Vietnam’s Deal, India’s Lesson

JANUS VIEW

Vietnam’s US Trade Deal A Cautionary Tale For Indian Negotiators

US President Donald Trump has got his tax and spending cuts through Senate, although one amendment to the bill has stripped it of its Trump-bestowed monicker, the Big Beautiful Bill.

Economist and commentator Paul Krugman has been denouncing the bill for slashing healthcare and food aid expenditure to finance tax cuts for the wealthiest Americans, apart from for adding anything from $3 trillion to $5 trillion to the US national debt. Sense is not, however, at a premium in Trump’s America.

Donald Trump would appear to have strong-armed Vietnam into accepting what seems to be a very one-sided tariff deal.

A Cautionary Tale

Vietnam would levy zero duty on imports from the US, while the US would levy 20% duty on Vietnamese exports, and 40% on trans-shipments. The trans-shipment clause is seen as an attempt to prevent Chinese manufacturers routing their wares to the US via Vietnam to escape penal duties on imports from China.

Vietnam is making the government relatively more efficient, reducing the number of states and centrally run cities from 63 to 34. And the new leadership of the Communist Party is cracking down on widespread corruption.

Vietnam’s deal offers a cautionary tale for Indian negotiators, as they try to wrap up a trade deal before the July 9 deadline that Trump has set for ending his suspension of the reciprocal tariffs announced on April 2. Corn, ethanol, soyabean and dairy are the four sticking points. It might make sense to allow the import of corn, so as to relieve pressure on food prices.

The Vietnamese negotiating tactic would appear to have been to kowtow to Trump while acting politically tough at home. Whether India would follow suit remains to be seen.

Meanwhile, as China forges ahead in artificial intelligence and robotics, India is stuck with half-baked R&D schemes.

What needs to change in India’s R&D?

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CORE NUMBER

60.4

That’s the June reading of the HSBC India Services PMI Business Activity Index — a 10-month high, reflecting strong expansion in the services sector, the Business Standard reported.

📌 The details:

• Up from 58.8 in May, driven by a sharp rise in new business orders.

• Domestic demand remained strong; export orders rose too, notably from Asia, the Middle East, and the U.S.

• Employment grew for the 37th consecutive month, despite a slight slowdown from May.

• Input cost pressures eased, improving margins.

🧾 Why it matters:

The services sector is a key driver of India’s economic growth. Sustained expansion signals resilience, but optimism about future output dipped — only 18% of firms expect growth, the lowest since mid-2022.

💬 Pranjul Bhandari from HSBC: “Service providers remained optimistic about future growth, though their confidence faded a tad.”

FMCG Spinout. Ahead of its retail IPO, Mukesh Ambani's oil-to-telecom conglomerate Reliance Industries Limited is planning to set up a new entity, New Reliance Consumer Products Ltd (RCPL), for its FMCG brands, Bloomberg reported.

The Shift: A National Company Law Tribunal (NCLT) order showed that RIL will move brands under Reliance Retail Ltd, Reliance Retail Ventures Ltd, and Reliance Consumer Products Ltd to RCPL. RCPL will manufacture, distribute, sell and market goods like clothes, personal care, foods and beverages.

Next Steps: The NCLT order on RIL's filing for restructuring also said that the aim of setting up RCPL was to find new investors and put a sharper focus on this sector.

Electronics Boom Losing Steam. Trade once booming in India’s electronics manufacturing sector — key to the “Make in India” push — is losing steam as high valuations, shrinking margins, and cooling investor sentiment bite.

By the Numbers: Shares of Dixon Technologies and Kaynes Technology have dropped over 15% this year after surging up to 888% over the past two years. Most stocks in the sector trade at over 50 times forward earnings, versus 11–12 times for global peers.

What’s Next? With key government incentives set to expire and firms committing billions to expansion, the spotlight now shifts to sustainable growth and gaining a long-term competitive edge.

Court Rules Against Patanjali. On Thursday, the Delhi High Court asked Patanjali Ayurveda to take down defamatory advertising they had made against Dabur, which holds a 61.6% share in the chyawanprash market. 

Fast Facts: Specifically, the ad featured Patanjali’s co-founder Ramdev accusing a “40-herb chyawanprash” – an indirect reference to Dabur’s product – of inauthenticity. 

The Backstory: Previously, in 2017, Dabur had filed a lawsuit against Patanjali for copying its chaywanprash packaging. 

Big Budget. India's defence acquisition council has approved proposals amounting to around Rs 1.05 lakh crore to acquire arms and military equipment, the Ministry of Defence said in a statement on Thursday.

The Backdrop: The investment would go into armoured recovery vehicles, electronic warfare systems, and inventory management systems. The announcement comes in the aftermath of the week-long conflict with Pakistan.

Fast Facts: The proposals were approved under the Buy (Indian–Indigenously Designed Developed and Manufactured) category. "These procurements will provide higher mobility, effective air defence, better supply chain management and augment the operational preparedness of the Armed Forces," the statement said.

PODCAST

On Episode 623 of The Core Report, financial journalist Govindraj Ethiraj talks to Moses Harding John, President & CEO at IndusInd International Holdings Limited, Mauritius. We also feature an excerpt from a recent episode of our show The Media Room featuring Anant Goenka, Executive Director of The Indian Express Group in conversation with media journalist and author Vanita Kohli-Khandekar.

• Markets fall in late trade as financials lose for the fourth session

• India may give in on imports of genetically modified farm products from the US as part of an imminent trade deal

• Murmurs of dedollarisation are rising again but the challenges remain

• Oil prices could touch $60 by year end, says S&P Global

• Indian Express launches a new print edition at a time most media houses are expanding digitally

👥 THE TEAM

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