India’s Defence Tech Moment

JANUS VIEW

As Trump Pushes NATO On Defence, India Must Rethink Strategy

Aside from the conflict between Iran and Israel, and the US dollar weakened against major currencies, thanks to Trump’s criticism of US Fed chairman Jerome Powell, a major Trump effect played out at the NATO summit in the Hague. He has ‘persuaded’ NATO members to commit to raise defence spending to 5% of GDP by 2035, with some grumblers protesting, in return for reaffirming the NATO commitment to the Three Musketeers’ motto, all for one and one for all, contained in Article 5 of the treaty, which obliges the alliance to treat an attack on any member as an attack on the rest as well.

This does not just mean added business for the world’s arms makers. It could mean smaller outlays for welfare and industrial policy subsidies, possibly in tandem with higher taxes, to raise resources to step up defence outlays.

Most NATO members fail to meet the existing defence spending commitment of 2% of GDP. The impact of such a resource crunch and re-orientation of domestic tax and spending priorities would not stay limited within the borders of NATO member states.

The European Union is likely to grow even more inflexible on imposing carbon taxes on domestic production and on the carbon border adjustment mechanism (C-BAM) levy on imports, to neutralise the effect of carbon taxes on domestic producers when they confront imports from countries without carbon taxes.

What Does This Mean For India?

India is the world’s largest importer of defence equipment. The forthcoming European race to rearm itself would push up the prices of all kinds of cutting-edge defence equipment, and India would stare at higher prices.

There is no point in buying more handguns, on the grounds that they are more affordable, when you are confronted with rapid-fire machine guns. This, obviously, is a challenge.

However, it is also an opportunity for India to step up its indigenous defence production.

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CORE NUMBER

5.2 million metric tons

That’s how much rice India has allocated for ethanol production in 2024–25, a record quantity amid a surplus that’s pressuring storage capacity, Reuters reported.

🧪 Why this matters:
India’s Food Corporation (FCI) is tapping excess rice—59.5 million metric tons, vs a target of just 13.5 million—as sugarcane supplies fall short and the country pushes for a 20% ethanol blending target in petrol. Last month, ethanol blending in petrol hit 19.8%.

🚜 The bigger picture:
In the previous year, less than 3,000 tons of FCI rice went into ethanol. The surge in use marks a strategic pivot to manage record harvests and avoid gluts.

Black Box Recovery. The Aircraft Accident Investigation Bureau (AAIB) has begun analysing black box data from Air India Flight AI171 that crashed in Ahmedabad on June 12, the Civil Aviation Minister said. Following International Civil Aviation Organisation protocols, AAIB launched a formal probe with support from US National Transportation Safety Board experts.

Fast Facts: The Cockpit Voice Recorder was recovered from a rooftop on June 13, while the Flight Data Recorder was retrieved from the debris on June 16. Both devices were transported to Delhi under heavy security via Indian Air Force aircraft on June 24. That evening, the AAIB and NTSB teams began the data extraction process. On June 25, the memory module from the front black box was successfully accessed and downloaded at the AAIB lab in Delhi.

What’s Next? With analysis now underway, investigators aim to reconstruct the sequence of events that led to the crash. The findings are expected to inform policy-level changes and enhance India’s aviation safety framework.

Tariff Trouble Brews: Trade talks between India and the US have hit a roadblock, Reuters reports, with disagreements over import duties on steel, auto parts, and farm goods. India wants the proposed 26% reciprocal tariff —set to kick in on July 9 — rolled back.

Catch Up Quick: The US is demanding deeper cuts on Indian tariffs for items like corn, soybeans, cars, and alcohol. India has resisted, citing policy space and long-term interests.

The Backdrop: PM Narendra Modi and President Trump had agreed in February to conclude phase one of a trade pact by autumn and expand bilateral trade to $500 billion by 2030.

Panasonic Downsizes. The Japanese company Panasonic won’t be selling its refrigerators and washing machines in India, according to an Economic Times report, as those products weren’t able to capture a meaningful market share in the country. The company will shut its Jhajjar production plant in Haryana and will also lay off workers. 

Pivot: Panasonic’s move is part of a global trend of legacy electronics firms narrowing their portfolios to prioritise high-growth areas. A company spokesperson told Moneycontrol that Panasonic will instead focus on home automation, heating, ventilation, cooling (ACs) and B2B products. 

Impact: After this news came out, the shares of Whirlpool and Voltas, Panasonic’s competitors, rose by 5 and 2% respectively.

What’s Holding Housing Back? India’s housing market experienced a sharp shift in sentiment in Q2 2025, with war jitters (Operation Sindoor, Iran-Israel) and relentless price hikes prompting buyers to adopt a wait-and-watch approach. Sales dipped 20% YoY across the top seven Indian cities.

By the Numbers: According to an Anarock report, approx. 96,285 units were sold, with the Mumbai Metropolitan Region and Pune contributing nearly 48%. Chennai was the only city to post YoY sales growth. New launches dropped 16% YoY to 98,625 units, though the National Capital Region saw a 69% QoQ spike.

What’s Next? With repo rate cuts and easing tensions, recovery may be ahead, but price stability remains key to revival. All eyes are now on how much further developers can push before affordability hits a wall with prices up 11% YoY and unsold inventory inching up.

THE SIGNAL DAILY

Luxury On A Budget: Why Young Indian Women Love Minis

India’s beauty market is huge – the country has the sixth largest market in the world. But, our per capita spending on beauty products is still low: only about 15 dollars. That’s 1200 rupees. For context, in the US, per capita spending on beauty is 335 dollars and the global average for this figure is 72 USD.

That’s also one reason why ‘minis’ of beauty products are particularly popular in India. In the West, people use minis as samples or as travel packs. With more luxury brands like Rare Beauty, Laneige and Innisfree coming to India, Indian consumers prefer to buy minis of these luxury products.

In the latest episode of The Signal Daily, we’ll hear from Indian consumers and learn about why they love buying minis of luxury beauty products. What does that say about aspiration, affordability, and identity among Indian women today?

The Core producers The Signal Daily. Follow us wherever you get your favourite podcasts. 

PODCAST

On Episode 617 of The Core Report, financial journalist Govindraj Ethiraj talks to Rishi Agrawal, CEO and Co-Founder of Teamlease Regtech.

• The stock markets see 1,000 point jump

• Bank stocks in vogue as HDFC Bank hits an all time high

• Sales of houses drop 20% on year in top 7 cities

• How running a solar power plant, a sector favoured by Government, can still mean 2,735 total compliance instances in a year

• Japan pushes back on the US trade deal, Spain offers an option for US bound students

• Black box analysis begins and so does the flow of communication

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas