The Core
Posts
India’s Trade Crossroads

India’s Trade Crossroads

September 04, 2025 • Estimated Reading Time: 12 minutes

In partnership with

Good Morning. Donald Trump's tariffs are forcing a new world order that all countries must reckon with. Not only will India have to face the 50% tariff, but it may have some more trouble on its horizon — with transshipments. How goods are moved, relabelled and re-exported is being redefined, with new layers of scrutiny that demand more integration and transparency. Experts believe that India has one choice — evolve its supply chains and fast.

In other news, Goods and Services Tax (GST) Council on Wednesday approves new rates. Meanwhile, US trading firm Jane Street appeals against Indian markets regulator, the Securities and Exchange Board of India (SEBI).

DECODE THE NEWS

Not Just Tariffs, Transshipments May Pose Hurdles In A New World Order

What?

India might have to live with the 50% tariffs on US exports for a while, posing a big hurdle.

What’s the best way forward? The country must stop fighting them and look for other markets — this is what most international supply chain experts said at the Ashwamedh-Elara India Dialogue 2025 in Mumbai on Monday.

To add to its existing troubles, India may also face other challenges. The current global supply chain order took decades to form, and as a new order forms, it could throw up new hurdles like a redefinition of transshipments.

Currently, two types of transshipments exist — the first is when goods from another country are unloaded in a port and reloaded for the destination. This is a regular practice, which does not pose any problems. The second is the illegal version wherein goods manufactured in one country are labelled again at a port — as if they were manufactured in that country and shipped out. Now, two more layers could be created between the legal and illegal versions.

“The third and fourth definitions are complex, as they include how much value was added in the exporting country, and what percent of content is manufactured in a country like, say China. The last is the most difficult as manufacturers have to go deep into the supply chain to trace it — like suppliers’ suppliers’ suppliers,” said Deborah Elms, head of trade policy at Hinrich Foundation.

What Now?

Cameron Johnson, partner at Tidalwave Solutions and a global supply chain strategist, believes that India must do more than assemble products. While the new world orders will take years to form, countries like India must integrate their supply chains.

For example, components used in phones might be used in many industries, and cross-industry collaborations can help; bring in local manufacturers for displays, batteries etc, and invest in research and development, which countries like South Korea offer.

“India and China mending relations is a good move as we can see what technology we can get from them. China will be dominant for 25 years in global manufacturing as it’s embedded and to outdo it, countries have to spend $5 trillion in 20 years,” Johnson added.

MESSAGE FROM OUR SPONSOR

AI You’ll Actually Understand

Cut through the noise. The AI Report makes AI clear, practical, and useful—without needing a technical background.

Join 400,000+ professionals mastering AI in minutes a day.

Stay informed. Stay ahead.

No fluff—just results.

Smarter AI. Zero fluff.

CORE NUMBER

62.9

That’s India’s services Purchasing Managers' Index (PMI) reading for August, a 15-year high, according to HSBC's India Services PMI, compiled by S&P Global.

📌 The details:

The index rose from 60.5 in July, though lower than the flash estimate of 65.6.

Surging new orders — both domestic and export — powered the expansion, with overseas demand at its strongest in 14 months.

Robust demand let firms pass on higher input costs, pushing output price inflation to its steepest level since July 2012.

Composite PMI (services + manufacturing) also hit a 17-year high of 63.2 last month, rising from 61.1 in July.

🧾 Why It Matters: India’s economy, which grew 7.8% last quarter, is riding a demand boom — but tariffs from the US and rising inflation could squeeze momentum.

💬 Insight: “India’s services PMI Business Activity Index reached a fifteen-year high last month ... on the back of surging new orders,” said Pranjul Bhandari, chief India economist, HSBC.

FROM THE PERIPHERY

GST Slabs Reset

The Goods and Services Tax (GST) Council on Wednesday announced that GST slabs will now be reduced to 5% and 18%. Finance minister Nirmala Sitharaman said in a press conference that rates have been decided keeping in mind the needs of the "common man".

By The Numbers: The GST rates will now be 5% and 18%, and a "special slab" of 40% will be levied on sin and luxury goods. Daily essentials such as toiletries, pre-packaged food such as namkeens and bhujia, baby care items such as diapers and feeding bottles are among items that will have a 5% GST rate. Educational items such as exercise books, pencils, and sharpeners will have no GST. Agricultural items such as tractors, tractor tyres, and drip irrigation systems, among others, will now have 5% GST. Electronic items such as TVs, fridges, and washing machines will also have a lower GST of 18% from 28%.

What Now? This will come into effect from September 22. "This reform is not just on rationalising rates, it's also on structural reforms, ease of living, so that businesses can work together with great ease," Sitharaman said.

Jane Street Challenges SEBI’s order

Jane Street has filed a case against SEBI in the Securities Appellate Tribunal, according to documents reviewed by Reuters. The filing accuses SEBI of not providing documents and data to support its claim that Jane Street manipulated India’s markets; the filing also calls the documents “undeniably relevant.”

How We Got Here: On July 4, SEBI temporarily barred American trading firm Jane Street from trading in India’s market, accusing it of market manipulation.

Outcome: Since then, SEBI has instituted various checks to prevent retail traders from losing money to corporate players. It imposed strict intraday exposure caps and also mandated multiple position checks, which will be effective starting October 1.

India Seeks Alternative Trade Partners

Indian foreign minister S Jaishankar told his German counterpart that India will seek Germany’s help to secure a free trade agreement (FTA) with the European Union (EU). Officials from India and the EU are currently in talks in Brussels.

Catch Up Quick: Meanwhile, India’s free trade agreement with the European Free Trade Association (EFTA) bloc will come into effect on October 1. The EFTA bloc consists of Iceland, Liechtenstein, Norway, and Switzerland. Under the deal, the bloc will invest $100 billion in India over 15 years. In return, India will reduce or eliminate duties on EFTA exports like Swiss watches, chocolates and cut and polished diamonds.

The Backstory: India’s efforts to forge trade deals come at a time when its relationship with its biggest export partner — the United States — is tense. Recently, Indian Prime Minister Narendra Modi concluded a visit to Japan and Tianjin, China, where he expressed a desire to improve relations with China.

Go First Faces Type Trouble

Grounded airline Go First has found itself in yet another legal tussle — this time over missing tyres. According to Mint, Japanese tyre maker Bridgestone, through its Thailand subsidiary, has moved the National Company Law Tribunal (NCLT) in Delhi seeking the return of 1,400 aircraft tyres it leased to the airline under a five-year agreement signed in 2019.

Backstory: Valued at $200–700 per tyre per month, the lease was supposed to run until October 2024, followed by a seven-month grace period. But by then, Go First had been ordered into liquidation, and the tyres never came back. Bridgestone argues that since the tyres were leased and not sold, they cannot be treated as assets in liquidation.

Fast Facts: So far, the NCLT has held only one hearing in July, with the case now adjourned to October 9. The case is just one in a string of disputes. Go First, which was grounded in May 2023, owes over Rs 6,200 crore to creditors and is also fighting a $1billion arbitration against Pratt & Whitney over faulty engines.

PODCASTS

Global Bond Markets Are Wobbling Again

On Episode 668 of The Core Report, financial journalist Govindraj Ethiraj talks to Co-Founder and JMD at Wazir Advisors as well as Paul Hickin, Chief Economist and Editor-in-Chief at Petroleum Economist.

Global bond markets are wobbling again, India gains in anticipation of GST rate cuts
Why gold prices are set to rise further
India’s services sector continued its strong run, hitting a 15-year high in August on new orders and rising output led by international demand
Why Indian apparel companies have to go multi global location
New oil finds in South America are bringing in fresh supply in the face of fresh shifts in demand and supply