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Good morning. This week, quite a few of you wrote in with your experiences and concerns for Air India. While almost everyone has experienced some difficulties on board (the broken entertainment system seems to be a consistent feature), the overwhelming sense was hope for a better future. Indians, rightly, want the national carrier to be successful, something we can be proud of. Yesterday, the civil aviation regulator announced that the critical data from AI171’s black box has been retrieved. We will soon know what caused the plane to crash in Ahmedabad earlier this month.
Farm to table
Negotiations on the India-US trade deal seem to have struck rough ground. With less than 20 days before Trump’s 26 per cent tariff on India kicks in on July 9, New Delhi’s tone has shifted. Although it initially seemed keen to be among the first countries to sign a deal with the US, the government has shifted to an attitude of cautious optimism.
Earlier this week, finance minister Nirmala Sitharaman said trade deals were still being negotiated “intensely” with different partners, but pushed back at Donald Trump’s claim that India is a “tariff king”. Local media has also dialled up the narrative that India should put its own national interest first when it comes to the agreements, and government sources tell me the new line is that a good deal is more important than a deal.
What will happen on July 9? Trump might extend the start date by another 90 days, or he might double down and start charging 26 per cent, or he could pluck any other number from the ether and announce that as the new tariff. The US president sees his unpredictability as a strategic dealmaking tool, so any number of options are on the table. But chances are there will be some kind of an interim agreement between the two countries before the date, and New Delhi will hope this rolls the tariffs back to 10 per cent. The substantive first tranche of the trade deal is only expected in end-September.
Even if a deal of some kind is signed before July 9, it will probably not mean very much for Indian exporters to the US. If the US’s trade deal with the UK and India’s own agreement with Britain are any guide, it will at best be an umbrella agreement and is unlikely to have a sector-by-sector breakdown of tariffs and taxes. We still don’t know the details of India’s trade deal with the UK, which was announced in the first week of May.
The key question for me is whether a July agreement will make any mention of agriculture — specifically, if American wheat, corn, rice, soya, sugar and dairy might enter the Indian market. For the US, of course, this would mean hundreds of millions of new consumers. But India has ringfenced its agriculture from external competition for decades now. Nearly half of India’s population is engaged in farming and derives income from it. Most of these farmers have only small landholdings, which means they will not have the efficiencies of scale to compete against a flood of western products.
This politically and economically thorny issue may explain New Delhi’s more cautious approach. There are some American farm products, like nuts and cranberries, that India does not mind bringing in, since they are not grown in the country anyway. But if the US stands firm on mentioning more sensitive goods, such as foodgrain and milk products, the Indian government will have a problem. Parliament goes into session less than two weeks after Trump’s deadline. A deal that does not go down well with India’s farmers will unleash chaos in the streets and in the House.
Do you think India should open its market to American corn and cheese? Hit reply or email me at indiabrief@ft.com
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Tata Motors’ rich ambitions
From next year, Jaguar Land Rover will start assembling its vehicles at a new production facility in Tamil Nadu. This plant has a projected annual capacity of 30,000 units for JLR, and the company plans to invest Rs9bn ($1.1bn) into the factory over the next five years.
The new plant is part of parent company Tata Motors’ broader push to expand its portfolio of cars catering to the wealthy. This includes its now-delayed Avinya, a premium electric car without overt Tata branding that it hopes to export to global markets. The company’s bullish expectations for the luxury segment may seem at odds with its short- and medium-term outlook. The stock lost 10 per cent in the past fortnight after it projected shrinking operating profitability in the JLR division in the current fiscal year. JLR accounts for 70 per cent of Tata Motors’ revenues.
Analysts have also warned that falling demand in China and the impact of US tariffs will have a significant impact on the company’s balance sheet. In India, Tata Motors’ market share has decreased, after coming close to becoming the largest EV carmaker last year. But speaking to investors earlier this month, group chair N Chandrasekaran struck a note of optimism. Despite challenges such as the supply of rare earths from China, he said the business was structured not just to “handle the environment but to thrive”.
It looks like he is putting his money where his mouth is. The electric vehicle division itself is projecting an investment of Rs35bn in the next five years. With its focus on high-end SUVs, and JLR also looking to sell more in India, the company is betting heavily on rich Indians getting richer. It’s been a long journey for a company that was intent on selling $1,500 cars for the Indian mass market a couple of decades ago. But with the country’s K-shaped economic growth in the intervening years, where the gap between the rich and the not-so-rich has widened, this is a better strategy. It is easier to sell bigger and better cars to a segment that has the money than to create a no-frills, low-cost offering for a market that does not exist.
Go figure
Shubhanshu Shukla became the second Indian to journey to space when, after several delays, the Axiom mission finally lifted off from Nasa’s Kennedy Space Center on Wednesday. Here are some highlights.
1984
Year first Indian went to space
Read, hear, watch
Sitaare Zameen Par starring Aamir Khan is now in theatres, and promises to be a reasonable success in Bollywood’s hit-starved year. The movie is about a basketball coach who has to train a team of neurodivergent adults. It tackles the prejudices that society has while dealing with people who are on the autism spectrum. Friends who watched the movie said the comedy was great, but the film was too preachy in parts. I might pop into a cinema for the first time in a while this weekend.
This week, I enjoyed listening to this episode of the Unhedged podcast where my colleagues Katie Martin and Robin Armstrong explain what the Israel-Iran war means for the markets. I’ve been too busy to read.
Buzzer round
Which person of Indian origin, who graduated from Harvard with a degree in visual and environmental studies, was in the news this week for her son’s success?
Send your answer to indiabrief@ft.com and check Tuesday’s newsletter to see if you were the first one to get it right.
Quick answer
On Tuesday, we asked: Do you think Iran has the ability to strike back at the US in a significant way? Here are the results. More than 80 per cent of you said, not really. That looks like the case. At least for now.
Thank you for reading. India Business Briefing is edited by Tee Zhuo. Please send feedback, suggestions (and gossip) to indiabrief@ft.com.
