessary for such ‘double taxation avoidance agreements’ to be given effect.

The Swiss finance department said on Wednesday that according the apex court’s ruling, India’s MFN status would not be directly applicable without such a notification.

The court also decided, Bern noted, that the third countries with whom tax rates were agreed to would have to have been OECD countries at the time of the agreement in order for the MFN clause to apply.

“On the basis of the Indian Supreme Court ruling, the Swiss competent authority acknowledges that its interpretation of para. 5 of the Protocol [containing a mention of the third country being an OECD member] to the IN-CH DTA [the treaty] is not shared by the Indian side,” Bern said.

It added: “In the absence of reciprocity, it therefore waives its unilateral application with effect from January 1, 2025.”

Bern’s decision will raise taxation at source rates for Indian entities in Switzerland to 10%.

They had been lowered from 10% to 5% in 2021 on account of the Swiss government noting that India had inked agreements with Lithuania and Colombia of a 5% tax rate in 2011 and that the latter two countries joined the OECD in 2018 and 2020 respectively.

However, the Supreme Court ruling meant that as Lithuania and Colombia were not OECD countries when their agreements with India were made, the subsequent adjustment of tax in the Indo-Swiss agreement would not apply, the Swiss finance ministry said on Wednesday.

External affairs ministry spokesperson Randhir Jaiswal during the weekly press briefing on Friday was asked for comment on the Swiss government’s decision.

“My understanding is that with Switzerland, because of EFTA [the European Free Trade Association], the double taxation treaty that we have, it’s going to be renegotiated. So that is one aspect of it,” he said.

Jaiswal continued: “The other one is this ‘most favoured nation’. I don’t have an update on it as to the details, etc. We’ll come back to you more on that account.”

Petrapole Sees Sharp Decline in Trade as Bangladesh Unrest Continues

Petrapole, South Asia’s largest land port, is a crucial trade and passenger hub. The decline in activity has hit border-dependent livelihoods hard.

Petrapole-Benapole border (West Bengal): The usually bustling Petrapole border, a vital link between West Bengal and Bangladesh, now stands eerily quiet, mirroring the political turbulence sweeping across Bangladesh. The usual flow of people and goods has drastically slowed, disrupting lives on both sides.

“Medical visas have been on hold for two weeks,” lamented Jaliluddin, who has come to India for medical treatment. “Only those with prior visas can enter. And with no public transport on the Bangladesh side, private vehicles are charging exorbitant fees.”

Petrapole, South Asia’s largest land port, is a crucial trade and passenger hub. Nearly 30% of India-Bangladesh land-based trade flows through this border. An average of 2.2 million people cross the border post on either side each year.

The decline in activity has hit border-dependent livelihoods hard. “The economic downturn began during COVID-19 and worsened with the political unrest,” explained Shamal Roy, a porter with 40 years of work experience. “Our registered porters have halved, and daily earnings have shrunk.”

Porters are finding it difficult to earn money due to decline in activity in the Petrapole international border. Photo: Joydeep Sarkar

The unrest has strained trade at Petrapole. “Yesterday, 418 trucks carrying goods like fruits and machinery left for Bangladesh, while 179 trucks with items like hilsa and jute entered India. These figures are below normal,” said Dhritiman Pal, a local businessman. “The Bangladesh economy is under severe strain, with dollar shortages and a lack of new orders.”

Shipra Sarkar was returning to Dhaka after a short visit to relatives in Howrah. The recent spate of violence on minorities began while she was out of Bangladesh. She expressed fears of escalating unrest. “There are rumours of criminal gangs demanding money and creating unrest in our area. I’m scared to go back, but it’s my home.”

However, not everyone shares her grim outlook. Nipa, a resident of Comilla, painted a relatively calmer picture. “While there’s unrest in certain areas, our locality remains peaceful. People of all faiths coexist harmoniously, and the roads are safe,” she assured.

Despite these differing accounts, Dhaka-based businessman Rahayan Kajal criticised the Indian media’s portrayal of the situation. “The Indian media is exaggerating the news,” he said. “While attacks, extortions, and assaults on minorities have occurred in certain areas, these incidents are localised. Even the Muslim majority is not immune to the threats posed by criminal gangs who are exploiting the political instability to extort money.”

Commuters near the India-Bangladesh border in West Bengal.

With no public transport on the Bangladesh side, private vehicles are charging exorbitant fees, many commuters noted. Many people also criticised India media’s coverage of the atrocities against minorities in Bangladesh. Photo: Joydeep Sarkar

Tapan Saha, a trader from Bongaon, was returning from Dhaka after a successful business trip. He shared a similar skepticism. “Everyday life in Dhaka seemed normal to me, but videos of unrest are absent from Bangladeshi media yet circulate on the web pages of the BJP [Bharatiya Janata Party]. It’s puzzling.”

A long stretch of the historic Jessore Road, linking Kolkata to Jessore in Bangladesh, is now lined with banners and saffron flags bearing the name “Sanatan Aikya Mancha.” The flags prominently feature images of BJP leaders, including Suvendu Adhikari, who is portrayed as a “Hindu Heart Emperor,” echoing the larger-than-life persona of Narendra Modi. 

Bengali social media is awash with reports of attacks on Hindu minorities in Bangladesh, alongside a provocative image allegedly showing the Indian national flag being insulted at a premier university in the neighbouring country.

“This is a sensitive issue,” Saha noted. “While upper and middle-class Bengalis are concerned, many are oversimplifying the problem. International diplomacy is crucial for a lasting solution.”

For those dependent on the Petrapole border’s economic activity, a resolution can’t come soon enough. “Petrapole’s economy is deeply linked to Bangladesh’s stability,” said businessman Pal. “Until normalcy returns, livelihoods here remain uncertain.”

Political parties make calculated move 

As expected, with Bangladesh as the backdrop, political parties have begun to calculate their gains in their own way. Moreover, two prominent local channels are providing non-stop coverage of the issue.

Recognising the stakes, the ruling Trinamool Congress (TMC) has taken a position that some within the party describe as ‘contradictory.’ On one hand, West Bengal chief minister Mamata Banerjee has expressed her willingness to align with the Union government’s stance on foreign affairs, including the developments in Bangladesh. On the other, she has called for the deployment of a UN peacekeeping force to Bangladesh during an assembly session. There is a debate on whether peacekeeping forces can be sent this way or whether there is such an opportunity at the diplomatic level. 

Petrapole international border, West Bengal.

Petrapole international border, West Bengal. Photo: Joydeep Sarkar

This seemingly dual strategy reflects Banerjee’s calculated effort to navigate complex political dynamics – reinforcing her appeal to the Muslim minority vote in West Bengal while simultaneously signalling solidarity with Hindu minority communities across the border to address broader electoral calculations, a move that even the BJP finds difficult to outrightly dismiss. It’s no surprise that she repeatedly says, “We love everyone.”

The ruling TMC’s stance is somewhat ‘haphazard,’ according to many within the party. The party’s mouthpiece on Wednesday wrote the headline of a report as: ‘The Yunus government’s incivility continues.’

Similarly, BJP spokesperson Mohit Roy said, “This is an international issue, and India must act decisively. We don’t consider her demand unjustifiable.” 

The Communist Party of India (Marxist) (CPI(M)) has called out the TMC for “aligning” with the BJP. 

“Before the BJP-led central government addresses international issues, the TMC appears to be aligning itself with the BJP’s stance within the state. Our party consistently advocates for the protection and security of minorities in every country, but talk of peacekeepers is premature unless a war-like situation arises,” said CPI(M) leader Sujan Chakraborty. 

Also read: At Talks Between Top Diplomats, India Says it Wants ‘Mutually Beneficial’ Ties With Bangladesh

Moreover, the arrest of a monk in Bangladesh, followed by allegations of attacks on minorities and the use of their ‘vulnerability’ as a weapon, has prompted Opposition parties in West Bengal to take to the streets again. Many believe that the role of a section of the Indian media in covering the Bangladesh incidents is providing ‘oxygen’ to this.

Not only is Opposition party leader Adhikari involved, the leaders of Hindu nationalist organisations are also organising programmes. Simultaneously, social media campaigns are underway.

Translated from the Bengali original by Aparna Bhattacharya.

Trump Warns 100% Tariffs on BRICS Countries if They Try to Bring Dollar Rival

Along with India, other countries in the alliance are Brazil, China, Russia, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates.

New Delhi: The US’s next president, Donald Trump, has threatened to impose “100% tariffs” on the BRICS countries – among which is India – if they create a currency to rival the US dollar.

Tariffs are a form of tax imposed on imported goods.

Trump wrote on his social media accounts on December 1:

“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy.”

He added:

“They can go find another “sucker!” There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America.”

Among BRICS countries are China and Russia, two powers the US is wary of. At the BRICS summit in October, Russia’s Vladimir Putin had called for an alternative international payments system that could prevent the US from using the dollar as a political weapon.

Along with India, other countries in the alliance are Brazil, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates. The Guardian had noted that the move to de-dollarise the world economy unnerves some BRICS members like Brazil and India “that do not want their rapidly expanding club to become solely pro-Chinese and anti-western.”

Trump will assume office on January 20.

He had, days ago, said that he plans to impose a 25% tariff on all products from Mexico and Canada and an additional 10% tariff on goods from China, citing concerns over illegal immigration and the trade of illicit drugs. In its aftermath, Canadian prime minister Justin Trudeau is reported to have made an unscheduled trip to Trump’s Florida estate Mar-a-Lago.

Tariff promises had marked Trump’s election campaign as well and particularly targeted China.

Bali Jatra, a Tradition That Still Talks to Us From Across Time

It is rather unfortunate that a rich history of maritime trade, cultural influences, political campaigns and regional exchanges have been left to wilt in present times.

Picking up the newspaper last week, one would have noticed two seemingly disparate pieces of news.

One, about the Bali Jatra celebrations in the state of Odisha with hundreds having gathered at the banks of Mahanadi.

And two, heavy downpour in the southern state of Tamil Nadu disrupting lives particularly in the deltaic regions of Thanjavur and Nagapattinam. But in a way the simultaneity of both these events have roots that go back more than 2,000 years. They are both tied to seasonality of monsoon winds at this time of the year. The ancient seafarers of Utkala or Kalinga were familiar with these winds caressing the eastern coastline of India, a phenomenon we call the retreating monsoons bringing rain to Tamil Nadu along its path. Festivals like the Bali Jatra only serve as reminders of a rich heritage and history of transoceanic regionalism.

On the full moon day (Kartika Purnima) of October-November, people in Odisha float thousands of votive boats made of coloured paper or banana stem in the lakes, ponds, rivers and the sea with oil lamps in them to light up the streams. This much cherished festival is a rather unique celebration of their ancient sea-faring traditions that go back across two millennia. It coincides with the onset of the northeasterly winds that was harnessed by the mariners to set sail across the Bay of Bengal towards our south east Asian neighbours – Bali, Sumatra, Java, Cambodia and also present day Sri Lanka. Hence the name Bali Jatra or ‘voyage to Bali island’. 

The ritual of women offering prayers for the boat, or Boitha Bandana, for the safe journey of the sailors, or sadhabas, is reminiscent of the transoceanic spirits of ancient traders and the risks of the uncertain at a time when the only certainty were these winds. From the months of October and November as the North East Monsoons pick up steam, sailors would set sail from the ancient ports of Manikpatna or Palur along the Chilka lake, from Kalingapatnam (in Odisha) or Tamralipta (Bengal), or Tanjavur and Nagapattinam (Tamil Nadu) for distant lands. Temple art in Bhubaneswar, in fact, depicts woman steering a boat with oars signifying that these voyages were not entirely a male domain, a study finds.

Bali Jatra celebrations in Cuttack. Photo: Kamalakanta777 – Own work, CC BY-SA 3.0.

In terms of the sheer expanse and network of this trade, these boithas, in fact, had also been part of a much longer transcontinental trade route that connected the Greek and Romans with the South East Asian islands. Marine archeologist Sila Tripati recounts that the sails of these boithas largely took two alternative coast-hugging routes. Either along the peninsular coast towards Sri Lanka and then across the Nicobar islands through the strait of Malacca towards Sumatra, Java, Burma, Borneo and Bali. Or along the Bengal and Burmese coastline across Andaman Sea and finally approaching the straits.     

They carried with them horses, beads, cotton, glasses in exchange for aromatics, spices and what not. What they also carried with them was culture. Creating a rich repertoire of both Buddhist and Hindu influence across South East Asia that amalgamated with local traditions, beliefs and practices. Ancient Odisha itself was a land where cultural elements of multiple streams in India synthesised. Something that was both aided and exported by strong trading traditions. 

The rich tapestry of acculturation is evident in expressions like “Ya Shiva, Ya Buddha” in local Balinese culture meaning he who is Shiva is also Buddha. In fact, historian Patit Paban Mishra says that in the Shiva-Buddha tradition in Bali, Shiva was regarded as “the elder brother with age-old privileges and Buddha as the younger one with ascetic qualities”. The confluence of these flavours was at times quite literal. The consecrated water brought by a Saivite priest was for instance mixed with that of a Buddhist in rituals. And while the practice of a Buddhist priest was called Yoga, that of a Shaivite was called Bhakti. 

And yes, we also did export caste. But thankfully, probably due to the strong Buddhist, Shaivite, Tantric elements and more importantly strong indigenous practices rooted in their community, untouchability was not prevalent and intermarriage was not uncommon in Bali.  

The spread of Buddhism across south east Asia was facilitated by the monks who travelled along the sadhabas and the patronage of Odia kings. The fact that Buddhist tantrism has traces in Bali and the fact that we hear of both Shiva and Buddha being referred as Jagannatha in Bali again goes onto show the strength of the North Easterly winds and the adventurous mariners from Odisha they carried along.    

And once again, the return journey was aided by the annual reversal of monsoon winds which start to take the southwesterly direction from the month of May onwards. Eerily similar to the Bali Jatra, the Balinese observe the Masakapam Kepesih ceremony to mark the return. They float small boats having burning candles with the belief that the child is being sent back home to Kalinga. The seasonal return journey of the sea farers from Kalinga followed the currents of Malacca Strait into the mainstream of the west-flowing equatorial current through the 10° channel between the Andaman and Nicobar islands to reach the shores of present day Sri Lanka. And then hugging the eastern coast all the way back home with the South West monsoon winds in the boitha’s sails. The end of this seasonal return voyage is marked in September by the Khudurukuni festival in Odisha by the unmarried girls who waited for their brothers “to return with wealth and gifts from Southeast Asia”. 

If we too sail back to the present times, then we must observe that it is rather unfortunate that such rich history of maritime trade, cultural influences, political campaigns and regional exchanges have been left to wilt in present times. Despite India’s avowed Look and Act East Policy framework or the rhetoric of being the “vishwaguru (teacher of the world)” in recent years, in terms of foreign policy, we seem to have failed to find any meaningful role or presence in the South-East Asia over the years. As the monsoon winds start becoming increasingly unpredictable with climate crisis and rising sea levels, there is a need, far greater than before, to have such regional cohesion and multilateralism. 

Anirban Bhattacharya is a researcher, political commentator and historian. He writes on socio-economic issues, democratic rights and inequality.

Discrepancy in India-China Trade Data Raises Red Flags over Under-Invoicing and Misclassification

According to World Bank data, India’s imports from China stood at $99.59 billion, 18.2% lower than China’s reported exports of $117.68 billion.

New Delhi: India’s trade data with China for 2023 reveals a significant discrepancy, sparking concerns over potential anomalies such as under-invoicing and misclassification, Mint reported.

According to World Bank data, India’s imports from China stood at $99.59 billion, 18.2% lower than China’s reported exports of $117.68 billion in FY23. The data gaps are not a new phenomenon and were noted for FY22 as well and the data gap has only risen in FY23. This discrepancy has widened from 15.5% in the previous year, with India’s imports valued at $102.63 billion, significantly lower than China’s reported exports of $118.50 billion in FY22.

China remains India’s largest trading partner, with bilateral trade reaching $118.4 billion in 2023-24. However, the significant gap in trade data raises concerns over revenue losses and inaccurate trade accounting.

Experts attribute the discrepancy to various factors, including under-invoicing, misclassification, and inconsistent reporting practices, the report mentioned.

Another important characteristic of the trade data discrepancy is that while India reported lower imports  and China’s data noted higher exports for shipping goods, aircraft, textiles and clothing, iron ore, steel, base metals, medical devices, leather, paper, and glass while opposite trend was noted for imports of chemicals and pharmaceuticals, diamond, gold, and other valuable products, telecom, electronics, electrical products, and machinery and computers — India’s reported imports exceeding China’s export data, the report added. 

“While discrepancies in trade data can arise due to methodological differences, the magnitude of these gaps — particularly in textiles and clothing, iron and steel, electronics, and remaining categories — requires deeper investigation,” Ajay Srivastava, former trade service official and the founder of economic think tank Global Trade Research Initiative (GTRI) told Mint.

Bangladesh Set to Review Controversial Power Agreement With Adani Group

The interim government has decided to review all major power deals signed by the previous regime between 2009-2024.

New Delhi: Bangladesh will review the power agreement signed by ousted Prime Minister Sheikh Hasina’s government with the Adani group, its interim government announced on Sunday (November 24).

A review committee formed by the Muhammad Yunus-led interim government has recommended that an investigation agency scrutinise al the major power agreements signed by Hasina’s regime between 2009-2024, one of which is with the Adani group. 

The statement, issued by chief adviser at Yunus’s office, said the committee was currently reviewing seven major energy and power projects, including the Adani (Godda) BIFPCL 1234.4 MW coal-fired plant, a wholly-owned subsidiary of Adani Power Limited, the New Indian Express reported.

Other agreements under review include a 1320 MW coal-fired power plant run by a Chinese company and agreements with business groups considered to be close to Hasina’s government.

The committee in its statement said that it had gathered sufficient information warranting agreement to be scrapped or reconsidered in consideration with internal arbitration laws.

 “The committee needed additional time to further analyze other solicited and unsolicited contracts. In doing so, we recommend immediate appointment of one or more top-level international legal and investigation agency or agencies to assist the committee”, the statement said quoting a letter of the committee, headed by retired high court judge Moyeenul Islam Chowdhury.

Mired in controversy since its inception

Adani’s Godda thermal power plant has been at the centre of controversy since its inception. 

Experts had said that Dhaka was buying power at an exorbitant price while political parties in Bangladesh had called it an “extremely uneven deal signed with an ulterior motive”.

In 2023, the Bangladesh Power Development Board (BPD) had written to Adani Power asking for the agreement, signed in 2017, to be revised.

“In our view, the coal price they have quoted (USD400/MT) is excessive – it should be less than USD 250/MT, which is what we are paying for the imported coal at our other thermal power plants,” a BPD official had said.

The memorandum of understanding, preceding the 2017 agreement, between the Adani Group and Dhaka was signed in August 2015, shortly after Prime Minister Narendra Modi visited Bangladesh.

Opposition parties in India have questioned whether Modi was directly involved in the deal between the Adani Group and the Bangladesh government.

‘Amenable rules’

“Cooperation in the power and energy sector has become one of the hallmarks of India-Bangladesh relations,” the Union external affairs ministry had said last year.

However, in October the Adani group wrote to Bangladesh over its unpaid power supply bill amounting to $800 million. Bangladesh’s state-run Power Development Board had said they had already paid $150 million despite its dollar crisis and was expecting to pay the full amount.

In November, the supply from the Godda plant was halved with Bangladesh experience a power shortage of over 1,600 megawatts

India also recently amended rules that allowed thermal power plants set up exclusively to supply power to neigbouring countries to be able to sell it domestically in light of non-payment or delays in clearing dues. Adani’s plant is the only such plant that sells its output to a foreign market.

The move was seen by some as a protective measure for the politically connected conglomerate against political disruptions in Bangladesh.

US indictment

Last week Kenyan President William Ruto announced the immediate cancellation of all infrastructure deals with the Adani Group, including the controversial takeover of the Jomo Kenyatta International airport. The move came after the US indictment of Adani, with the US Department of Justice and the Securities and Exchange Commission (SEC) accusing him of running a “massive bribery scheme”.

Trumponomics Will Be Modi’s Trial by Fire

India will have to fend for itself by taking innovative measures like China is already doing. Time is of the essence.

On the eve of the Lok Sabha poll results, both Narendra Modi and Amit Shah gave an unprecedented call urging people to buy shares in the market on the assumption that BJP would win a decisive victory and the stock markets would be on a roll. However, after the results, the stock market crashed over 6% and Rs 31 trillion of wealth was eroded in just one day.

The markets somewhat retraced and stabilised subsequently and gained for a few months but again started wobbling after September as data on macro economy and later the quarterly results of NIFTY companies started showing significant weakness. In the midst of all this came statements from top CEOs of Nestle, HUL, Asian Paints and other consumer companies that urban consumption was weakening further as high inflation was eating into the real incomes of the middle class. All such negative news is cumulatively impacting market sentiments.

What is seriously worrying the investors is the massive, indeed precipitous, sell off by the Foreign Institutional Investors (FIIs) in the last month and a half as the Sensex has crashed 10%. A large number of individual stocks are down 20 % to 30%, which is normally defined as a bear market.

The FIIs have pulled out $15 billion in just the last one and a half months. The last time withdrawal on such a scale happened was in 2008 after the global financial meltdown when the Sensex crashed over 40%. Just for comparison, the FIIs had pulled out over $15 billion in all of 2008 but this time such a large withdrawal has happened in just seven weeks. Fortunately markets have fallen just 10% because domestic mutual funds and possibly institutional investors like LIC have supported the market. This trend has resulted in some loss of confidence as big investors who were most emphatically bullish on India have started saying China is providing more value as stocks are much cheaper there.

Suddenly, China has become the flavour of the season as a lot of FII money is incrementally moving to Chinese stocks over the past two months. This is triggered partly by China’s monetary stimulus package delivered sometime ago and another bazooka in the form of a $1.4 trillion stimulus package is expected shortly in anticipation of the Trump tariffs on China. Indeed China is very proactive in anticipating the disruption that a Trump administration may cause across the world.

According to Jehangir Aziz, economist at JP Morgan, New York , the Trump tariffs will disrupt the emerging markets equilibrium as the US dollar is likely to strengthen and this could weaken the emerging market currencies, thus affecting business sentiment and disrupting investment flows.

Also read: Growing Inequalities Maul Incumbents Across the World

Aziz says the last time Trump imposed heavy import tariffs in 2018, the Chinese immediately depreciated their currency and pivoted their exports to the Asian and Latin American markets. China may repeat that act this time too, he says. However if China depreciates its currency India and other emerging economies too will have to follow. The Indian rupee is already in decline mode, testing Rs 85 to a dollar level, even before Trump has formally taken over as president. The Trump sentiment is already gripping the world economies. Though sensible economists across the ideological spectrum in the US are cautioning Trump that higher tariffs against China and other emerging economies combined with drastic deportation of illegal immigrants will be hugely inflationary, it remains to be seen how things play out next year.

India will have to come up with a substantive policy response like China has to counter the possible negative economic impact on its inward foreign portfolio investments, exports, employment and currency after Trumponomics takes effect.

At present we hear only tentative statements from the government that for India, Trump may create new opportunities. Trump has already declared India as a big tariff offender during his poll campaign. He will bargain very hard on everything in spite of his much touted personal chemistry with Modi. Remember how in his earlier tenure he stunned India by removing the long-standing preferential exports to the US worth $4 billion under a special GSP  tariff scheme meant to aid the less developed economies. A trade negotiator told me that personal chemistry between heads of state is highly overrated in such situations.

India will have to fend for itself by taking innovative measures like China is already doing. Time is of the essence. The response to Trumponomics has to be swift. In this regard, Uday Kotak, chairman of Kotak Mahindra Bank, has coined the term ROTI (return on time invested). If you lose time you will lose economic value. Hitherto Modi has wasted a lot of time attempting big policy ideas which have not yielded the desired  results. Wrong diagnosis may also have been a reason for that.

From hereon, India will have to carefully calculate the return on time invested when it comes to responding to global economic headwinds. The current state of the stock markets is also signalling that very clearly. Modi and Shah must remember they cannot  build self-serving narratives especially when dealing with the impact of global economic headwinds.

This piece was first published on The India Cable – a premium newsletter from The Wire & Galileo Ideas – and has been updated and republished here. To subscribe to The India Cable, click here.

Imports Hit All-Time High, Widen Trade Deficit Despite 17.25% Increase in Exports

The increase in imports was largely driven by higher gold and petroleum imports.

New Delhi: India’s goods exports grew by 17.25% in October, reaching $39.2 billion, marking the fastest monthly rise in over two years. This growth follows a slow first half of the financial year, where exports increased by just 1%.

However, imports too rose by 3.9%, reaching a new high of $66.34 billion, surpassing the previous record of $64.34 billion in August. As a result, the trade deficit widened to $27.14 billion in October, up from $20.8 billion in September. This is the second-largest trade deficit this year and the third-highest ever.

The increase in imports was largely driven by higher gold and petroleum imports, The Hindu reported. Gold imports reached $7.13 billion, a slight 1.4% decline compared to October 2023 but a 62% jump from September 2024.

Petroleum imports grew by 13.3% year-on-year to $18.3 billion, a 46.4% increase from the previous month. Meanwhile, petroleum exports fell by 22.1% to $4.58 billion, continuing their downward trend.

Commerce Secretary Sunil Barthwal however pointed out that non-petroleum exports rose to an all-time high of $211.3 billion. If the trend continues, India’s total exports, including services, could exceed $800 billion for the year, he said.

“A key factor for the 17%-plus growth in exports could be improved demand for this Christmas from developed markets as firms start stocking up inventories for the festival. This demand seems far better than last year and gives us confidence that the coming months will also see a healthy uptick,” Barthwal said.

“If you look at the UNCTAD and the World Trade Organisation projections for this year, they are very pessimistic. But despite the global situation being highly volatile, growth in the Western countries slowing with some recessionary trends, and the disruptions in global trade routes, our exporters have been able to do well in several sectors,” he added.

Barthwal attributed the double-digit growth in exports of engineering goods, chemicals, electronics, rice, and labour-intensive sectors such as readymade garments and textiles to the government’s focus on specific sectors and markets, alongside supportive policies.