Trump Plays Hardball, Will India Blink?

Good Morning. India has been put on the spot by US president Donald Trump yet again. As he pushes the red line of agriculture and Russian crude, India is calculating what it can concede and what it can't. How much can India bend to dodge a hefty penalty?

In other news, Vietnam's electric vehicle maker VinFast thinks local for India. Meanwhile, private players could enter India's nuclear power sector.

DECODE THE NEWS

Tariff Trouble: How Much Can India Concede If Trade Talks Resume?

What? 

While India has been slapped with 25% tariffs by the US, a glimmer of hope arises from another round of trade negotiations in the third week of August. Amidst the confusion, political and economic experts are of the opinion that India has little headroom to haggle.

The US wants India to open its agricultural market and sell its genetically modified (GM) foods, particularly soybeans. India refuses as they want to protect the interests of their farmers, and also does not allow GM foods. The US appears to have a similar issue — appeasing the large base of middle-American farmers.

“Soy is an interesting story. Soy farmers are actually a big (Donald) Trump voting base. America's soy exports used to go to China. From 2024, China soy imports started to dip fairly heavily, as they shifted to Brazil and Argentina. There is no other big large market in this world that leaves us. We will not take soy because it's genetically modified. That's where we are,” explained Indrani Bagchi, CEO of Ananta Aspen Centre and foreign affairs columnist.

The US is also unhappy with India’s Russian relations — in military and oil imports. As per estimates, moving away from Russian oil could raise India’s import bill by anywhere between $9-11 billion — something that India can’t afford.

Russia in itself might not be the red flag that the US wants us to believe. Bagchi said that China, Brazil and Europe — all of them purchase energy from the country, yet they did not face penalties or sanctions, though Brazil was hit worse with 50% tariffs. “There are other calculations here at work and not Russian oil,” she added.

“He (Trump) may impose tariffs on BRICS (Brazil, Russia, India, China, and South Africa) because we are a member of BRICS, because we are buying oil from Russia. Not only this, he can manufacture many pretexts, hundreds of pretexts,” said Ajay Srivastava, former trade negotiator and founder of the Global Trade Research Institute (GTRI), referring to agriculture.

What Next?

There is also a lack of clarity on which sectors the tariff will apply to and could just be a pressure tactic. European nations and Japan are touchy about agriculture. And China, Brazil and Europe all buy all from Russia, but did not face Trump’s ire over it.

​​“My hypothesis is that we have agreed to open the industrial products, which account for 95% of US exports to India, but the US is not happy. They want the balance 5% and most of it is a red line for us,” said Srivastava.

How much will India really have to concede?

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CORE NUMBER

7 million barrels

That’s how much September-arrival crude that India’s top refiner, Indian Oil Corp, reportedly bought from the US, Canada and the Middle East through a tender, according to Reuters.

Why It Matters

The US has been pressuring countries, including India, to stop buying oil from Russia as it imposes sanctions on the country over its war with Ukraine. Trump has also reportedly imposed the 25% tariffs on India because of its purchase of Russian oil.

Now What?

While some reports suggest India plans to stop buying oil from Moscow, Bloomberg reports that Russian crude is still being delivered to the country. Four tankers delivered “millions of barrels of Russian crude at Indian refineries at the weekend.” Bloomberg reported that this indicates that everything is going on as normal. The government has not yet made an official announcement regarding the suspension of Russian crude oil purchases.

FROM THE PERIPHERY

VinFast in Talks to Boost Sourcing in India. After starting operations at its first production plant in Thoothukudi, Tamil Nadu, Vietnamese EV company VinFast says it’s in talks with suppliers to source parts locally too. The company’s Tamil Nadu plant currently focuses on assembling vehicles using completely knocked down (CKD) kits. 

The Backstory: VinFast, currently loss-making, pivoted to India after a poor performance in the US. Tesla dominates the EV market in the US, and VinFast’s VF8 suffered from software glitches, poor build quality and safety concerns. The company’s success in India, the world’s third-largest auto market, will be key if it wants to meet its global delivery target of 200,000 cars for 2025.

Fast Facts: VinFast has already begun pre-booking for its VF6 and VF7 models; customers have to pay 21,000 rupees to do so. The company says it has received orders from Sri Lanka, Nepal and Mauritius, but that it is catering to India for now.

India Defiant On Oil: Top Trump aide Stephen Miller accused India of “financing Russia’s war” by purchasing Moscow’s oil, calling the practice unacceptable and equating India’s imports with China’s, Reuters reported. His remarks mark the strongest rebuke yet from the Trump camp toward a key Indo-Pacific ally.

Implications: A 25% tariff on Indian goods has already kicked in, with threats of 100% duties unless Russia agrees to a peace deal. Despite US pressure, India says it will continue oil trade with Moscow, asserting its sovereign right.

Next Steps: India’s major trade unions and farmers' groups have called for nationwide protests on August 13, with rallies and demonstrations planned across cities and rural districts.

India May Privatise Nuclear Power. India is considering the qualifying criteria for private companies to operate nuclear power plants, according to sources The Economic Times spoke to. Right now, only the public sector can run nuclear power. 

Backstory: In the Union Budget speech on February 1st, 2025, Finance Minister Nirmala Sitharaman proposed amending the existing atomic energy laws to enable private companies to build, own and operate nuclear power plants. In April 2025, the National Thermal Power Corporation (NTPC) announced a tender seeking global partners to build 15 gigawatt nuclear reactors in the country. 

The Twist: The government says this partnership is crucial to achieve its goal of increasing India’s nuclear capacity from 8.8 GW now to 100 GW by 2047. But critics argue that inviting foreign investment into India’s nuclear energy risks the country’s sovereignty and raises safety issues too. 

Japan’s JFE Steel to Partner With JSW. JSW Steel and Japan’s JFE Steel will jointly invest Rs 5,845 crore to triple India’s production of cold-rolled grain-oriented (CRGO) electrical steel. They will expand capacity at plants in Nashik and Vijayanagar from 112,000 to 350,000 tonnes per year, starting FY 2028. 

Setting: Right now, India imports most of the CRGO steel it uses, but demand is rising. CRGO steel is essential for high-efficiency power transformers, electric motors, generators, renewable energy infrastructure, and increasingly, data centres. 

Implications: JFE is expanding abroad as domestic steel demand slows in Japan, while JSW is shifting toward high-value, energy-efficient steel to align with India’s infrastructure push and clean energy transition.

PODCAST

On Episode 646 of The Core Report, financial journalist Govindraj Ethiraj talks to Pawan Kumar, President at Seafood Exporters Association of India as well as Vaibhav Sanghavi, CEO of ASK Hedge Solutions.

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• The rupee falls despite the dollar index also going down

• Oil prices slide again, BP makes a big find off Brazil

• How Indian seafood exporters are trying to cope with new US tariff structures

👥 THE TEAM

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