Good morning. The Brics meeting is this week, and both Prime Minister Narendra Modi and finance minister Nirmala Sitharaman are expected to travel to Brazil for it. Neither Russia’s Vladimir Putin nor China’s Xi Jinping are making an appearance. Is the grouping still relevant? Tell me what you think.
In today’s newsletter, I’ll talk about how India has been buying more US oil to balance its trade with the US. In New Delhi, expectations are that an interim agreement will be signed before Trump’s 26 per cent reciprocal tariffs kick in next Wednesday — we’ll have an update on this by the end of the week. Will there be a third consecutive edition of this newsletter devoted to the trade deal? Odds are high! (Don’t come at me. It’s Trump’s world, we just live in it.)
Oiling the deal’s wheels
India has more than doubled its oil imports from the US this year, partly to improve how its trade balance looks as it tries to negotiate a trade deal with Donald Trump.
Official data shows India has cut crude imports from Russia, Saudi Arabia and Iraq by more than 70 per cent in the first four months of the year, while increasing supplies from the US by nearly 120 per cent. There was an uptick in procurement from both Russia and the US for May, as the government tried to insulate domestic petrol prices from the Middle East conflict. The country’s demand for oil has followed an upward trajectory over the past few years, and with limited domestic production, this means an increasing dependence on imports.
Russia remains India’s biggest source of oil. After Vladimir Putin’s full-scale invasion of Ukraine, India shifted a large chunk of its oil procurement from the Middle East to Russia, which was selling at lower prices due to western sanctions. But what seemed like a good deal then could now prove a liability. The US Senate is considering a bill which would impose 500 per cent tariffs on countries that buy Russian oil. The Republican senator backing the bill, Lindsey Graham, has specifically called out India and China as the main targets of the proposed legislation.
At the same time, New Delhi is trying to wrap up an interim trade agreement with Washington by the end of the week to avoid paying Trump’s 26 per cent levy on exports. During these negotiations, India has been trying to shift the narrative in two ways. First, the government has pushed back at Trump’s description of India as a “tariff king”, by proactively dropping duties on several categories of goods in the past six months. This newsletter covered the early deal sweeteners: the elimination of the “Google tax” and a tax cut that benefited American bike brand Harley-Davidson. Second, India is trying to reset the trade balance with the US, so that Trump does not use America’s trade deficit with India as a reason to impose higher duties. In the last fiscal year, India had a trade surplus of $45bn with the US.
With the continued use of trade as a geopolitical weapon, India has to do a balancing act of what is best for its economy versus what is best for its foreign policy and national security. Increasing the share of American oil is a good way to appease a pugnacious Trump administration. Diversifying our sources of energy is also useful in the current climate of global uncertainty. We will know more about the contours of the trade deal with the US towards the end of the week. For now, fingers crossed.
Has India got its strategy right in the trade negotiations with the US? Tell me what you think. Hit reply or email me at indiabrief@ft.com
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Blood work
Beyond books or groceries, you can now even order a blood test on Amazon. Last week, the company announced its foray into the diagnostics business, promising sample collection in less than an hour in six Indian cities through a tie-up with Orange Health Labs. Earlier, Amazon India had launched delivery services for medicines, as well as Amazon Clinic, a service that helps users book online clinical consultations with doctors. The launch of the diagnostics arm rounds up the company’s healthcare offerings in India.
In the stock market, shares of listed diagnostic companies — Dr Lal Pathlabs, Thyrocare Technologies and Metropolis Healthcare among others — shed more than 4 per cent after the announcement last week, with analysts concerned that Amazon’s deep pockets would fund a price war in the sector. Even though 85 per cent of medical diagnostics in India is done by local labs providing tests to people living in a small radius, the number and share of large corporations has increased substantially.
With Covid, home-based sample collection became an accepted route for consumers, and according to analyst reports diagnostics companies have been growing 12-14 per cent every year. Also, as the percentage of the population of affluent, urban Indians grows, lifestyle diseases are more rampant. Diabetes is especially prominent, with India accounting for more than 25 per cent of cases in the world. This is a sizeable market that needs frequent blood tests. (Every day I encounter dozens of phlebotomists, with their large bags branded with the name of the lab, zipping past on their two-wheelers when I am on my morning run).
Will Amazon become a serious player in healthcare in India? The company’s clinical and medicine delivery services have so far not posed a significant threat to existing operators. But Jeff Bezos’s deep pockets mean Amazon can afford to have a much longer-term view. India is a big market for healthcare, and existing diagnostic companies have barely scratched the surface. Their coverage of even the second-tier cities is minimal and there is a lot of room to grow. India’s government-funded healthcare is abysmal and a large chunk of the population has no choice but to pay premium rates to private players, even if it makes a significant dent in their household savings. While the entry of big multinational groups will mean that existing players will have to tighten their belts and ensure higher efficiency of capital employed, for now there is space for everyone.
Go figure
We reported in India Business Briefing in May that Sajjan Jindal’s JSW was looking to acquire the India operations of Dutch paint maker AkzoNobel. That deal was announced over the weekend. Here’s a quick look.
My mantra
“I believe in embracing technology. I am not natural at technology but am leveraging it for higher productivity. Start small to conquer tech’s learning curve. Secondly, delegate smartly. Set clear goals, trust your team and free yourself for strategic work. Thirdly, it’s important to set boundaries that define non-negotiable limits, but allow creativity to thrive within them. And finally and most important for me is to tell the truth. It builds trust with honest communication, even in tough moments and rough courses.”
Nilesh Shah, managing director, Kotak Mahindra AMC
Each week, we invite a successful business leader to tell us their mantra for work and life. Want to know what your boss is thinking? Nominate them by replying to indiabrief@ft.com
Quick question
Do you think Zohran Mamdani’s success will inspire more young people to join politics? Let us know below.
(Additional question — Will they be more socialist than capitalist? Hit reply or write to me at indiabrief@ft.com)
Buzzer round
On Friday, we asked: Which person of Indian origin, who graduated from Harvard with a degree in visual and environmental studies, was in the news this week for her son’s success?
The answer is, of course, filmmaker Mira Nair, whose son Zohran Mamdani won the New York democratic primary.
Ram Teja was the first to write in with the correct answer, followed by Agasthya Vivek and Aniruddha Dutta. Bala, P V Kannan and Juzar Motiwalla were all rather quick too.
Congratulations!
We have been getting tremendous responses for Buzzer Round these days. Thank you all for participating!
Thank you for reading. India Business Briefing is edited by Tee Zhuo. Please send feedback, suggestions (and gossip) to indiabrief@ft.com.
