India looks for ‘low-hanging fruit’ in high stakes US trade talks

Good morning. The monsoon rains are soaking Delhi, the Air Quality Index has dipped well below 100 to breathable levels, and India’s MPs are due to convene for Monsoon Session next week. I’m stepping in for Veena this week, and boy do I have big shoes to fill. (Actually, Veena’s shoes are petite and stylish, so please delete that mental image!)

This week, my team is digging deeper into what Saturday’s report on the tragic Air India crash means for the carrier and its owner Tata. But first, a few words on one of our top running news stories: trade.

Deal or no deal for India with Trump?

India’s trade negotiators are back in Washington in pursuit of a framework deal ahead of Donald Trump’s new August 1 deadline. In recent days, the US president has not shied away from pulling the tariff trigger, targeting America’s three biggest trading partners — the EU, Canada and Mexico.

What might make India different from US neighbours and allies, however, is the two countries’ fast-expanding ties in defence, technology and trade — areas of co-operation which both countries see as a hedge against China. Speaking in Jaipur in April, Vice-President JD Vance fulsomely declared that “the future of the 21st century is going to be determined by the strength of the US-India partnership”.

As Delhi’s ink-stained economics reporter wretches (including yours truly) try to game out what’s next, the question is whether India will prove “special” enough to avoid the looming 26 per cent US levy. According to people briefed on the talks, New Delhi and Washington are arguing over what finance minister Nirmala Sitharaman calls “red lines”: mostly, opening up its protected, politically sensitive grain and dairy markets to US exporters.

In the closed-door trade talks, the Indian delegation has almost certainly pressed the point that any significant climbdown on farming would be politically precarious for Narendra Modi, who Trump has described as a “great friend”. If there’s no deal soon, the August 1 endgame will unfold when parliament is in session, giving opposition politicians like Rahul Gandhi an easy talking point.  

“I think there’s going to be an early harvest ‘lite’ deal because the stakes are quite high for India,” says Biswajit Dhar, a trade economist. He is betting that the two sides will pluck “low-hanging fruits”, with India opening up to more US manufactured goods such as automobiles and minor farm commodities like nuts. 

To avoid backlash from farmers on both sides, many details may be left deliberately murky, as my colleague Anantha reported happened with Vietnam. Trump, too, needs to keep American farmers happy, with many of them also voters in Republican states. After upending world markets, he will also be eager to present Maga supporters with a big export market he can claim to have “opened up”. India would comfortably fill the bill.

Will India and the US strike a preliminary trade deal? Hit reply or email me at indiabrief@ft.com

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4. Jane Street has deposited more than $560mn in a step to lift India’s trading ban.

5. Trump’s Maga base is split over his administration’s handling of files relating to the late paedophile Jeffrey Epstein.

A slanging match over numbers

Is Narendra Modi’s government massaging data to make India look good? As we like to joke in my profession, two is a trend, and for the second time in two months, his officials have been criticised for making flawed but self-flattering statistical claims.

In May BVR Subrahmanyam, who leads the government think-tank Niti Aayog, declared that India was the fourth-largest economy, a position held by Japan. Indian reporters and fact-checkers pointed out that his claim was based on forward-looking projections for the fiscal year ending in March 2026. While India’s economy will almost certainly overtake Japan’s in size in the coming years (maybe even this year!), it has not yet done so.

Then this month, the government’s Press Information Bureau appeared to double down on Subrahmanyam’s assertion and went on to say that India was “one of the most equal societies today”. Citing a World Bank report on poverty published in May, the agency said India’s Gini Index — a widely quoted measure of inequality — made it “the fourth most equal country in the world”. This time, the opposition National Congress pounced on the claim, accusing the PIB of focusing on consumption-based measures of inequality rather than income-based ones, which are more commonly used to gauge inequality.

The World Bank responded in comments to local media that while there was “corroborating evidence that household welfare has improved since 2011”, about 5 per cent of India’s population — more than 70mn people — still live in extreme poverty. Some observers noted that leftist economist Thomas Piketty’s World Inequality Lab had last year reported a rise in top-end inequality in India, with the share of the country’s top 1 per cent of total income “among the very highest in the world”. In response, a senior government official told me the lab’s figures were “voodoo numbers” and said the World Bank figures were more credible than “Pikettian propaganda”.

As my team have reported, how data is interpreted and used in India can be both controversial and politically freighted. But while it is self-evident that Modi government opponents should criticise it, if there’s any weight to their cavils, there’s an impact for business too: Banks, rating agencies and consumer goods companies need to understand the India they are transacting with.

Go figure

Ukraine has for the first time replaced India as the world’s largest importer of arms in the first half of this decade, according to the Stockholm-based group SIPRI. India’s old friend Russia still accounted for 36 per cent of its total imports in 2020-24, followed by France with 33 per cent and Israel with a 13 per cent share.

My mantra

“I find productivity is high on days that start productively. The early morning meeting routine that has been part of my work life for the past 25 years now prepares me well for the day. I also find setting daily and weekly goals helps me avoid distractions. I believe healthy work-life balance and physical wellbeing are critical to maintain focus and high energy levels.”

Ashish Gupta, chief investment officer, Axis Mutual Fund

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

Some of Britain’s politicians and chief executives have been showing their vulnerable side recently. Should leaders show their emotions at work, or keep them bottled up? Let us know in the poll below.

Buzzer round

On Friday, we asked: If you go to Paris this summer, what are you free to do that you weren’t legally allowed to for the past 100 years?

The answer is . . . take a dip in the Seine.

Ram Teja was the first to write in with the correct answer, followed by Aniruddha Dutta, Sushant Jain and Ranjan Kumar Sinha.

Congratulations!

Thank you for reading. India Business Briefing is edited by Tee Zhuo. Please send feedback, suggestions (and gossip) to indiabrief@ft.com.