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Floods Wreck, Tariffs Bite

Floods Wreck, Tariffs Bite

August 29, 2025 • Estimated Reading Time: 13 minutes

Good Morning. India can’t seem to catch a break. The Trump tariffs, which everyone had hoped would be waived, came well and truly into effect. Exporters are panicking, while the government is promising to find new markets for them. Several industries are under threat. Floods and rains wreak havoc in the northern part of India, and artificial intelligence is doing all sorts of new things.

In other news, questions loom over whether Indian refiners will increase or decrease buying Russian oil. Meanwhile, the Maharashtra government wants you to spend more time at work (potentially).

Floods, Tariffs, AI: India’s Perfect Storm Of Disruption

India frets over the consequences of the 50% tariff wall blocking most traditional Indian exports to the US. President Donald Trump continues his assault on the independence of the US central bank, the Fed.

Artificial intelligence (AI) makes news around the world, some good, some bad. Amidst all this, an elephant in the room receives little attention, even as it demolishes hills, lives and built infrastructure.

Heavy rains are wreaking havoc in North India, delivering landslides, death and destruction in Jammu and Kashmir and Uttarakhand, flooding Punjab and Uttar Pradesh, not to speak of large swathes of Pakistan. India has warned Pakistan that flood waters would be coming its way down the West-flowing tributaries of the Indus.

Tariff Consequences

India’s pharma exports are exempt, for the time being, from the Trump tariffs. So are iPhone exports to the US, thanks to fleetfooted flattery of the US president by Apple CEO Tim Cook.

Gems and jewellery exports would suffer less than textiles, seafood and engineering goods, as there are few viable alternatives to India’s low-cost diamond polishers. China, Vietnam and Bangladesh are likely to gain market share in the US at India’s expense in the case of garments. If the effective ban on Indian garment exports to the US stays in place, regaining market share would be hard.

There is considerable disappointment among exporters over the government’s failure to block the tariff threat. The government promises to help garment and other exporters find alternative markets for their blocked exports to the US.

Stoking Controversy

It has also brought in the 130th Constitution amendment bill, which seeks to remove/disqualify ministers who are arrested and kept in jail for 30 days, after being charged with offences that invite a jail term of at least five years.

Cynics like the present author would argue that the bill has been introduced to create a controversy, to engage people, in case those in the export business need something to take their minds off the pain of having their livelihoods blocked, along with their exports.

The Prime Minister had promised to stand like a rock in front of Indian farmers, to defend them from the Trump tariff onslaught. Standing in front protects only against a frontal attack. The government has exempted cotton imports from all import duty, so as to lower costs for garment exporters. Cotton farmers feel as if the roof has fallen in on their heads, even as their sides are defended.

Also this week — Modi gave a new definition to Swadeshi, and Trump continued to give a pass to China, which is a bigger buyer of Russian oil and coal. With the help of AI, researchers at the Massachusetts Institute of Technology have engineered two entirely new chemicals as candidate antibiotics against some superbugs. China has launched a mission to integrate AI into its production base. It is called AI + Manufacture.

Will AI render humans useless?

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CORE NUMBER

$12.50 billion

This is how much (in value) India’s polished diamond industry is projected to shrink to this fiscal year — down nearly 30% from $16 billion last year — after the US imposed 50% tariffs on imports, according to a recent Crisil Rating report.

The Backstory: Revenues had already slid 40% over the past three years as US and Chinese demand weakened and lab-grown diamonds grabbed 60% market share by volume. Margins, already thin, are expected to drop another 50-100 bps to just 3.5-4%.

What the experts say:

“Revenues for the domestic industry, which polishes about 95% of the world’s diamonds, are set to drop to their lowest since 2007,” said Rahul Guha, senior director at Crisil Ratings.
Himank Sharma, director at Crisil Ratings, added that while low debt has kept capital structures stable, “declining scale of operations and pressure on profitability will likely test their credit risk profiles.”

Zoom Out: India's exports drive 80% of its revenues. The US, once contributing 35% of exports, has already slipped to 24% this fiscal year after earlier tariffs. The UAE has doubled its share to 20%, emerging as a key hub. Still, with lab-grown diamonds now 60% of the US market by volume, recovery looks uncertain.

FROM THE PERIPHERY

Will We Or Won’t We?

India’s buying of Russian crude has been the talk of the town (rather the planet) in the last few weeks, as the US has imposed an additional 25% tariff that affects many of India’s industries. Yet, there is no official word on what India’s policy will be on buying Russian oil, something set to cost the country a lot in terms of tariffs and lost business. And the headlines surrounding it are even more confusing.

Overview: Reuters has been consistently reporting that Indian refiners will continue, and have continued to buy Russian crude despite several warnings from the US. Donald Trump and several other officials in Washington have called it “unacceptable” and even called the Russia-Ukraine war “Modi’s war”. On Thursday, an exclusive Reuters report said that India’s buying of Russian oil will increase in September. Last week, the news agency had reported that India’s government-run refiners — Indian Oil and Bharat Petroleum — bought Russian oil for September and October delivery. On the contrary, Bloomberg has been reporting that refiners like Reliance Industries (which is also caught in tariff crosshairs) will only trim their purchases from 1.8 million barrels a day to 1.4 million-to-1.6 million barrels a day.

Backdrop: India is among the largest buyers of Russian crude in the world. India took advantage of the discounts as Western countries stopped buying from Russia amid sanctions.

China-India Thaw Continues

Xu Fiehong, the Chinese ambassador to India, said last week that China “firmly stands with India” against Trump’s tariff barrage and called the US a “bully” for imposing steep duties of 50% on Indian exports. A Bloomberg story also found that in March, Xi Jinping sent a letter to Indian President Droupadi Murmu, signalling Beijing’s willingness to improve relations with New Delhi.

The Backstory: The China-India relationship broke down in 2020, after deadly border clashes, but the two have been patching up recently. This comes at a time when the US-India relationship is deeply strained–a trade deal between the two was underway, but US President Trump imposed steep duties instead.

Future: Last month, Indian foreign minister S Jaishankar visited China and discussed borders and China’s rare earth curb with his Chinese counterpart. Indian PM Modi is set to go to China in a few days to attend the 2025 Tianjin Shanghai Cooperation Organisation (SCO) summit too.

First Challenge to Online Gaming Ban

A gaming company, A23, filed a complaint against the government for its recent ban on real-money online games. The legal filing, which isn’t publicly but which Reuters accessed, says that the new law is a “product of state paternalism” and asked the court to declare it as unconstitutional.

Fast Facts: Specifically, the filing criticised the government’s decision to ban even games of skill, like rummy and poker, which according to A23, will result in many gaming companies closing shop overnight. This law came as a surprise to many companies and their venture capital backers, as the industry was on track to be worth $3.6 billion by 2029.

The Scoop: A government source toldBusiness Standard. That 450 million Indians lose 20,000 crore rupees each year to such games. They added that while the government has tried the regulation path, this ban was essential since these games were impacting people’s mental health to the point of pushing them toward self-harm.

PODCASTS

India’s Real Money Gaming Ban and What Comes Next

On August 22, the Indian Parliament passed the 'Promotion and Regulation of Online Gaming Bill'. After getting the President's assent, it became law. This law bans all real-money gaming, skill and chance-based.

While many support this bill, there’s dissenting voices too. People say that lawmakers passed it too quickly and didn’t invite public opinion. The government says that real money gaming is dangerous to India’s youth – in his Lok Sabha speech, Minister Ashwini Vaishnaw said that each year, 450 million Indians lose 10,000 crore rupees to these games.

But, who do gamers and psychologists think?

In the latest episode of The Signal Daily, we’ll hear from two such consumers, as well as psychologists and an IT expert. What is the human cost of gaming?