The European Union (EU) and India have recently agreed to a trade deal which includes an MOU to allow “an uncapped mobility for Indian students”, according to officials, allowing Indians greater ease to travel, study and work across EU states. India's largest and most valuable export to the world is its people who last year sent $135 billion in remittances to their home country. Going by the numbers, the Indian economy is a tiny fraction of the European Union economy. Indians make up 17.8% of the world population but contribute only 3.3% of the global GDP. The European Union, on the other hand, has just 5.6% of the global population and produces 17.8% of the world's economic output.
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If finally signed and implemented, this "uncapped mobility" for Indians will probably become the most significant part of the deal. “More than 800,000 Indians are living and actively contributing to the countries of the European Union", according to Indian Prime Minister Narendra Modi. The two sides welcomed the conclusion of the India‑EU Comprehensive Framework of Cooperation on Mobility, in line with the national competences of EU Member States and India and domestic legislation of both parties. They applauded the launch of the first pilot European Legal Gateway Office, as a one‑stop hub to provide information and support the movement of workers, starting with the ICT sector. |
Indians are currently the seventh-largest migrant group in Germany. Just the talk of "uncapped mobility" from India will trigger a backlash across Europe where far-right parties opposed to all immigration are gaining popularity. There have been high-profile hate incidents against Indians in several European countries recently. While the rise of the AfD (Alternative for Germany) has increased hatred against Indian migrants, the arrival of the far-right in the mainstream political system in Germany has also started a conversation on racism that otherwise would have been swept under the rug.
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| EU-India Migration Agreement Tweeted by Modi |
Undaunted by the anti-immigrant sentiments, the Indian government has quietly signed labor mobility agreements with at least 20 countries over the past half-dozen years — in Europe and Asia, including the Persian Gulf — all with developed economies and most without much history of hiring Indian workers, according to the New York Times. Arnab Bhattacharya, the chief executive of the "Global Access to Talent From India Foundation" think tank, estimates that India could double its current export of 700,000 workers a year to 1.5 million by 2030. His country, he told the NY Times, “has a workforce that should be servicing the world and not just India.” Their real aim is to deal with the ongoing unemployment crisis in India.
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| EU-India Migration Agreement Tweeted by Modi |
Indian economy is not generating enough jobs for the nation's growing working age population. Corporate profits of Indian firms are growing at a much slower pace than the 8.2% GDP growth in its most recent quarter. Net income for Nifty 50 Index firms likely rose 1.1% in the three months through Dec. 31 from a year earlier, according to analyst estimates compiled by Bloomberg. That would be the slowest pace in five quarters, weighed down by deteriorating margins for banks. Falling profits and declining currency are causing foreign capital to flee Indian markets. Foreign Portfolio Investors (FPIs) pulled out over $20 billion from Indian equities in 2025, marking a severe, sustained withdrawal that has continued into 2026. Net Foreign Direct Investment (FDI) has seen consecutive monthly outflows, including $1.67 billion in October and $446 million in November 2025. Investment banker Ruchir Sharma wrote about it in a Financial Times op ed titled "India needs to import more capital and export fewer workers". Ruchir wrote: "Most strikingly, corporate revenue normally grows (or shrinks) with the economy — in any country. But last year corporate revenue growth for listed companies in India decelerated to barely half the GDP growth rate"
Related Links:
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India's Unemployment Crisis
Top One Percent: Are Hindus the New Jews in America?
Growing Share of Working Age Population in Pakistan
Pakistan Scientific Output is World's Fastest Growing
India's "Great Brain Drain" Accelerating
Digital Pakistan 2022
Pakistan's Large and Growing Civil Nuclear Program
Riaz Haq's Youtube Channel
55 comments:
Imagine for a moment that this is a Pakistan-EU trade deal. Imagine that it has a provision for "uncapped" mass immigration of Pakistani students and workers to EU countries. Then this would be a fairy tale about Pakistan's burgeoning youth population, reaping of demographic dividend, economic prosperity through remittances and so on.
But this is India. So I understand the story on India-EU trade deal should be about India's economic stagnation, the abysmally low per-capita GDP and incomes, the falling Rupee, brain drain, lack of jobs, falling profits for companies, foreign capital fleeing Indian markets, right-wing backlash against Indian immigrants in the West etc etc.
Never mind that Pakistan fares worse in most or all of these.
AI Overview
The 2026 EU-India trade deal, hailed as a "mother of all deals," faces significant opposition within the European Parliament, driven by concerns over lack of worker rights, environmental protections, and lingering protectionism in India. Despite reducing Indian tariffs on autos and wine, critics fear the deal harms local producers without securing sufficient sustainable development guarantees.
Opposition Highlights: Some MEPs and industry groups (like Eurofer) criticize the deal for imbalances, citing India's protectionist procurement policies.
Key Issues: The agreement lacks strong provisions on workers' rights and social protection, which angers key sections of the European Parliament.
Strategic Context: The deal was accelerated as a geopolitical counterweight to U.S. tariffs and to reduce reliance on China, making it sensitive to political shifts within the EU.
Ratification Hurdles: While aimed for 2027 implementation, the deal must pass approval from the European Parliament and all member states, where similar agreements (like Mercosur) have recently stalled.
While the deal strengthens trade in automobiles and machinery, opposition remains regarding whether it truly creates a fair, rules-based partnership or simply prioritizes geopolitics over European standards.
auspill
@aus_pill
India’s ruling BJP party leadership have said they want a strong diaspora, using existing influential ones as their model. This influence, combined with remittances and staving off a youth unemployment crisis is why they’re aggressive about putting migration pacts in trade deals.
https://x.com/aus_pill/status/2016720162016411752?s=20
Ajay Kamath
@ajay43
The INR has fallen 6% against the Pakistani rupee over the past few weeks. It has literally collapsed against the Euro. Not one policy maker has an explanation, not one media outlet is asking questions, and
@iam_juhi
and
@SrBachchan
aren’t making jokes
https://x.com/ajay43/status/2016795856419357022?s=20
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sahil bhadviya
@sahilbhadviya
INR is not just falling against USD. It is falling against all major currencies. A euro trip is now 20% more expensive in last 1 yr. UK trip is 12%-14% expensive.. this is crazy. I fail to understand what is happening.
https://x.com/sahilbhadviya/status/2016772489519779916?s=20
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Pakistan becomes latest Asian country to introduce checks for deadly Nipah virus | Reuters
https://www.reuters.com/business/healthcare-pharmaceuticals/pakistan-becomes-latest-asian-country-introduce-checks-deadly-nipah-virus-2026-01-29/
Summary
India confirmed two infections in late December
India says no outbreak, no need for screening at its airports
A number of Asian nations have tightened screening
Nipah has high mortality rate but not easily transmitted
LAHORE/HANOI/HYDERABAD, Jan 29 (Reuters) - Authorities in Pakistan have ordered enhanced screening of people entering the country for signs of infections of the deadly Nipah virus after India confirmed two cases, adding to the number of Asian countries stepping up controls.
Thailand, Singapore, Hong Kong, Malaysia, Indonesia and Vietnam have also tightened screening at airports. But an Indian official said there were no plans to introduce screening at the country's airports and said there was no sign of any outbreak.
The Nipah virus can cause fever and brain inflammation and has a high mortality rate. There is also no vaccine. But transmission from person to person is not easy and typically requires prolonged contact with an infected individual.
PAKISTAN SEEKS TRANSIT HISTORY
"It has become imperative to strengthen preventative and surveillance measures at Pakistan's borders," the Border Health Services department said in a statement.
"All travelers shall undergo thermal screening and clinical assessment at the Point of Entry," which includes seaports, land borders and airports, the department added.
The agency said travellers would need to provide transit history for the preceding 21-day period to check whether they had been through "Nipah-affected or high-risk regions".
There are no direct flights between Pakistan and India and travel between them is extremely limited, particularly since their worst fighting in decades erupted last May.
In Hanoi, the Vietnamese capital's health department on Wednesday also ordered the screening of incoming passengers at Noi Bai airport, particularly those arriving from India and the eastern state of West Bengal, where the two health workers were confirmed to have the virus in late December.
Passengers will be checked with body temperature scanners.
"This allows for timely isolation, epidemiological investigation," the department said in a statement.
That follows measures by authorities in Ho Chi Minh City, Vietnam's largest city, who said they had tightened health controls at international border crossings.
NO OUTBREAK, NO WORRY, SAYS INDIA
India's health ministry said this week that authorities have identified and traced 196 contacts linked to the two cases with none showing symptoms and all testing negative for the virus.
The two infected people are health workers, with the male patient doing well and likely to be discharged from hospital soon, while the female patient remains critical and under treatment, the chief district medical officer in the eastern Indian state of West Bengal told Reuters on Thursday.
Indian health authorities have repeatedly sought to reassure people that the infection has been contained and that there is no reason to fear an outbreak. Federal health authorities also said there was no need to screen passengers at Indian airports.
Vineeth, just wondering if you pass the same/similar comments on in Indian media when they post negative news about Pakistan.
G. Ali
If you look at this development beyond the India-Pakistan animosity prism, it is about time and that goes for any economy not US. While you can’t completely de-couple from the US, you have to de-risk and put more eggs in other baskets of the world.
@Vineeth 🤣🤣🤣 but unlikely to happen in Riaz's lifetime
You mentioned racism in Germany, but Indians haven't been the focus of Afd. Their focus is largely regugees from mostly ME and African countries. Remember, Germany is the most popular country for aspiring refugees. This is changing though now, with current govt. following a very harsh route (to appease and win back Afd voters).
Indians just like any other S. Asians largely face "everyday racism" (I suspect this is no different in France or Italy). ie, you could get ill treated in a restaurant or be berated by your colleagues based on skin color. This has to be read together with more assertive actions to emphasise diversity by govt. agencies. Ultimately, Indians will never choose Germany like they chose Canada/US or UK due to high barriers such as language, lack of social mobility for immigrants etc.
Interesting:
This is not an economy; it is a feudal estate with a digital gloss. The celebrated GDP growth rate, often near 7%, is driven almost entirely by the consumption and investment of this microscopic elite and the sectors that serve them: high-end services, luxury goods and speculative finance. It is a closed-loop circuit of prosperity.
https://asiatimes.com/2026/01/the-fast-growth-mirage-of-modinomics/
Sólionath
@Anarseldain
Modi is an ethnic nationalist and the explicit goal of his party is to send millions of indians to the first world so that they can secure funding and policy influence for india, citing zionism as an example.
https://x.com/Anarseldain/status/2016887094464172457?s=20
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Polish Connection
@PoleConnection
Outcomes of the India EU deal, retweeted by Modi
https://x.com/PoleConnection/status/2016384034662679026?s=20
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Narendra Modi
@narendramodi
These outcomes reinforce our commitment to further strengthening the partnership between India and the European Union.
https://x.com/narendramodi/status/2016149408027693258?s=20
Sushant Singh
@SushantSin
This is nominal wage growth. Real wage growth is actually negative under the Modi govt. How can that lead to increased consumption which is what would drive private investment?
https://x.com/SushantSin/status/2016724428952858854?s=20
India’s consumption story has a wage growth problem | Business News - The Indian Express
https://indianexpress.com/article/business/india-consumption-story-has-a-wage-growth-problem-10499910/
While one-off tax cuts can boost consumption in the short term, sustained increase in household demand requires wages to grow at a healthy clip.
The year 2025-26 has been about supporting household consumption. First, the Union Budget presented last year lowered income tax rates under the new regime. Then, in September, the long-awaited rationalisation of the Goods and Services Tax (GST) was finally announced. Now, with the Union Budget for 2026-27 around the corner, it is expected that segments other than the consumer will be the focus.
But it is worth examining if consumption – even after the two supportive measures of the last one year – is indeed doing well. The problem is that there is no clear answer.
Yes, demand for consumer durables rose in the aftermath of the GST rate cuts, with vehicle sales increasing significantly, in particular as households took advantage of lower prices. According to credit bureau TransUnion CIBIL, demand for consumer durable loans was incrementally higher by around one-and-a-half times in the 20-day festival window between Dussehra and Diwali compared to the previous year. This, the firm said last month, was
- "The INR has fallen 6% against the Pakistani rupee over the past few weeks. It has literally collapsed against the Euro. Not one policy maker has an explanation, not one media outlet is asking questions.."
- "INR is not just falling against USD. It is falling against all major currencies. A euro trip is now 20% more expensive in last 1 yr. UK trip is 12%-14% expensive.. this is crazy. I fail to understand what is happening."
The people who wrote these are either clueless about how the global economy works and how the valuations of currencies are inter-linked, or their comments are driven by other motivations. A fall in the value of Indian Rupee against USD will have a knock-on effect on its value against other currencies as well including Euro and even the Pakistani Rupee.
Remember that when the Pakistani Rupee was steeply devalued against the US Dollar a few years back its value against the Indian Rupee fell as well, despite India-Pakistan trade being miniscule.
For example, 1 INR = 1.55 PKR in 2016. Due to the sharp decline of PKR vs USD in the succeeding years the exchange rate became 1 INR = 3.69 PKR in Sep 2023. After the fall of INR vs USD after Trump's tariffs, the exchange rate is now 1 INR = 3.06 PKR. Similarly, 1 PKR = 113 EUR in early 2016. In Sep 2023 it was 1 PKR = 328 EUR.
Would it make any sense then in wondering why the value of PKR fell against EUR or INR after it was devalued against USD?
So there isn't anything surprising here. If the value of INR falls against USD, its value against other currencies would decline as well. As other economic analysts have pointed out, this is the direct effect of Trump's tariffs which has badly hit Indian exports to US, with the result that there are fewer Dollars coming in while the demand for USD remains high to pay for India's imports. If there are fewer Dollars, importers would try to buy more Euros instead which would result in the fall of Indian Rupee against Euro as well. In effect, its essentially the demand-supply dynamics that determines the valuations of currencies.
G Ali,
The only Indian English language media I used to read regularly was "The Hindu". After that got paywalled years ago I have since been mostly reading local Malayalam language media outlets for national and regional news, and international media outlets for international news. For news from Pakistan I mostly used to read DAWN. Malayalam language media here don't cover news from Pakistan that much, so there isn't much of an opportunity for me there to comment about India-Pakistan matters. But I do remember posting comments about the loss of Indian jets in Operation Sindoor and the exaggerated official narratives around that skirmish.
Does that answer your question?
The Economic Survey 2025-26 projects India's nominal GDP to expand to ₹357.14 lakh crore in FY26, up from ₹330.68 lakh crore in FY25, representing an 8% growth rate. This projection highlights continued economic expansion with a 7.4% real GDP growth estimate for the same period.
At 92 to a US$, ₹357.14 lakh crore converts to $3.9 trillion, while Modi govt clams well above $4.1 trillion.
https://www.youtube.com/live/UtF6aUpqSbs?si=5xbN-_woHq-jKs-Z
- "At 92 to a US$, ₹357.14 lakh crore converts to $3.9 trillion, while Modi govt clams well above $4.1 trillion."
They would have calculated it based on the INR 85 = 1 USD rate for Jul 2025 after the slide began. Not unreasonable if they expect the current fall to be temporary and that a trade deal with US to eventually take the exchange rate of the US Dollar back to that level. The sudden collapse of the exchange rate of the Rupee from 85 to 92 happened in just the last 6 months and the reason is pretty obvious.
And as I noted in another comment yesterday (not yet published) about the sales data of two-wheelers in India and Pakistan for CY 2025, the real size of the Indian economy would be very likely in the $4.1 trillion range IF Pakistan's is indeed $410 billion. I do not see any other reason why India should be selling 11 times as many two-wheelers as Pakistan if its economy weren't as large in proportion, since the prices of the popular commuter motorcycles in India and Pakistan are mostly on par. The much wider disparity in car sales - 22 times - is likely to due to relatively higher prices of cars in Pakistan.
Automobile ownership is a poor indicator of GDP in South Asia given that both India and Pakistan are among the least motorized countries in the world.
https://www.visualcapitalist.com/vehicles-per-capita-by-country/
Pakistan steps up EU trade engagement as India deal raises export fears
https://www.arabnews.com/node/2631187/pakistan
Deputy PM chairs inter-ministerial meeting, calls GSP+ “crucial” for growth
Move follows India–EU trade pact that industry warns could hit exports, jobs
ISLAMABAD: Pakistan’s Deputy Prime Minister and Foreign Minister Mohammad Ishaq Dar on Friday chaired a high-level inter-ministerial meeting to review and strengthen trade and economic relations with the European Union, as Islamabad scrambles to safeguard market access following India’s new trade deal with the bloc.
The meeting is part of a broader diplomatic and policy push this week after India and the EU confirmed a free trade agreement granting Indian exporters sweeping tariff-free access to Europe — a development Pakistani exporters and analysts warn could erode Pakistan’s competitiveness, particularly in textiles, its largest export sector.
The EU is Pakistan’s second-largest export market, accounting for about $9 billion in annual shipments, mostly textiles and apparel. Industry leaders have warned that India’s tariff-free access could undercut Pakistan’s long-standing advantage under the EU’s Generalized Scheme of Preferences Plus (GSP+), which allows duty-free access in return for commitments on labor rights, human rights and governance.
At Friday’s meeting, Dar emphasized the centrality of GSP+ to Pakistan’s trade strategy with Europe.
“He emphasized that GSP Plus remains a crucial framework for mutually beneficial trade and underlined the need to maximize its potential for Pakistan’s economic growth,” the Foreign Office said in a statement.
Dar also stressed the importance of enhancing trade cooperation with the EU and exploring new avenues for economic engagement, as Pakistan assesses how to respond to shifting trade dynamics in Europe.
The inter-ministerial huddle follows a series of rapid consultations this week, including a meeting between Prime Minister Shehbaz Sharif and the EU’s ambassador to Pakistan, as well as briefings by trade bodies to Finance Minister Muhammad Aurangzeb on the potential impact of the India–EU agreement.
Exporters have warned that unless Pakistan lowers production costs, particularly energy tariffs, and secures continued preferential access, the country could face declining market share in Europe and job losses across its labor-intensive textile sector.
Pakistan’s Foreign Office has said Islamabad is aware of the India–EU agreement and continues to view its trade relationship with the EU as mutually beneficial, but officials acknowledge that the new deal has intensified pressure to defend Pakistan’s position within the bloc.
- "Automobile ownership is a poor indicator of GDP in South Asia given that both India and Pakistan are among the least motorized countries in the world."
Indeed the per-capita ownership of motor vehicles are quite low in India and Pakistan compared to many smaller developing economies, but that doesn't mean these numbers (and especially their visible disparity) are irrelevant as an economic indicator.
I'm sure you would agree that unlike the case of developed economies where motorcycling is more of a pastime or lifetsyle choice they constitute a vital mode of mobility for middle classes in India and Pakistan - particularly so for those among its lower middle classes who cannot afford a car. As a result, these sales numbers and their relative disparity do reveal some economic facts - especially the relative sizes of the middle classes of the two countries and their relative disposable incomes.
For one, we know that India's population is 5-6 times that of Pakistan. From what I could see the prices of the popular commuter motorcycles like the popular Honda CD70 or the Pridor in the Pakistani market are on the same ballpark as a Hero HF Deluxe or Splendor in India. Had India's per-capita GDP and income (or atleast those of its middle classes) were on the same level as Pakistan's we would have seen two-wheeler sales in India clocking only at around 5-6 times that of Pakistan's. But the actual difference we see here is on the order of 10-12. What explains this if not the higher average incomes for India (or the Indian middle class) vis-a-vis Pakistan's?
If you think is there is an alternate explanation for the disparity in numbers I would be interested to hear it. Is there some other reason why Pakistan's middle class would buy fewer two-wheelers on a per-capita basis than India? From what I see they aren't buying more cars to compensate for this (sales of cars in Pakistan is 22 times lower than India's), and it doesn't seem to be the case that Pakistan's public transportation infrastructure is better developed than India's either.
- "Pakistan steps up EU trade engagement as India deal raises export fears"
So, its not the uncapped mass exodus of Indians to EU that should be worrying Pakistanis about the India-EU trade deal but the potential loss of that market. But never mind. As long as Dear Donald doesn't change his mind about India, Pakistanis have the US market all to themselves.
Vineeth: “ If you think is there is an alternate explanation for the disparity in numbers I would be interested to hear it”
The only thing that comes to mind is that Indians are willing to take on a lot more debt than Pakistanis. Currently, the household debt in India is 41% of GDP vs 2% of GDP in Pakistan.
https://www.imf.org/external/datamapper/HH_LS@GDD/GBR/USA/IND/BGD/CHN/PAK/IDN/RUS
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When easy EMIs (Equated Monthly Installment) become a trap: 85% of struggling borrowers spend over 40% of their income often to predatory lenders - The Economic Times
Mumbai: India's household debt rose to 41.3% of gross domestic product at the end of March 2025, extending a steady increase above its five-year average, as b ..
Read more at:
https://economictimes.indiatimes.com/news/economy/finance/indias-household-debt-seen-above-5-yr-average-but-lower-than-chinas/articleshow/126281475.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
- "The only thing that comes to mind is that Indians are willing to take on a lot more debt than Pakistanis."
So the only explanation you could think of for these numbers is that Indians love taking debt by buying more motorcycles per-capita than Pakistanis, and not that - just maybe - Indians do indeed have a higher per-capita income in proportion to the advertised size of the two economies?
Well, I rest my case. :)
Vineeth: “ - just maybe - Indians do indeed have a higher per-capita income in proportion to the advertised size of the two economies?”
Is that why 85% of Indian borrowers are struggling to pay it back?
AI Overview
Real wages in India have experienced a period of stagnation or decline over the past decade, driven by inflation outpacing nominal wage growth, particularly for salaried professionals and rural workers. Despite GDP growth, the purchasing power of many workers has not improved, leading to a "silent crisis" in consumption. This trend is attributed to structural issues, including a shift towards lower-quality, insecure, or informal employment, which has hindered broader economic prosperity.
https://www.indiatoday.in/interactive/photo-essay/the-great-indian-salary-crisis-middle-class-unemployment-job-loss-268-04-07-2025#:~:text=%E2%80%9CIndia's%2520salaried%2520professionals%2520have%2520experienced,That's%2520no%2520longer%2520the%2520case.%E2%80%9D
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When easy EMIs (Equated Monthly Installment) become a trap: 85% of struggling borrowers spend over 40% of their income often to predatory lenders - The Economic Times
Mumbai: India's household debt rose to 41.3% of gross domestic product at the end of March 2025, extending a steady increase above its five-year average, as b ..
Read more at:
https://economictimes.indiatimes.com/news/economy/finance/indias-household-debt-seen-above-5-yr-average-but-lower-than-chinas/articleshow/126281475.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
- "Is that why 85% of Indian borrowers are struggling to pay it back?"
How easy it is to misread a headline! Please take a closer look at the article.
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When easy EMIs become a trap: 85% of struggling borrowers spend over 40% of their income often to predatory lenders
https://www.google.com/amp/s/m.economictimes.com/wealth/borrow/when-easy-emis-become-a-trap-85-of-struggling-borrowers-spend-over-40-of-their-income-often-to-predatory-lenders/amp_articleshow/126523169.cms
"The survey conducted by an expert panel, a unit of Eresolution Consultancy, that specializes in cases related to loan defaults, cheque bouncing, and harassment by recovery agents covering 10,000 financially distressed borrowers across India between June and December 2025, reveals 85% of struggling borrowers are forced to pay more than 40% of their monthly income toward EMIs."
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Nowhere does it say that "85% of Indian borrowers" are struggling to pay back their loans. What it clearly says is that a survey of 10,000 "financially distressed" borrowers revealed that 85% of those "struggling borrowers" (i.e. 85% out of those 10,000) are forced to pay 40% of their monthly pay towards EMIs.
Secondly, if you read that India Today article you quoted, you would see it is talking of the relatively affluent, white-collar salaried professionals living in metro cities like Delhi, Chennai, Ahmedabad, Bangalore, Pune etc that have very high costs of living especially in terms of house rent, utility prices, school fees etc. Their primary complaint is that their salaries haven't kept up with the rising cost of living (i.e. daily expenses) in those cities. This is a familiar story even in the West these days, isn't it?
On the other hand, the tier-II cities in India have significantly lower cost of living. I used to work at an IT company in Bangalore from 2005-2008 and shifted later to another company in Kochi, Kerala. The difference was very obvious. My house rent and other daily expenses were a lot lower and I was able to save a lot more every month. Therefore this story isn't about any general debt distress nation-wide. Its about how the rising living costs are eating into the salaries of corporate workers in India's metro cities. Also, these are the demographic that primarily drive car sales in India, not its two-wheeler sales. Corporate employees usually don't buy a Hero Splendor. Those with families buy cars, and the younger ones buy more premium motorcycles.
As for the second article from Economic Times about India's household debt, perhaps you missed this part.
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"India's household debt rose to 41.3% of gross domestic product at the end of March 2025... The ratio, up from a five-year average of 38.3%, remains lower than China's 60% and Malaysia's 69%."
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i.e India's household debt is still a lot lower than China and Malaysia. Would you say the Chinese and Malaysian households are going through a debt distress that is far worse than India's?
The survey included 10,000 borrowers but lot more than 10,000 borrowers are experiencing distress in India. The percentage of distressed borrowers in India is 60 to 68%.And the reason is stagnant income/wages.
Approximately 60% to 68% of borrowers in India are experiencing financial distress, with some estimates indicating 85% of distressed borrowers allocate over 40% of their monthly income toward EMIs. A survey of 10,000 distressed borrowers (June–Dec 2025) highlighted a massive debt crisis, with many individuals unable to cover daily expenses due to high-interest personal loans, credit card debt, and BNPL, as stated by Expert Panel (via Moneycontrol) and Expert Panel (via Moneycontrol).
Key details regarding the distressed borrower situation in India:
Widespread Distress: A 2025 Bloomberg opinion piece noted that 68% of borrowers in certain segments show signs of distress.
High Debt Burden: Around 85% of distressed borrowers are spending more than 40% of their monthly income on loan repayments.
Key Drivers: Major causes include job losses (31%), extreme EMI-to-income ratios (28%), and emergencies like medical crises (19%).
Rising Defaults: The delinquency rate for credit card debt over 90 days reached 15% as of March 2025.
Impact on Borrowers: 60% of borrowers are struggling with repayments or have ceased payments entirely, with 40% of them taking new loans to pay off old ones, say Experts Panel (via Moneycontrol).
The surge in digital loans and personal loans has driven up household debt, leaving many consumers vulnerable to financial ruin and aggressive recovery tactics.
Perhaps this Bloomberg piece is the source of that 68% figure. Again, that 68% distressed borrowers specifically refers to the subprime loans in the microfinance segment - mostly the poor - and does not include other conventional loan borrowers.
Essentially the solution they highlight for that in the article is greater monitoring and regulation by the government and the RBI of the microfinance sector.
https://www.bloomberg.com/opinion/articles/2025-04-03/india-s-subprime-bubble-grew-2-100-now-a-bust-looms?embedded-checkout=true
India’s real problem is stagnant wages and income.
AI Overview
Real wages in India have experienced a prolonged period of stagnation, with growth failing to keep pace with inflation or corporate profit growth. Despite strong GDP growth and record corporate profitability, particularly in 2023-24, income levels for many, especially in the salaried and rural sectors, have remained below pre-pandemic levels.
Wage Stagnation Data: Real wages for salaried workers in mid-2024 were lower than in 2019. Rural real wages have seen near-zero growth between 2015-16 and 2022-23, following a period of faster growth, reports Ideas for India.
Profits vs. Wages: While 4,000 listed companies reported a 22.3% rise in profits for FY24, employee expenses grew only 13%, indicating a focus on cost-cutting over salary increases.
Impact on Consumption: Stagnant wages have reduced consumer purchasing power, which is a key driver of India's GDP, leading to concerns about the sustainability of the economic momentum.
Sectoral Disparities: The IT sector has seen a sharp drop in pay increases from 8–10% to roughly 3%, while urban wage growth was hit by high inflation and AI-related job shifts.
Root Causes: Factors contributing to this trend include post-pandemic recovery issues, high unemployment/underemployment, the impact of structural changes like GST and demonetization, and low agricultural productivity.
The government has acknowledged that weak wage growth is impacting consumer demand and the broader economy, urging for a better distribution of income. However, some recovery in urban real wages was observed in late 2025 due to lower inflation, per Vajiram & Ravi.
I'm not sure if you would publish this, but since we are doing so many AI overviews of Indian economy, this is the AI overview I got about the state of Pakistan's economy. Shall we see a writeup on this anytime soon sir?
AI Overview
Pakistan's economy is fragile, marked by high inflation, significant external debt, currency instability, and reliance on IMF bailouts, struggling with slow growth and rising poverty despite efforts to build resilience, facing challenges like structural weaknesses, political uncertainty, and limited job opportunities, especially for youth, contrasting starkly with India's faster growth.
Key Economic Challenges
Debt Burden: Massive external debt and a cycle of borrowing to service old loans, leading to dependency on foreign aid.
Inflation & Currency: High inflation and sharp currency swings have eroded purchasing power and business confidence.
Stagnant Growth: Economic growth barely keeps pace with population growth, resulting in stagnation, not progress, with low GDP per capita compared to regional peers like India.
Balance of Payments: Persistent deficits and low foreign reserves create pressure, with reliance on remittances and loans over exports.
Poverty: Poverty levels have risen recently after a period of decline, with increasing numbers falling below the poverty line.
Structural Weaknesses: Issues include weak private sector growth, reliance on agriculture, security concerns, and governance gaps (like elite capture).
Sectoral & Social Impacts
Youth Unemployment: High youth unemployment and limited opportunities lead to significant anxiety and a desire to emigrate, notes IANS LIVE.
Agriculture: While some areas like cotton, fruits, and livestock show growth, challenges remain, impacting food security and exports.
Current Outlook & Policy
External Support: The economy relies heavily on continuous bailouts and external financing, providing short-term relief but not solving underlying issues, says FocusEconomics and Economics Observatory.
Government Focus: Efforts aim to strengthen fundamentals, boost exports, improve human capital, and foster private sector growth, according to the World Bank Group and URAAN Pakistan.
AI Overview
Pakistan's economy is undergoing a cautious recovery in 2026, transitioning from a 2023 crisis to stabilization with GDP growth projected around 3%–3.2%, according to Asia Times and YouTube. Key drivers include significantly lower inflation (dropping near 0.3% in early 2025), rising foreign exchange reserves, and strict IMF-backed reforms, though structural challenges regarding debt and growth sustainability remain.
This video provides a summary of the economic reforms in Pakistan:
https://youtu.be/jU-fADS-iao?si=Ky1hdft26C7ladmT
Key Aspects of Pakistan's Economic Recovery (2025-2026)
Macroeconomic Stability: The economy has shifted from near-collapse to a stabilization phase. Inflation plummeted from over 17% in April 2024 to exceptionally low levels (e.g., 0.3% in April 2025), driven by tight monetary policy and reduced global commodity prices.
Growth Projections: The World Bank estimates ~3% growth for FY2025 and similar for FY2026, while the IMF projects 3.2% for 2026.
Foreign Exchange & Reserves: Foreign exchange reserves recovered to approximately $11 billion, offering better, though still limited, import coverage.
External Debt & Aid: Despite high debt, Pakistan has managed to secure external financing and roll over debts. The country also began prepaying some domestic debt, reflecting improved fiscal discipline.
Investment & Confidence: Investor confidence has shown signs of revival, with a reported 20% increase in Foreign Direct Investment (FDI) in the first half of FY2025.
Ongoing Challenges: Structural issues persist, including a low investment-to-GDP ratio (13.8% in FY2025), high external financing needs ($24.6 billion projected for FY26), and the need for further structural reforms to ensure long-term, inclusive growth.
This video discusses the challenges to Pakistan's economic recovery:
https://youtu.be/muhqn5JUwKs?si=NWC_i4Zk54yjYJaz
Pakistan Is Talking With IMF Over Plan to Boost Economic Growth
https://www.bloomberg.com/news/articles/2026-01-30/pakistan-is-talking-with-imf-over-plan-to-boost-ecnomoic-growth?embedded-checkout=true
Pakistan is in talks with the International Monetary Fund over a plan to boost economic growth after achieving stability with stringent policy measures, Prime Minister Shehbaz Sharif said.
The International Monetary Fund paid $1.2 billion in installments to Pakistan as part of a loan program and a separate climate change impact debt, helping the country repay its debt and bolster foreign exchange reserves.
Prime Minister Shehbaz Sharif announced a cut in power tariff for industry and a lowering of the export refinance rate, saying he is convinced that direct taxes need to be lowered to help the industry grow.
Pakistan is in talks with the International Monetary Fund over a plan to boost economic growth after the South Asian nation achieved stability with stringent policy measures, Prime Minister Shehbaz Sharif said.
“Now is the right time to move toward sustainable, export-led growth,” Sharif told leading businessmen at an event in Islamabad on Friday. “I have talked to the finance minister and the central bank governor that we have to divert the capital to help the industry. The governor has to listen to business leaders and take bold decisions.”
The global lender paid $1.2 billion in installments to Pakistan as part of a three-year loan program and a separate climate change impact debt. Funding from the IMF helped the cash-starved country to repay its debt and bolster foreign exchange reserves. The central bank predicted this week that by December its foreign reserves will cross $20 billion - a record. However, the program requires Pakistan to maintain a tight monetary policy and restrain spending.
State bank of Pakistan, the central bank, this week unexpectedly kept its key rate steady at 10.5%, citing concerns inflation may pick up while forecasting GDP will expand 3.75%–4.75% in the fiscal year to June.
Sharif said his team led by Finance Minister Muhammad Aurangzeb “presented a good case” to the IMF. “I have told them that we have achieved stability and now we have to generate employment and reduce poverty,” he said.
“I am convinced that we need to lower direct taxes to help our industry grow,” Sharif said while announcing a 4.4 rupee cut in power tariff for industry and lowering the export refinance rate to 4.5% from 7.5%. “I want to do more but our hands are tied.”
What is unlikely to change in Mr Haq’s lifetime or mine, is Pakistan vs India confrontations whether on social media or elsewhere. Meanwhile, what’s sadly ignored are successful methods that could improve economic productivity and decrease deprivation. Lot what goes on this blog are mindless elitist comparisons among people who probably don’t even live there.
Vineeth, a simple Yes or No would be enough to answer my original question.
G. Ali
G Ali,
I have already answered your question.
Regards.
"Pakistan’s export fragility exposed"
https://www.dawn.com/news/1970476
The recently finalised EU–India Free Trade Agreement (FTA), described by Brussels as “the mother of all agreements”, is a crucial development that should prompt Pakistan to reassess its export strategy. The European Union or EU is not just another market for Pakistan; it is the cornerstone of the country’s export economy. Approximately 40pc of Pakistan’s exports head to the EU, with textiles and clothing representing nearly 76pc of those exports in 2024.
This heavy concentration on a single market and product category brings both advantages and risks. On one hand, European demand has traditionally been stable, and the Generalised Scheme of Preferences Plus (GSP+) has provided Pakistani exporters with sustained market access for value-added textiles. On the other hand, such reliance makes Pakistan highly vulnerable. Any reduction in competitiveness — whether through tariffs or non-tariff barriers — can quickly lead to lost orders, idle factories, job losses, and increased pressure on foreign exchange reserves.
Impact of the EU–India agreement
The vulnerability of Pakistan’s export sector will potentially come under strain due to the EU–India agreement. Indian exports, including textiles, will benefit from phased tariff reductions, eventually achieving zero duties for key products. Pakistani exporters have long relied on their preferential margins under GSP+ to compete in Europe. However, even with these preferences, Pakistan’s textile exports to the EU do not match China’s volume, and its share in core product categories (HS codes 61, 62, and 63) is not significantly larger than India’s, despite the 10-12pc tariffs India was facing.
As tariff preference margins diminish, the focus will shift from tariffs to core business fundamentals — areas where Pakistan has repeatedly delayed reforms. These include energy costs and reliability, turnaround times, compliance, exchange-rate stability, workforce skills, productivity, and product development.
Comparative exposure: India vs Pakistan
Comparing India and Pakistan underscores the risks of over-concentration. For India, the EU is an important market, but not an existential one. In 2024, India exported $97.2 billion to the EU out of total global exports of $441.7bn, meaning only about 22pc of its exports were EU-bound. In contrast, about 42pc of Pakistan’s exports relied on the EU, highlighting a much greater exposure to market shocks.
In textiles alone, the EU imported roughly $9bn from India and $9.7bn from Pakistan in 2024. Although both countries are similar in export value, for Pakistan, textiles to the EU represent the engine of its export economy, while for India, they are just one component of a diverse export portfolio.
With India’s tariff disadvantage disappearing, even a small shift in EU orders could disproportionately harm Pakistan. There is significant product overlap and reliance on cotton; India’s costs are lower, productivity is higher, it has a scale benefit, and its man-made fibres are more competitive. A 15pc reduction in Pakistan’s EU textile share would mean a loss of approximately $1.5bn in exports.
While India is less likely to gain from Vietnam (which will benefit further from the EU–Vietnam FTA by 2027) or Bangladesh (which enjoys quota-free, duty-free access under Everything but Arms), India stands to benefit as buyers diversify away from China under the China+ thrust and choose to substitute some sourcing away from Pakistan.
Over time, India could add $3–4bn in additional textile exports to the EU. A third to a half of this could be at Pakistan’s cost, though buyers are unlikely to switch all sourcing away from Pakistan.
(Contd..)
(Contd..)
https://www.dawn.com/news/1970476
Recommended actions for Pakistan
First, the GSP+ must be defended through visible action: The government must protect GSP+ by ensuring compliance with labour, environmental, and governance conventions. Export policy reforms, especially in energy, taxation, and exchange rates, are essential. Non-compliance puts export revenue at risk, especially as GSP+ has barely compensated for Pakistan’s 40pc higher energy costs compared to India — a cushion that may soon disappear.
Second, we have to move beyond tariff preferences. Exporters need to recognise that competing on tariff margins alone is no longer sufficient. The new focus must be on cost, quality, product range, sophistication, compliance, reliability, and trust. Addressing skills gaps, possibly by bringing in experienced supervisors from countries like Sri Lanka, will be vital.
Third, standards-driven trade must be prioritised and prepped for. Europe is increasingly enforcing standards that act as “shadow tariffs” on non-compliant suppliers. Pakistani exporters must prepare for carbon reporting and evolving EU border adjustment mechanisms to maintain access.
Fourth, Pakistan must diversify not only within textiles (eg, man-made fibres, technical textiles, performance wear, and design-led home products) but also geographically, by developing new export destinations. India’s resilience comes from market and product diversification, allowing it to adapt to changing conditions.
While Pakistan cannot influence the terms of the EU–India agreement, it can take decisive steps to ensure its textile industry remains competitive as preferences erode. The EU is a lifeline for Pakistan’s exports. It is crucial that Pakistan stops treating this market as a comfort zone and instead undertakes the necessary reforms to safeguard its economic future.
Vineeth, no you haven't.
G. Ali
Brofessor sb, Do you consider power generation to be a good indicator for GDP in South Asia? India's power generation at 1.8 Trillion unit is almost 12 times that of Pakiland. Regards
G Ali,
I did. But since apparently you do not have the time or inclination to read the five sentences I wrote above (by your own admission in another thread), I'll summarize the answer as: "Yes, when I get the chance (which isn't a lot in regional Malayalam language media)".
I hope the answer is clear enough to you now? Or would you like it to be even shorter?
Regards.
Key Data Points on Pakistan's Power Generation:
Total Generation (2024-2025): Approximately 137 TWh in FY2024 (excluding some behind-the-meter solar), with estimates reaching up to 150 TWh based on total capacity, with a growing reliance on solar.
Solar Growth: As of April 2025, net-metered solar reached 5.3 GW. The total solar contribution to the energy mix is increasing rapidly, with some reports suggesting solar is becoming a dominant, often under-reported, source of power.
Installed Capacity: The total installed capacity was around 46.6 GW to 49.2 GW by early 2025.
Renewable Energy Share: While overall renewable energy (including large hydro) is part of the mix, solar and wind are growing rapidly, though their share often falls below official targets.
About 21% of India’s total energy consumption is electricity while it’s only. 13% in Pakistan. The use of natural gas as a source of energy is much more widespread in Pakistan.
Per capita natural gas consumption in Pakistan is 7.13 cubic feet while in India it’s just 1.44. Pakistan has extensive gas transmission and distribution pipelines.
On the plus side for Pakistan, there doesn't seem to be any talk of uncapped mass migration of Indians into US as part of the trade deal. So..
US and India reach trade deal, Trump says after Modi call
https://www.bbc.com/news/articles/c5yve1x9zv0o
US President Donald Trump announced that he agreed to a trade deal with India's Prime Minister Narendra Modi, where the US will lower tariffs on goods from India to 18% from 25%.
In a post on Truth Social, Trump said India will reduce trade barriers to zero and will also stop buying Russian oil. An additional 25% tariff penalty imposed for Delhi's refusal to stop buying oil from Russia will be dropped.
Modi said on X that he is "delighted" that an agreement with the US has been reached.
In the post, Trump said that a morning phone call with Modi included discussions of trade and the Russia-Ukraine war.
"He agreed to stop buying Russian oil, and to buy much more oil from the United States and, potentially, Venezuela," Trump wrote.
Trump added that, at Modi's request, he immediately "agreed to a trade deal" that would see tariffs lowered and India's tariffs and non-tariff barriers reduced to zero.
Additionally, Trump said Modi committed to buying more than $500bn (£366bn) worth of American goods including energy, technology, agriculture and coal products.
The trade relationship between the US and India has been strained since the US imposed 50% tariffs on goods from India - the highest for a country in Asia - in August, including a 25% penalty linked to India's purchase of Russian oil.
A White House official confirmed to the BBC that the Russian oil-linked tariffs will be dropped as part of the agreement and other tariffs lowered to put the rate at 18%.
"Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement," Modi said on X.
"When two large economies and the world's largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation," he added.
Indian exports to the US plummeted sharply as Trump's tariffs took effect.
Officials in Delhi have been seeking partnerships with other countries also grappling with Trump's tariffs.
Last week, India and the European Union announced a free trade agreement that is set to lower taxes on nearly all goods between India and the bloc of 27 European states, as both sides seek to deepen ties in the face of increasing tensions with the US.
The agreement, which European Commission President Ursula von der Leyen called "the mother of all deals", is poised to double EU exports to India by 2032, according to the EU.
Terry Haines, founder of Pangaea Policy, an analysis and forecasting firm, called the Washington-Delhi deal "an answer to those thinking the EU is flanking or gaining speed on the US on trade."
He said he expected US markets to "cheer" the agreement.
We Pay the Tariffs, a coalition of 800 US small businesses, criticised the announcement, noting that before Trump's tariffs policies were implemented, American importers paid an average of 2.5% on goods from India.
"This 'deal' locks in a rate six times higher than what we were paying a year ago," the organisation's director, Dan Anthony, said. "That's not relief, it's a permanent tax hike that will be in place for a long time."
US stocks inched higher after Trump announced the trade deal with Delhi on Truth Social.
"Lower than Pakistan, China: In trade deal with US, India secures a favourable tariff rate"
https://www.google.com/amp/s/timesofindia.indiatimes.com/business/india-business/lower-than-pakistan-china-in-trade-deal-with-us-india-secures-a-favourable-tariff-rate/amp_articleshow/127869988.cms
With this deal, India bags a place among countries facing one of the lowest tariff rates from the Donald Trump administration. Incidentally, the 18% tariff rate is lower than Pakistan’s 19%, Indonesia’s 19%, Vietnam’s 20%. Bangladesh’s 20%, and China’s effective tariff rate which ranges between 30-35%.
Vineeth, so Malayalam media, how convenient.
G. Ali
See new posts
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United States Trade Representative
@USTradeRep
India will lower tariffs on a wide array of U.S. industrial and agricultural goods to 0%.
President Trump’s historic deal with India delivers unprecedented market access for American farmers and producers.
https://x.com/USTradeRep/status/2018709394054144155?s=20
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Zhao DaShuai 东北进修🇨🇳
@zhao_dashuai
The US-Indian trade deal is a total Modi capitulation.
I see some indians celebrating the trade deal, because India gets 18% tariff, lower than countries they see as competitors.
But the problem is, Modi got the 18% by promising to have 0% tariff on major import items from the US, like agriculture products, energy and manufactured goods.
Modi also threw Russia under the bus by promising not to buy Russian oil.
So all US had to do for total India to surrender was to impose high tariffs, then drop the newly imposed tariff. In return, India changes their decade long trade policies.😂
This is the true nature of indians, they can spin any defeat into a victory on social media and on the news.
https://x.com/zhao_dashuai/status/2018685907155800365?s=20
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Sincere Dibya
@TheSincereDude
🚨 REALITY CHECK: Modi calls 18% tariff a “victory”,
But here’s what he’s NOT telling you:
1️⃣ Trump STARTED at 25%, went to 50% to bully us, then reduced to 18%; classic negotiation trap. We’re celebrating our own surrender.
2️⃣ India GAVE UP Russian oil; our cheapest energy source that saved billions for ordinary Indians. Who benefits? American oil companies.
3️⃣ We’ve committed to buy $500 BILLION of US goods; energy, coal, tech, agriculture. That’s not partnership, that’s colonial tribute.
4️⃣ Even at 18%, we’re taxed HIGHER than Vietnam (20% before, now similar), Thailand, Philippines, Indonesia, Malaysia (all 19%); so much for “special partnership.”
5️⃣ India’s average tariff is 17%, US is 3.3%. “Reciprocal” would mean they charge us 17%, not 18%+. Trump is charging us MORE than our own rate.
This isn’t diplomacy. It’s transactional humiliation dressed up as friendship.
Modi sold India’s strategic autonomy and energy security for a photo-op with Trump.
The 1.4 billion Indians deserve leaders who negotiate FROM strength, not ON their knees.
https://x.com/TheSincereDude/status/2018514396067357034?s=20
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Ajay Kamath
@ajay43
18% for us, ZERO for them. Awesomeness! What a deal! 🙄🙄🙄 No Russian oil, buy all American…. the good news just doesn’t stop. For them!!!
https://x.com/ajay43/status/2018393098393727160?s=20
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Manish Singh
@ManishNifty
JUST IN: 🇺🇸🇮🇳 India agrees to reduce tariffs on the United States to 0% and will stop buying Russian oil.
In return, the US will reduce tariffs from 25% to 18%
Wondering who is on the losing side in this deal
https://x.com/ManishNifty/status/2018372537995129127?s=20
As of now details of the trade deal remain sketchy to draw conclusions one way or the other. All we have at the moment are mostly political statements from both sides. Trump's statement that tariffs on Indian products will be lowered to 18% from the whopping 50% - if true - would come as a big relief to Indian exporters and would lower the pressure on the Indian Rupee. However the catch would be in the concessions that the Indian side had to make in return. Did the Indian side agree to reduce tariff to zero for all import categories from US, or only a select few? The Indian trade minister says that the politically sensitive agriculture and dairy sectors have been protected (not exactly a good thing from a competitive standpoint), but until they officially publish the contours of the deal or make a joint statement we cannot say for sure.
https://timesofindia.indiatimes.com/business/india-business/agricultre-dairy-shielded-in-india-us-deal-trade-pact-in-weeks/amp_articleshow/127894789.cms
As for the oil imports, all that matters for the Indian consumers at the end of the day is the price. By all accounts Indian refiners had already scaled down purchases of Russian oil after fresh US sanctions were imposed on several Russian energy firms.
G Ali,
Yeah, its actually quite convenient (and a lot more fun) writing satirical political comments in my native language than in English since we can use local slangs, idioms, word plays, iconic dialogues from movies etc. - a lot of which, unfortunately, is lost in translation even to other Indian languages.
Regards.
The Trump-Modi Trade Deal Won’t Magically Restore U.S.-India Trust
https://carnegieendowment.org/emissary/2026/02/india-us-trade-deal-tariffs-trump-modi-relationship
On Monday, after six months of rancor and wrangling, the United States and India at last announced an initial agreement on a trade deal. The agreement came just one week after India and the European Union sealed a formal free trade agreement that had been under negotiation for well over a decade.
The contrast is important in two respects.
First, the EU’s deal is a genuine trade agreement, while Washington’s, in keeping with the pattern of negotiations under President Donald Trump, is a trade “deal”—with all the flexibility and potential for reversal that the latter implies. Bluntly put, the United States hasn’t done true bilateral or plurilateral agreements since what feels like the Jurassic period, so we should temper our enthusiasm by recognizing that one of these things is not like the other.
Second, the American deal is still thin on details, many of which will need to be further negotiated. According to Trump, the deal includes a cut from 50 percent to 18 percent tariff rate on Indian exports, an agreement from India to purchase $500 billion in U.S. goods and services over time, and what the White House spokesperson Karoline Leavitt has now characterized as an explicit promise from India to stop purchasing Russian oil.
My advice? Everyone needs to take a deep breath.
The situation between Washington and New Delhi was utterly unsustainable, which is why a deal was inevitable. (In fact, I was surprised it didn't happen sooner.) If you care deeply about U.S.-India relations and are invested in them, then having the floor fall out—as it did—is bad news. This is the opposite, and we should celebrate it.
Since his arrival in January, U.S. Ambassador to India Sergio Gor has managed to reset the tone. Prior American ambassadors, such as Robert Blackwill and David Mulford, have fostered momentum by identifying just a few key priorities early in their tenures and then pushing both systems hard to move the ball downfield. Gor seems to have recognized that a U.S. tariff rate for India that was the highest in the world (alongside Brazil’s) was both unsustainable and an insuperable obstacle to progress in any other area. Smartly, he focused on removing it.
The resulting headline is that the deal cuts tariffs on India’s exports to 18 percent. That’s better than the 50 percent—a 25 percent base tariff coupled to an additional 25 percent penalty tied to India’s Russian oil purchases—but the tariff rate never should have been that high in the first place, and everyone had better hope it stays here.
Trump loves tariffs, full stop. He has used or threatened them for much more than just trade disputes, and they are now the one-size-fits-all solution to any and every issue that seizes his attention: because he seeks a crackdown on fentanyl flows, because he doesn't like a given country’s foreign policy choices, because he doesn’t like how a U.S. company has been treated, because he’d like to roll back other countries’ domestic regulatory regimes, because he thinks countries should buy American only, because he wants them to ditch supply chain relationships with third countries, because he doesn’t want anyone to do deals with the very countries that he himself is doing deals with, and even when others dare to object to his interest in annexing a piece of territory.
In short, tariff “deals” have foundered because he changes his mind or layers on new issues. Don’t believe me? Go talk to some South Koreans. Then ask a few Canadians. Both countries thought they had made deals, only to discover that the terms of such deals are subject to fresh threats and perpetual renegotiation.
(contd..)
(Contd..)
https://carnegieendowment.org/emissary/2026/02/india-us-trade-deal-tariffs-trump-modi-relationship
Analysts would be wise to ignore some of the numbers in the deal, or at least treat them as aspirational. How is India going to buy $500 billion of anything from the United States anytime soon? U.S. goods exports to India in 2024 were $41.5 billion. U.S. services exports to India in 2024 were $41.8 billion. So a 500 percent increase—from $83 billion to $500 billion—seems like, well, kind of a stretch. But U.S.-India trade has undershot its potential forever, so ambition is good.
I also have a hard time believing the government of India will make any Russian oil-related commitment explicit. After all, India has deep historical and sentimental ties to Russia that it will not simply ditch under American pressure. Maintaining the symbolic hedge that it can purchase Russian oil if it so chooses speaks both to Indian foreign policy autonomy and to its ability to resist American coercion, both of which are important factors in India’s domestic politics.
Initial signs suggest that New Delhi had already been incrementally reducing its imports of Russian crude, even in the absence of a deal with Washington. But publicly rebuking Russia—as Bessent and others in the administration repeatedly have—was always a nonstarter for Prime Minister Narendra Modi, who can ill afford to humiliate one of India’s most important defense partners. And Trump’s frequent suggestions that Venezuelan oil is the answer to the world’s crude import needs strains credulity when that country’s industry needs to be modernized, to the tune of tens or hundreds of billions of dollars in capital expenditure.
Most importantly, those who care about U.S.-India relations—have worked hard on them and have spent years struggling for them against domestic political pressure—should be happier than they were a few months ago. But let’s not talk as if the past six months never happened or somehow just went “poof” in a magical puff of fairy dust and smoke. International politics and domestic politics are not populated by unicorns and leprechauns, so there really is such a thing as collateral damage.
The biggest bipartisan achievement on both sides since the 2000s had been a depoliticized relationship. Because of all that has happened in recent months, this relationship has become politicized again. A lot of people put in a lot of work over recent decades to ensure that third-country relationships to which either side objected did not bleed back into U.S.-India relations: namely, India’s relationships with Iran, Myanmar, and Russia, to which Washington often objected, and America’s relations with China and Pakistan, to which India often objected. So the American decision to impose a 25 percent oil penalty tied to third-country choices set a bad precedent that will linger, even if it is now rolled back in this new tariff deal. This is the perverse foreign policy impact of the administration’s recent choices. It was obvious from the get-go that imposing an unprecedented 25 percent “Russian oil tariff” was a fool’s errand, since the United States had no realistic chance of persuading India to jettison its relations with Moscow wholesale.
Last August, I wrote about three fundamental facts in foreign policy: (1) domestic politics nearly always trumps foreign policy, (2) foreign policy arguments almost never prevail unless they are anchored by a strong domestic political foundation, and (3) trust is much easier to lose than to build. I hope the domestic politics around the relationship now get stronger for both India and the United States but fear that the ceiling of trust has been lowered very considerably. Washington and New Delhi are in a better place than they’ve been since August. Both leaders should take the win, and Gor and his counterparts should be commended. But it’s still worthwhile to take a deep breath, check the euphoria at the door, and see where we go from here.
Vineeth, obviously you don't get English sarcasm.
G. Ali
G Ali,
Oh, I do get English sarcasm. In case you are referring to what you actually meant by "convenient" above, my reply to it was sarcastic as well.
Either way, since I have already answered your question (though perhaps not to your satisfaction) and our little talk really isn't contributing anything relevant to the discussion here, shall we call it a day?
Regards.
The DeshBhakt 🇮🇳
@TheDeshBhakt
In the last few hours - every Trump administration official has given a more information about the #usindiatradedeal than the Modi Govt did in the last 24 hours (& now we know why)
Turns out that the Govt was celebrating without divulging all the details of the 'deal' - that include
🚨 India purchasing $500 BILLION worth of American goods
🚨 Opening up our protected agricultural sector for American products
🚨 Lowering tariffs on almost all US imports to ZERO (while still facing an 18% tariff on the American side)
🚨 Buying oil (or not) from where American decides for us.
Unless the entire US Govt is lying through its teeth - the alleged Dhurandhar has done surrender.
Watch New Ep. - https://youtu.be/0_u0ZNxRnX0
https://x.com/TheDeshBhakt/status/2018769618186424780?s=20
Did Trump Jump the Gun With the US-India Trade Deal Announcement?
India and the U.S. seem to have agreed only on a framework to address the reciprocal tariff agreement. More work lies ahead for a full trade agreement.
https://thediplomat.com/2026/02/did-trump-jump-the-gun-with-the-us-india-trade-deal-announcement/
On February 2, U.S. President Donald Trump took to Truth Social to announce that the United States had reached a “trade deal” with India, reducing the reciprocal tariffs on India from 25 percent (announced on July 31, 2025) to 18 percent. In his post, Trump said the decision — taken as per Indian Prime Minister Narendra Modi’s “request” — was out of his “friendship and respect” for Modi. The post went on to state that India had agreed to stop buying Russian oil and buy “much more” from the United States and “potentially” Venezuela. Trump also claimed that India had agreed to eliminate all existing tariff and non-tariff barriers and buy American goods worth more than $500 billion across several sectors, including energy, technology, and coal.
Modi took to X to confirm his conversation with Trump, describing him as a “dear friend.” Notably, his post only said that “Made in India” products will face a “reduced tariff” of 18 percent and expressed support for Trump’s efforts for “global peace, stability and prosperity.” No mention was made of India’s commitment to reducing oil purchases from Russia or eliminating tariffs on U.S. goods altogether.
Meanwhile, a day later, India’s Commerce Minister Piyush Goyal confirmed that the final details of the deal are still being “worked out” and a joint statement is expected to come out “shortly” after “technical details” are finalized. Echoing this, U.S. Trade Representative Jamieson Greer said that the paperwork on the deal is yet to be confirmed, but conceded that the “specifics and details” of the agreement had been defined. Citing government sources, the Indian news agency Asian News International (ANI) reported that the joint statement will be issued “this week.”
While Goyal has reassured the domestic public that India has protected its sensitive sectors, namely agriculture and dairy, Greer said that India had agreed to reduce tariffs for the United States on “a variety” of goods — including agricultural products. Previously, at a Senate Appropriations Committee hearing, Greer acknowledged the challenges in accessing India’s tightly regulated farm sector — describing New Delhi as a “tough nut to crack” — but said that Indian offers as part of the trade negotiations were the “best the U.S. has ever received.”
U.S. Secretary of Agriculture Brooke Rollins announced on social media that under the India-U.S. deal, more American farm products would be exported to India. Reuters has reported, citing an anonymous government official, that India has agreed to partly open up its agriculture sector as part of the trade deal.
Amidst the ongoing confusion surrounding whether a full trade deal has been arrived at, India’s Commerce Secretary Rajesh Agrawal — previously the chief negotiator for the India–U.S. Bilateral Trade Agreement — said at a public event just before Trump’s announcement that India-U.S. trade talks were “progressing well” but “a larger bilateral trade agreement” is “complex and will take time.”
As things currently stand, it seems India and the United States have agreed on a framework to address the reciprocal tariff agreement. This is being dubbed as a trade deal, but falls short of a full free trade agreement, which addresses all the sticky issues that had previously stalled negotiations.
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https://thediplomat.com/2026/02/did-trump-jump-the-gun-with-the-us-india-trade-deal-announcement/
Questions remain over what happens to the 25 percent punitive tariff announced by the United States on India on August 6 as a penalty for its continuing purchase of Russian oil. While U.S. Ambassador to India Sergio Gor has confirmed that the total tariff on India will be 18 percent, indicating that Washington has revoked the punitive tariff, according to some Indian media outlets citing sources in the White House, the revocation is contingent on India completely halting all imports of Russian oil, rather than merely reducing purchases.
Meanwhile, the Kremlin has confirmed that it has not received any information from New Delhi about its plans to stop buying Russian oil.
India has been gradually diversifying away from Russian oil, with Russia’s share of India’s oil imports falling to its lowest level in December 2025 since December 2023. According to the Economic Survey 2025–26, the share of U.S. crude in India’s total oil imports rose to about 8.1 percent between April and November 2025, up from around 4–5 percent during the same period in the previous year.
Shares of Indian imports of oil from the UAE, Nigeria, Libya, Egypt, Brazil, and Brunei have also increased. While shares from Venezuela dropped during this period, Indian imports from Caracas are expected to increase, especially after Trump’s announcement that India has agreed to buy more oil from Venezuela.
However, Moody’s, a credit rating company, warned that an immediate halt of Russian oil imports could disrupt India’s economic growth and have inflationary implications. Overall, one can expect India to continue reducing Russian oil imports, but a complete halt — as per Trump’s announcement — will be challenging.
Despite these challenges, New Delhi’s securing an 18 percent reciprocal tariff is undoubtedly a remarkable feat. India now faces one of the lowest tariff rates among major Asian economies, only behind Japan, which faces a 15 percent tariff, giving it a significant competitive edge in the U.S. market.
However, until there is more clarity on how much access India has conceded to U.S. exports in its markets, any assessment of the benefit of the deal to the Indian economy will be premature.
The timing of Trump’s announcement provides some insights into why the announcement was made now. It came just days after an India-EU FTA was announced. As I explained in an earlier piece for The Diplomat, that FTA was aimed at signaling to the U.S. that its partners will not give in to threats of tariff wars and the weaponizing of trade.
It indicates that Washington has shown more willingness to accommodate Indian demands to reduce the reciprocal tariff, even while negotiations around contentious issues continue.
Once further details are out, it will become clearer if Trump did indeed accommodate Indian sensitivities about market access. With the India-EU deal, agricultural trade negotiations were consciously kept out of the scope of the agreement, which enabled speedy conclusion. Whether Washington reciprocated with a similar arrangement is yet to be seen. Nevertheless, this announcement will likely put an immediate pause on the downward spiral in overall bilateral ties, albeit a temporary one, and open space for rebuilding trust.
India, US reach interim trade pact framework: What's in the deal
https://www.google.com/amp/s/timesofindia.indiatimes.com/business/india-business/india-us-reach-interim-trade-pact-framework-whats-in-the-deal/amp_articleshow/128013428.cms
India and the United States have reached a framework for an interim agreement on reciprocal and mutually beneficial trade, according to a joint statement issued by the White House early Saturday.
The framework reaffirms both partners' commitment to broader India–US bilateral trade agreement (BTA) negotiations, which were launched by Prime Minister Narendra Modi and US President Donald Trump in February 2025
Washington said it would take into account India’s request for further cuts in tariffs on Indian goods as negotiations progress.
The agreement comes days after India and the US reached a meaningful breakthrough on a trade deal, following nearly a year of trade tensions between the two countries. The tensions began when Trump imposed tariffs on Indian goods and later doubled them to 50 per cent as a penalty over New Delhi’s purchase of Russian oil.
On Saturday, Trump also signed an executive order lifting the punitive additional 25 per cent tariff imposed on India over its Russian oil imports.
Key terms of the interim agreement between the United States and India:
- Under the framework, India has agreed to eliminate or significantly reduce tariffs on all US industrial goods and a broad range of American food and agricultural products. These include dried distillers’ grains (DDGs), red sorghum used for animal feed, tree nuts, fresh and processed fruits, soybean oil, as well as wine and spirits.
- The United States, in turn, will apply a reciprocal tariff rate of 18 per cent on Indian-origin goods under an executive order governing reciprocal trade practices. These goods include textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products and certain categories of machinery. Subject to the successful conclusion of the interim agreement, Washington will also remove reciprocal tariffs on a wide range of Indian exports, including generic pharmaceuticals, gems and diamonds, and aircraft parts.
- The White House said the US will additionally lift tariffs on certain aircraft and aircraft parts from India that were imposed earlier on national security grounds under separate proclamations covering aluminium, steel and copper imports. India, meanwhile, will receive a preferential tariff rate quota for automotive parts exported to the US, in line with American national security requirements. Negotiated outcomes on generic pharmaceuticals and pharmaceutical ingredients will be contingent on the findings of an ongoing US investigation.
- Both countries have committed to providing each other with sustained preferential market access in sectors of mutual interest. They also agreed to establish rules of origin to ensure that the benefits of the agreement primarily accrue to India and the United States.
- Addressing non-tariff barriers will be a key focus of the interim pact. India has agreed to tackle long-standing issues affecting US medical devices, remove restrictive import licensing procedures for information and communication technology (ICT) goods, and review within six months whether US-developed or international standards and testing requirements can be accepted for American exports into the Indian market in identified sectors. India will also work to resolve long-standing barriers affecting US food and agricultural exports.
- To improve regulatory cooperation, the two sides said they intend to hold discussions on standards and conformity assessment procedures in mutually agreed sectors to ease compliance with technical regulations.
- The statement added that if either country changes its agreed tariff levels in the future, the other side will have the right to modify its commitments accordingly.
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- The United States and India will work to further expand market access through negotiations under the Bilateral Trade Agreement (BTA), the White House said. Washington also indicated that it would consider India’s request for further reductions in tariffs on Indian goods during the course of the talks.
- Both sides agreed to strengthen alignment on economic security to improve supply chain resilience and boost innovation. This will include coordinated steps to counter non-market policies of third countries, as well as closer cooperation on inbound and outbound investment screening and export controls.
- India has indicated its intention to purchase goods worth $500 billion from the United States over the next five years. These purchases are expected to include US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal. The two countries also plan to significantly expand trade in technology products such as graphics processing units (GPUs) and other equipment used in data centres, alongside deeper joint cooperation in critical technologies.
- The US and India also committed to addressing discriminatory or burdensome practices affecting digital trade and to charting a clear path towards robust, ambitious and mutually beneficial digital trade rules as part of the BTA.
According to the statement, both countries will move swiftly to implement the agreed framework and work towards finalising the interim agreement, with the goal of concluding a comprehensive and mutually beneficial BTA in line with the agreed roadmap.
On the politically sensitive question of Russian oil imports...
https://www.google.com/amp/s/www.thehindu.com/news/national/us-india-interim-trade-agreement-joint-statement-white-house/article70601889.ece/amp/
The U.S. will impose 18% reciprocal tariffs on Indian goods, slashed from the previous 25%. Mr. Trump separately issued an executive order rescinding 25% additional tariffs for India’s purchase of Russian oil as he said India has committed to stop importing Russian oil and buy more U.S. energy products. The order warns the tariffs would be reimposed if India “resumes” Russian oil imports.
“India has committed to stop directly or indirectly importing Russian Federation oil, has represented that it will purchase United States energy products from the United States, and has recently committed to a framework with the United States to expand defense cooperation over the next 10 years,” Mr. Trump said in his order.
“If the Secretary of Commerce finds that India has resumed directly or indirectly importing Russian Federation oil, the Secretary of State, in consultation with the Secretary of the Treasury, the Secretary of Commerce, the Secretary of Homeland Security, the United States Trade Representative, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and the Assistant to the President and Senior Counselor for Trade and Manufacturing, shall recommend whether and to what extent I should take additional action as to India, including whether I should reimpose the additional ad valorem rate of duty of 25 percent on imports of articles of India,” the order read.
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