This article is an on-site version of the India Business Briefing newsletter. To receive it in your inbox regularly, sign up if you’re a premium subscriber, or upgrade your subscription here.
Good morning. This week’s tragic event in Pahalgam is a reminder of the ever-present threat of violence in the subcontinent. After 26 people were killed in the terrorist attack in Kashmir, India’s government has sharply downgraded diplomatic relations with Pakistan and suspended its participation in a crucial cross-border water treaty. Islamabad has retaliated by suspending a peace treaty and closing its airspace to Indian airlines.
Tensions are high and everyone is, understandably, angry and emotional. We will keep a close watch on what happens next.
A step closer
India is working at a frenetic pace to make the most of Donald Trump’s tariffs. Earlier this week, Prime Minister Narendra Modi hosted US Vice-President JD Vance, and both hailed the “significant progress” made on a trade deal. Meanwhile, in Washington, finance minister Nirmala Sitharaman said the first of the pact’s two tranches would be finalised this autumn.
India’s race to become one of the first big economies to strike a deal with Trump is strategic, and is aimed at helping both sides claim victories swiftly. The US, which has a $45.7bn trade deficit with India, is looking to balance its trade position and significantly open the huge Indian market for American companies. If the US president achieves these goals, he can tout it as an example of the success of his tariff policy, while India hopes giving Trump an early win will result in better trade terms.
New Delhi’s key concern will be to protect vulnerable sectors of the economy, especially agricultural products and some core manufacturing. The government has the difficult job of deciding which parts of homegrown manufacturing can be sacrificed for the greater good. It has already loosened entry barriers for some imports, such as motorcycles and spirits, and scrapped the “Google tax”. But it will probably have to concede further ground in several sectors, including the thriving parts of the new economy.
One sector to watch is the $125bn ecommerce market. India has limited foreign direct investment in the retail sector, and allows foreign ecommerce companies to operate only as online marketplaces for third-party sellers. Local players, however, can produce, own and sell goods through their platforms. Washington has called this a “non-tariff barrier” and wants India to give full access to the market to online retail giants such as Amazon and Walmart.
Though Trump has toned down his tariff rhetoric this week, the signing of this deal will ensure some kind of trade stability for India. In an interconnected world, his continued unpredictability will of course keep things in flux and impact business and economic growth even after any deal has been signed. But for now, India is only looking at the positives.
Do you have any questions about the India-US trade talks? Reply to this email or let me know at [email protected].
Recommended stories
-
From trains to tanks: Germany’s push to increase defence production marks an industrial shift.
-
The Chinese factory jobs Trump wants to bring back to the US are as dreary as depicted in those viral AI-generated videos.
-
Klaus Schwab, who founded the World Economic Forum, faces whistleblower allegations that he manipulated the organisation’s research to curry favour with governments.
-
Nomura is to buy Macquarie asset management units in its biggest deal since Lehman.
-
Harvey Weinstein’s retrial is putting the #MeToo movement back into focus.
-
Here’s how to be a digital nomad in Paris.
GenAI isn’t killing all jobs. Yet.
Using generative AI to write dynamic product descriptions in multiple languages is helping ecommerce companies like Amazon and Myntra to expand to new markets, research shows. Overall, generative AI is projected to unlock $6.6tn in productive capacity across various industries in five countries: the US, UK, India, France and Germany.
At 62 per cent, Indian companies were the biggest users of the breakthrough new technology, the study by technology advisory firm Access Partnership found, with adoption resulting in more than 10 per cent revenue growth in over half of the around 2,600 businesses surveyed. The report also said that genAI had boosted hiring, with over 60 per cent of the companies planning to increase headcount.
Some content could not load. Check your internet connection or browser settings.
While the total number of people employed is a net positive, in my view the alteration in the composition of jobs is equally significant. Some roles have gained traction, as companies hire the best talent to implement genAI, while others have already been made redundant. (My profession, writing, is one of the early victims, as is software development). What AI is unable to do well currently is jobs that are “messy”, which require multiple inputs and have to respond to a dynamic environment.
It is impossible to predict what the workplaces of the future will look like, but it is certain that there will be several iterations along the way and the skill sets in demand will change constantly. Businesses — and workers — who adopt the technology early will have an advantage. Though technical, creative and customer-facing roles are seeing an uptick in demand right now, that may not always be the case. Everything is fluid; only the quick learners and easy adaptors will survive. It’s one of the few times I feel grateful to be older.
Go figure
The IMF has slashed its growth projections for the global economy by half a point for this calendar year to 2.8 per cent. The US is expected to grow at 1.8 per cent. The fund pared down India’s projections by 0.3 per cent, but still put it at the top of the pack.
Read, hear, watch
I have been reading the Japanese bestseller, Butter, by Asako Yuzuki. Based on the true story of a foodie and homecook who was convicted of killing three of her lovers, Butter is an exposé of Japanese society’s fatphobia. It is also, in today’s diet culture, a reminder of the pleasures of eating, of enjoying a meal full of fat and salt and everything that we have been conditioned to feel guilty about consuming.
The story revolves around two women, one accused of the murders and a journalist who is trying to be the first woman on the editorial desk of her magazine. I was hoping to finish this during my vacation but even for me, a person who wrote an entire book about the pleasures of reading, it is becoming increasingly difficult to avoid the distractions of my phone and devote myself to the page.
Last week’s Buzzer Round winner Yaman Singhania wrote to me suggesting I watch the latest season of Black Mirror, a show that I will admit terrified me when I first encountered it. I hope to get to the current season as soon as I finish Butter.
Buzzer round
What is the United Arab Emirates aiming to deploy to speed up lawmaking by 70 per cent?
Send your answer to [email protected] and check Tuesday’s newsletter to see if you were the first one to get it right.
Quick answer
On Tuesday, we asked: How many meetings do you have in an average week?
Here are the results. 20 seems to be the winning number. That’s four meetings a day! (I don’t know how you do this).
Thank you for reading. India Business Briefing is edited by Tee Zhuo. Please send feedback, suggestions (and gossip) to [email protected].