'Brazil' tariff shock flags risks of fast-tracking India-US pact
TRADE VIGIL. New Delhi watchful as US global tariffs of 10% are set to lapse
Amiti Sen
New Delhi
The US' decision to impose an additional 25 per cent tariff on a broad range of imports from Brazil has reinforced the Indian government’s cautious approach towards a potential bilateral trade agreement with Washington, with trade experts arguing that New Delhi should not rush into a deal amid continuing uncertainty over future US trade policy.
Industry sources said India was adopting a “wait-and-watch” approach as the temporary Section 232 universal tariffs of 10 per cent on steel and aluminum are slated to lapse later this month, potentially bringing those duties down to zero.
“At the same time, the outcome of the ongoing Section 301 investigations against India remains uncertain, making it prudent to avoid any long-term trade commitments before there is greater clarity,” a source tracking the matter told businessline.
ADDITIONAL TARIFF
Last week, the US move to impose an additional 25 per cent tariff on a wide range of Brazilian imports from July 22 has heightened concerns in India about rushing into a trade deal with Washington.
“This particular Section 301 investigation (against Brazil) was unusually broad. It covered digital trade and Brazil’s past tax system, preferential tariffs granted to India and Mexico, weak anti-corruption enforcement, inadequate intellectual property protection, restrictions on US ethanol exports, and illegal deforestation that allegedly gives Brazilian producers an unfair cost advantage,” said Ajay Srivastava from trade research body GTRI.
The Brazil case shows that US trade concerns extend far beyond tariffs and can cover almost any policy Washington considers discriminatory or commercially disadvantageous, Srivastava said.
“The lesson for India is clear: it cannot meet every US demand. These now range from Russian oil purchases and digital rules to hundreds of trade complaints listed each year in the NTE Report. India should therefore respond calmly to future US actions as they arise, rather than making sweeping concessions through trade deals or outside of it through budget or policy changes to avoid possible investigations or penalties,” he added.
Echoing the views, former JNU professor Biswajit Dhar said the episode demonstrated that bilateral agreements alone do not necessarily shield countries from unilateral US trade actions.
“India is seeking a presence in the India-US trade deal, which is the right thing to do. But it is absolutely clear that the US can always go ahead and do whatever it wants,” Dhar said.
EXPORT SECTORS
According to Dhar, India’s key export sectors — including textiles, health products, engineering products, automobiles and auto parts, solar modules, petrochemicals and steel — could all face uncertainty depending on how the US proceeds with the Section 301 investigations on structural excess capacity and forced labour.
“We don’t know how much market access we may lose if there’s any such tariff as the investigations against India are not yet complete. We have already experienced the entire MFA (Multi-Fiber Arrangement) market access to the US even before signing the trade pact, our imports from America have increased and our trade surplus has narrowed. So we need to be careful. We cannot give market access for free,” he said.
Russia continue to meet half of India's crude imports in July, Aug
Rishi Ranjan Kala
New Delhi
Russia's share of India’s crude oil imports is expected to remain at at least 40-45 per cent during July-August as refineries take advantage of the discounted Russian oil while West Asian supplies remain tight.
Refiners and traders said that July crude oil imports from Russia are likely to remain high as refiners now leverage business hurdle against West Asian crude. Besides, cargoes for July and August have been booked in the second half of June and July.
“July imports will surpass 5 million barrels per day (mbpd) for the third month, averaging around 2.6-2.7 mbpd. We expect imports to follow the same trajectory as last month,” a trader with a state-run refinery said. West Asian producers' share is rising with supplies from Saudi Arabia and UAE following a tight market for Oman and the UAE. However, most Indian refineries are largely done with the spot volumes, the trader added.
Kpler data suggests that July crude oil imports from Russia averaged around 2.15 mbpd, with a share of 44.2 per cent. Russian barrels have enabled Indian refiners to maintain high refinery run rates, ensure uninterrupted fuel supplies, and avoid the disruptions experienced by several other Asian refining markets.
KEY SUPPLIER
This growing importance is reflected in import trends, emphasized Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modeling. “Russian crude imports rose to around 2.16 mbpd in June, accounting for more than 40 per cent of India’s crude imports, and have been steadily increasing since March/April. We are also tracking at healthy levels and could match or even exceed June’s volumes,” he told businessline.
However, West Asian imports have seen a 10 per cent decline from March 2026. This has been attributed to an attack on the Red Sea by the Houthis led to the latter closing the Suez Canal, leading to the largest disruption in energy supplies in history.
However, August may also witness some displacement of Russian barrels as Saudi Aramco cut August prices of Arab Light by $1 per barrel from last month, marking its first price cut in two decades. Besides, Saudi Arabia and the UAE have stepped up supply to Asian countries from alternate routes. For instance, Saudi Arabia is supplying crude oil from its Red Sea port of Yanbu, which is connected through the East-West pipeline that bypasses the Suez.
However, a refiner said this route is longer and will likely result in longer travel time to India, making it difficult and the shift back to Russian crude oil that is available in plenty due to drone attacks on refineries in Ukraine.
“Russian crude remains competitive source of supply for Indian refiners, and under current market conditions, it is difficult and the volumes disappearing unless those volumes disappear from the market in the near term,” Ritolia said.
Inflated worries
RBI can look through the spike in CPI in June
The outlook on inflation is far from sanguine, and yet it cannot be seen as cause for alarm. The retail inflation print of 4.4 per cent in June was not unexpected. It is largely the result of the base effect and is not broad-based — never mind even if the headline number happens to be an 18-month high. It could edge up further, but whether that leads to a higher-than-expected trajectory would depend on the trajectory of the ongoing war.
As far as global bond markets and central banks are concerned, India need not entirely peg its actions on their decisions. Quite apart from the macro fundamentals being sound, the Reserve Bank of India and the Centre have taken steps to shore up capital flows — creating space for independent monetary policy. It is worth noting that average inflation for the first quarter of FY'27 is at 3.9 per cent, below the RBI’s projection of 4.2 per cent for the quarter. The RBI has now begun to accord more importance to core inflation which excludes the more volatile food and energy prices. Core inflation had stayed at 3.9 per cent in June. If the influence of the sharp increase in gold and silver prices is removed from core inflation, the reading is at a much benign 2.5 per cent. These numbers are likely to lend comfort to the RBI. Besides petrol and diesel, the increase in prices of LPG cylinders and piped natural gas weighed on consumer wallets and made services of restaurants and hotels pricier. Inflation in transport was high at 4.3 per cent, which was expected due to higher prices of various services, including food items. The higher food inflation of 5.3 per cent was also influenced by higher cost of fertilizers and the seasonal spike in vegetable prices in June. Higher prices of oil and fat in global markets pushed domestic edible oil prices higher.
However, there is uncertainty regarding the trajectory of inflation in the coming months. Though crude oil prices are below their recent peaks, they are still almost 20 per cent higher than the pre-war price level. While the deficit in monsoon rainfall has narrowed in July and kharif sowing is expected to improve, food inflation could continue to apply upward pressure on headline inflation. RBI’s CPI projections of inflation are pegged at an average of 4.8 per cent for the third quarter and 5.4 per cent for the fourth quarter of FY'27. These projections are largely done taking the base effect into account. However, inflation in gold and silver prices is expected to ease in the coming months since prices are drifting lower and the rally in precious metals occurred in the second half of 2025. Given that the CPI is still below the upper band and the current spike is mainly caused by supply side challenges, the RBI can maintain a status quo in policy rate for now.
A status quo is desirable in view of the Centre’s plans to ramp up spending to deal with war-related issues. Businesses could do with some relief in borrowing costs. Monetary authorities, however, will have to be nimble and data-dependent.
RBI's financial inclusion index rises 4.48% in FY'26
Mumbai: Reserve Bank’s FI-index, which captures the extent of financial inclusion in the country, rose 4.48 per cent during the year-ending March 2026, the central bank said on Thursday. The RBI had constructed a composite Financial Inclusion Index in consultation with concerned stakeholders, including the government. The index was first published in August 2021 for the year ending March 2021. PTI
IMF agenda
Apropos 'IMF must stick to its core competencies' (July 16), the IMF should continue to provide surveillance, crisis lending and fiscal discipline of its member nations when they are in jeopardy. But IMF's growing engagement in climate change issues can take its focus away from its core competencies and let specialized bodies handle issues like climate change.
Sudarshan Raja
Chennai
Wheat production this crop year will likely be affected by climate
Subramani Ra Mancombu
Chennai
India's wheat production could be impacted by the climate this crop year (July 2025-June 2026) with weather beginning to impact wheat in the country, experts said at a webinar conducted last week.
The delayed harvest of kharif crops is on the cards. This will delay sowing of wheat, and the climate may come into play, said experts at a session on 'Global wheat markets: Production and price risk' at the Wheat Products Promotion Society (WPPS) CEO Conclave in Varanasi, Uttar Pradesh.
Jatin Singh, Founder and Managing Director, Skymet Weather, said that if the bad for the South-west monsoon (June-September) is enough damage would have been done.
DROUGHT YEAR
Skymet, though, the Indian Met Department (IMD) has stopped declaring drought year.
However, the silver lining could be the positive Indian Ocean Dipole (IOD) which could bring good rain during the monsoon. El Nino, however, did not rule out and a below-normal South-west monsoon could be affected by its presence.
Somnath Chatterjee, Ex-Head — Procurement and Logistics, ITC Food Division, said the wheat market is facing a volatile scenario due to geopolitics in Russia, West Asia and some other areas.
Gaurav Jain, Co-founder and Director, Ag-Watch Analytics, said nations were inducing war through production is down in some countries and increased in the Middle East and North Africa (MENA) region.
The current El Nino weather is a worry and could impact winter crop production this year. “Italy and South Korea and Argentina may be at risk,” he said.
Nations, including India and China, that witnessed a record harvest last year and good demand for wheat had increased production to 170 million tonnes (mt) from the global production target of 150 million tonnes earlier, said Jain.
Though the world is going through a tough time due to the war in Ukraine, the global wheat market is well supplied across the globe.
Rory Deverell, Owner and Principal Consultant at Black Sea Commodity Consulting, said the wheat futures market is not showing any rise in prices for the July-September period.
“There is plenty of wheat in the Black Sea region, which is anchoring supplies. This will likely continue until there is a threat of a significant rise in wheat prices,” he said.
WHEAT AS FEED
In another session, ‘Procurement, Trade, Storage, Supply Chain and Food Security’ at the conclave, which was organised by WPPS in association with the UP Roller Flour Millers Association, Major Rajiv Yadav, Director and CEO of Rajshahi Agri LLP, sought hedging options in wheat to facilitate price discovery.
Foreign airlines bolster premium offerings
Aneesh Phadnis
Mumbai
International airlines are increasing their premium offering on India routes on the back of high demand for first-class and business-class seats.
Lufthansa began operating Airbus A380 aircraft on Munich-Mumbai route last week, from October 25. Emirates will operate an A380 aircraft from Delhi to Dubai.
The A380 aircraft of both these airlines have premium dense configurations which means these have more business and first-class seats than Airbus A350 or Boeing 777.
“We’re seeing very strong demand across India, particularly for premium travel, and the deployment of the A380 allows us to respond to that demand with significantly greater premium capacity,” said Kevin Markette, Lufthansa Group Senior Director – Regional Sales South Asia.
STRONG DEMAND
Markette said the A380 will be flown to Mumbai in the summer schedule and its deployment reflects the strong demand between India and Europe.
The aircraft offers more business class and premium economy seats, while also re-introducing Lufthansa’s first-class on the Mumbai route. This gives customers travelling between India and Europe even more choice, complementing the daily first-class offering already available on Swiss services to Mumbai,” said Kevin Markette, Lufthansa Group Senior Director – Regional Sales South Asia.
Other carriers too are tapping the opportunity with Swiss operating a second daily to Delhi till the end of October and British Airways increasing frequencies on Delhi and Bengaluru routes.
These moves come amid increased competition and changes in traffic flows following tensions in West Asia. Air India is upping its game by deploying its latest in-flight products to Frankfurt, London and Tokyo.
Several governments had issued travel advisories asking their citizens to avoid travelling to the West Asia region.
These had an impact on transit flow via hubs such as Dubai or Doha, benefiting the European airlines. The situation is slowly improving now.
A source said Emirates is seeing big demand for premium and business class seats on Delhi routes prompting it to deploy the A380 service from October.
The Emirates A380 has up to six extra first-class and up to 26 more business class seats than its Boeing 777s.
PREMIUM TRAVEL
The deployment of large premium aircraft such as A380 on key India routes reflect airlines’ confidence in sustained demand for premium travel from India, said Indiver Rastogi, President and Group Head – Global Business Travel, Thomas Cook (India) and SOTC Travel.
FCM Travel’s Managing Director Sunny Sodhi said the firm has seen double-digit year on year growth in premium and business class transactions on India routes led by MNCs.
“Demand via Gulf hubs declined sharply following the government advisories but has gradually recovered as airlines restored capacity to around 90 per cent of the previous levels,” he said.
“Yet many corporates continue to take a wait and watch approach to travel via Gulf carriers,” Sodhi added.
Uber offers $14.8 b to buy Germany's Delivery Hero
Berlin: Uber on Thursday launched a public takeover offer for Delivery Hero that values the German food delivery company at $14.8 billion and would create the world's largest food-delivery firm outside China. The Berlin-based company said the combination with combined pro-forma gross merchandise value of $23.6 billion in 2025. REUTERS
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