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No Quick Fix For Tariffs
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Good Morning. Remember, around this time last month, everyone thought the Indian-US trade deal was almost through, that it would come any moment, until it didn’t. What we now have is some extra tariffs and industries wondering how to brace for the storm. While the prime minister has announced some schemes for “self-reliance” and tax reforms, the truth is stark: There isn’t a quick fix. Industry experts — Rahul Mehta, head of the Clothing Manufacturers Association of India and Ajay Srivastava, founder of the Global Trade Research Institute — tell us why.
In other news, India’s ties with China see a thaw after the 2020 skirmish. Meanwhile, in this week’s Build On Blockchain, why Indian lenders must not miss out on blockchain tech.
CORE CONVERSATIONS
No Quick Fix: Industry Experts Say Tariff Relief Will Take Time
The US-India trade pact, which seemed almost sealed about a month ago, seems to have completely unravelled, with no news on it since president Donald Trump’s announcement of an extra 25% tariffs on India, taking the total to 50%.
While India had said it will still pursue a deal, Prime Minister Narendra Modi has since called for self-reliance and announced some schemes to boost Indian industries.
However, in the long run, India still needs to find ways to recover from these tariffs, which will come into being on August 27.
“First is trying to export more to other countries. That means we expedite our free trade agreement negotiations with them or solving the specific non-tariff barriers faced by India in those countries other than US,” said Ajay Srivastava, founder of the Global Trade Research Institute.
Will Plan B Work?
While India must have a plan B, experts believe that it is going to take time to recover from the tariff blow, no matter how we pivot.
“I'm afraid there is no plan B to the immediate suffering that the industry is going to face,” said Rahul Mehta, head of the Clothing Manufacturers Association of India.
Mehta also believes that since the US and EU are big players in global trade, even if India diversifies to countries such as Australia, New Zealand, Japan and UK, it may not be enough.
“These are all going to be sort of supporting characters. The main player will be the EU. The only concern that I have is that plan B in this case is not going to be an immediate alternative,” Mehta said.
What Role Will the Govt Play?
Several industries, especially small ones, are now lobbying with the government for support to tide them over the tariff tsunami.
Srivastava believes that whatever support the government announces must be general and not US-specific.
“We should focus on increasing the general competitiveness of exporters, which means bringing more domestic manufacturers into the field of exporting who may not only be exporting to, I mean, the US is not possible, but all other countries,” Srivastava said.
But is India’s plan B really going to work and will internal reforms be enough?
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BUILD ON BLOCKCHAIN
India’s Techies Missed The AI Train, Its Banks Must Board The Blockchain Bus
What?
Around the world, some of the most conservative institutions, including big financial firms, are investing significantly in blockchain companies as a well-thought-out move to stay competitive and offer better services.
Indian banks, on the other hand, have been hesitant and cautious in this area, but this global change in mood should be a wake-up call for them.
A fresh report from cryptocurrency group Ripple reveals that between 2020 and 2024, global banks took part in 345 investments in blockchain companies.
Citigroup and Goldman Sachs led the pack with 18 investments each, followed closely by JPMorgan Chase and Japan’s Mitsubishi UFJ Financial Group with 15 apiece says the report published in the first week of August 2025.,
The combined funding into the sector during that period exceeded $100 billion.
Why?
To be fair, India has taken a few small steps in this direction.
The Reserve Bank of India has launched its Central Bank Digital Currency on blockchain, and many institutions, such as IndusInd Bank, have already used it.
Some private banks have also tested the technology for trade finance, cross-border payments, and KYC, but there is still no big investment or partnerships with blockchain companies.
But it need not stay that way because this complacency could come at a great cost as we’ve seen before with AI.
Regulatory policy, though, still remains a hurdle for the adoption of blockchain by Indian lenders.
CORE NUMBER
Rs 1,507 crore
That's how much the Cabinet Committee on Economic Affairs on Tuesday approved for a new regional greenfield airport at Kota-Bundi in Rajasthan, proposed by the Airport Authority of India.
Why It Matters: Kota, Rajasthan’s industrial hub and a national coaching capital, lacks a major airport despite heavy student and industry traffic.
Details:
The Government of Rajasthan has provided 440 hectares of land.
The airport will handle A-321 aircraft.
Terminal: 20,000 square metres, built for 1,000 peak-hour passengers and 2 million annually.
Backstory: This adds yet another new airport in India’s list of small airports that the government has set out to build to connect smaller cities. But just building new airports hasn't been much of a success. The Core reported that about 90% of India's small and regional airports face operational and financial hurdles, with many struggling to attract airlines and passengers despite government efforts to boost connectivity. These shortcomings make them unattractive to both airlines and passengers, hindering their growth and contributing to their financial woes.
FROM THE PERIPHERY
China Promises to Address India’s Rare Earth Curb
Chinese foreign minister Wang Yi is currently in India; in his meeting with his counterpart S Jaishankar, he assured that China will address India’s three key needs for fertilisers, rare earth metals and magnets and boring machines.
The Context: In early April, China curbed its exports of rare earths — that was a major point of concern for Indian executives, especially automakers, as most manufacturing requires rare earth metals and magnets. China also halted exports of fertilisers to India in mid-2025, which negatively affected India’s agricultural sector.
Pivot: China and India’s newfound camaraderie comes at a time when the US is pushing India away. Earlier this month, US President Trump announced a 50% tariff on Indian exports to the US, because it buys oil from Russia.
India’s Shrimp Farmers Look for Alternate Livelihoods
Major US chains like Walmart and Kroger have paused buying Indian shrimp after US President Trump announced a 25% on India’s exports. The US will impose an extra 25% tariff starting August 27, making India’s shrimp even more pricey. This has forced the country’s shrimp farmers, who report a 20% drop in revenue, to find other livelihoods–they’re turning to fish farming and selling vegetables, according to a Reuters report.
Catch Up Quick: Previously, The Core interviewed Pawan Kumar, president of the Seafood Exporters Association, who said that the added tariffs on India’s seafood exports, 40% of which is shrimp, will make Ecuador’s shrimp more competitive. He said that the industry needs the government’s “hand-holding” to stay afloat.
Outcome: The US is the largest market for Indian shrimp. While shifting to other countries like China, the UK or Japan could help, it would be time-consuming, said the Reuters report.
India Scraps Cotton Duty
Facing escalating US tariffs and mounting stress on its garment exporters, India has suspended the 11% import duty on cotton until September 30. The move, announced on Monday, is aimed at easing costs for the textile industry while signalling goodwill to Washington.
How We Got Here: The suspension comes just as US tariffs on Indian goods are set to double to 50% from August 27, after President Trump penalised India over Russian oil imports. A planned August 25–29 visit by US trade negotiators has been called off, stalling progress on a bilateral deal.
Fast Facts: India imported $1.2 billion of cotton in FY25, with the US its second-largest supplier. In The Core Report’s Weekend Edition, Rahul Mehta, head of the Clothing Manufacturers Association of India, argued India wrongly protects raw materials while allowing competition in finished garments, calling it “a basic strategy the government must re-look at” to make imports cheaper and exports more competitive.
Housing Prices Climb Higher
Construction costs in India’s top metros have surged to record highs, with luxury housing in Mumbai and other Tier-1 cities now topping Rs 5,000 per square foot, according to Anarock.
By The Numbers? Overall construction costs have jumped 40% since 2019, driven by pricier materials, labour wages up 150%, and higher fuel and logistics costs. Here’s what construction costs per square foot look like in each city. In Mumbai, it ranges from Rs 2,500–4,500 (affordable), Rs 3,500–5,000 (mid), and Rs 5,000+ (luxury). Delhi NCR: Rs 2,000–3,500, Rs 3,000–4,500, and Rs 4,500+. Bangalore: Rs 1,800–3,200, Rs 2,800–4,000, and Rs 4,500+. Chennai, Hyderabad and Pune show similar upward trends.
Flashpoint: Developers are passing 5–6% of costs to buyers, lifting home prices 9–12% annually. Affordable housing players are slowing launches or cutting amenities, while larger and luxury developers absorb cost hikes. Proposed metal tariffs may push costs higher, though a cement GST cut could offer limited relief, mainly for affordable projects.
PODCAST
The Markets Ride On Macro Bliss
On Episode 658 of The Core Report, financial journalist Govindraj Ethiraj talks to Indrani Bagchi, CEO at Ananta Aspen Centre as well as Chandrima Chatterjee, Secretary General at the Confederation of Indian Textile.
The markets ride on macro bliss and expectations of a solution to Russian oil.
India-China relations appear to be on a mend. What is driving it and will it last?
India has cut a 11% import duty on cotton. Will it really help?
Solar energy has a problem of plenty. What it means.
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