U.S. Tariffs Loom Over Indian Exports as Trade Talks Stall
India’s Foreign Minister Subrahmanyam Jaishankar said on Saturday that trade negotiations with Washington are ongoing but warned that New Delhi has “red lines” it will defend, particularly to protect farmers and small producers. His remarks came just days before additional U.S. tariffs of up to 50% are set to hit Indian goods, following New Delhi’s increased purchases of Russian oil. A 25% levy is already in place, with the remaining 25% due from August 27, after U.S. negotiators cancelled a planned visit to New Delhi. Analysts estimate that the full impact could shave 0.8 percentage points off India’s economic growth both this year and next, with longer-term damage to its global manufacturing ambitions.
The tariffs, which Jaishankar described as a result of “unusual” U.S. policy under President Donald Trump, could have ripple effects for non-Indian companies as well. Global firms with supply chains tied to India may face cost pressures and market uncertainty, while competitors in regions like Southeast Asia or Latin America could gain trade advantages. The minister also pointed out that Washington’s focus on India’s Russian oil imports appeared inconsistent, as major buyers like China and the EU have not faced similar measures—highlighting geopolitical risks that multinationals must factor into investment and sourcing strategies.
Editor’s Note: India faces steep U.S. tariffs of up to 50% on its exports amid stalled trade talks and scrutiny over its Russian oil imports, prompting Foreign Minister Jaishankar to assert New Delhi’s commitment to protecting farmers and small producers. Analysts warn the tariffs could dent India’s economic growth and global manufacturing ambitions, while exposing multinationals to rising costs and geopolitical uncertainty.
GST Council to Discuss Major Reforms, Two-Rate Structure Likely
The 56th meeting of the Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, will be held in New Delhi on September 3–4. The two-day deliberations are expected to focus on rate rationalisation, compensation cess and measures to improve compliance. An officers’ meeting on September 2 will prepare the groundwork for these discussions. The Centre has proposed a simpler two-rate GST structure of 5% and 18%, replacing the current four-rate system, while retaining a peak levy of 40% on luxury and sin goods.
Prime Minister Narendra Modi has described the proposal as a “next-generation reform” to ease compliance and reduce disputes. The Council may also consider introducing an additional duty exceeding 40% on select items to compensate states after the withdrawal of the compensation cess. For multinational companies operating in India, these changes could significantly impact pricing strategies, supply chain costs and long-term investment decisions, making the outcome of the Council’s deliberations highly relevant for foreign investors.
Editor’s Note: The GST Council will meet on September 3–4 to discuss major reforms, including a proposed two-rate structure of 5% and 18%, aimed at simplifying compliance and reducing disputes. Potential changes—such as duties exceeding 40% to offset the phased-out compensation cess—could significantly affect pricing and investment strategies for multinational firms operating in India.
OpenAI to Open First India Office Amid Push to Become AI Hub
OpenAI is set to establish its first office in India later this year as part of a strategy to deepen its presence in its second-largest user market. CEO Sam Altman described the move as a “first step” in making advanced AI more accessible in India, where ChatGPT subscriptions were recently launched at a globally lowest price of ₹399 (US$4.57) per month. The plan aligns with New Delhi’s ambition to position the country as an artificial intelligence hub under the IndiaAI Mission, though industry experts caution that India must guard against becoming merely a source of data and low-cost talent for global tech firms.
While OpenAI has announced partnerships with IIT Madras, the All India Council for Technical Education and new educational initiatives, critics argue that India still lacks sufficient investment in AI education and research infrastructure. For multinational companies, the expansion signals both rising opportunities and sharper competition in the Indian AI market. It also underscores a broader trend of global AI firms turning to India for scale, talent and data — factors that will shape business models, regulatory debates and cross-border intellectual property issues in the years ahead.
Editor’s Note: OpenAI will open its first India office later this year to expand access to advanced AI and support New Delhi’s push to become a global AI hub, with ChatGPT subscriptions now offered at the lowest global price. While partnerships with IIT Madras and AICTE signal growing opportunities, experts warn that India must invest more in education and infrastructure to avoid being seen merely as a source of data and low-cost talent.
China Lifts Export Curbs on Fertilizers, Rare Earths and TBMs to India
In a major diplomatic breakthrough, China has lifted export restrictions on fertilizers, rare earth minerals and tunnel boring machines (TBMs) to India, Chinese Foreign Minister Wang Yi confirmed during his August 18 visit to New Delhi. The decision, conveyed to External Affairs Minister S. Jaishankar, marks a step toward normalizing strained bilateral ties that had been tested by trade curbs and border tensions. The move is expected to stabilize India’s agriculture, manufacturing and infrastructure sectors, which had been hit hard since China imposed the restrictions in April 2025 amid escalating global trade wars.
The resumption of shipments comes as India grapples with punitive U.S. tariffs of up to 50% on its exports, creating a complex geopolitical backdrop. Industry watchers say China’s easing of curbs could prevent a potential 0.5–1% GDP loss for India by restoring critical supply chains. For non-Indian companies, the development is significant as it reduces supply chain volatility in sectors like electric vehicles, electronics, fertilizers and infrastructure projects where India is a growing market. It also signals a pragmatic shift in Sino-Indian ties that could reshape regional trade flows, with implications for global firms balancing exposure between the U.S., China and India.
Editor’s Note: China has lifted export curbs on fertilizers, rare earths, and tunnel boring machines to India, signaling a thaw in bilateral ties and offering relief to key sectors hit by earlier restrictions. The move, amid rising U.S. tariffs on Indian exports, could help avert a 0.5–1% GDP loss and reshape regional trade dynamics for global firms navigating supply chain risks across India, China, and the U.S.
India Prepares ‘Semicon 2.0’ to Deepen Chip Manufacturing Push
The Ministry of Electronics and Information Technology (MeitY) has initiated work on Semicon 2.0, the next phase of India’s semiconductor programme, with consultations underway with the Ministry of Finance and other stakeholders. Confirming the move, MeitY Secretary S. Krishnan said the initiative will build on the momentum created under the first phase. The announcement comes just ahead of Semicon India 2025, to be held in Delhi from September 2–4 and inaugurated by Prime Minister Narendra Modi.
Under Semicon 1.0, the government had committed nearly its full outlay of ₹76,000 crore, including ₹64,000 crore for chip fabs, ₹10,000 crore for a semiconductor lab, and ₹1,000 crore for the Design-Linked Incentive scheme. For multinational firms, Semicon 2.0 could offer fresh entry points as India widens incentives and expands into new parts of the semiconductor value chain. With India’s growing market and policy focus on self-reliance in chips, global players in fabrication, equipment, design and materials will find new opportunities for collaboration, investment and supply chain diversification.
Editor’s Note: India has launched Semicon 2.0 to deepen its semiconductor push, building on the ₹76,000 crore outlay from Semicon 1.0 and aligning with the upcoming Semicon India 2025 summit. The new phase aims to expand incentives and attract global players across the chip value chain, opening fresh avenues for collaboration, investment, and supply chain diversification.
Automation, Robotics Key to India’s 2047 Developed Nation Vision
India’s path to becoming a developed nation by 2047 will rely heavily on decarbonisation, reducing imports, and scaling domestic capabilities in electronics and capital goods. Experts say automation and robotics are central to this transition, enhancing precision manufacturing, streamlining supply chains, and enabling clean-energy adoption. With smartphone exports rising rapidly, policymakers stress the need for India to move further up the value chain into chips, sensors, and high-precision machinery. A major push on upskilling India’s vast engineering workforce will be critical to sustaining this momentum.
Electronics are now the second-largest contributor to India’s import bill after crude oil, but unlike oil, this sector offers opportunities for domestic manufacturing. India’s recent success in smartphone assembly demonstrates this potential: electronics exports surged 47% in Q1 FY26 to USD 12.4 billion, making them the fastest-growing export category after petroleum products. For multinational companies, India’s automation drive and electronics push create both opportunities for investment in advanced manufacturing and competition in global supply chains, as the country seeks to position itself as a key hub in next-generation technology production.
Editor’s Note: India’s 2047 developed nation vision hinges on automation, robotics, and domestic manufacturing in electronics and capital goods, with rising smartphone exports highlighting its potential to move up the value chain. As electronics become a major import category, the push for precision manufacturing and workforce upskilling offers global firms both investment opportunities and competitive pressure in advanced tech sectors.
India Unveils First-of-Its-Kind Digital Diplomacy Center at TRIPS Conference
At the recently concluded TRIPS conference held at IIT Kanpur and jointly hosted with the Indian National Science Academy, India formally inaugurated its Digital Diplomacy Center—a pioneering initiative designed to redefine how nations, leaders, and citizens engage in the digital age. The high-profile gathering featured leading voices from academia, industry, and government—including the Prime Minister’s Scientific Advisor and top IIT deans—and underscored the need to move beyond conventional statecraft toward a model shaped by algorithms, innovation ecosystems, and digital sovereignty.
Positioned at the crossroads of international affairs and technology, the Digital Diplomacy Center aims to provide changemakers with the platforms, training and dialogue spaces necessary to navigate the emerging dynamics of “neopolitics”—where power increasingly stems from digital capacity rather than territorial reach. The center seeks to elevate India’s role from participant to shaper in global digital governance, focusing on cyber norms, AI governance, responsible innovation, and inclusive digital cooperation. For multinational organisations and foreign governments, India’s launch of this center signals a growing opportunity to engage with a new global platform for digital diplomacy. The initiative offers a partnership avenue in shaping emerging cyber norms and AI policy frameworks, especially as nations grapple with digital governance, sovereignty, and innovation-led influence. It further positions India as a convenor of international discourse in digital geopolitics, offering a potential bridge between advanced economies and Global South nations.
Editor’s Note: India has launched a pioneering Digital Diplomacy Center at the TRIPS conference to reshape global engagement through digital sovereignty, AI governance, and innovation-led statecraft. Positioned as a bridge between advanced and Global South economies, the initiative offers multinational firms and governments a new platform to influence emerging cyber norms and digital policy frameworks.