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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: For months, the relationship between the world's two biggest democracies,

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Speaker 2: the US and India, looked as though it might be

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Speaker 2: on life support. The US has stopped a crushing fifty

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Speaker 2: percent tariff on some Indian goods.

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Speaker 1: An additional twenty five percent to tariff on top of

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Speaker 1: that over India's imports of Russian energy supplies.

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Speaker 3: India's ambassador to Russia saying it will continue to buy

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Speaker 3: oil wherever it gets the best deal. Following President Front, the.

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Speaker 2: Two countries have been involved in intense trade talks for months.

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Speaker 2: After the US hiked tariffs on Indian goods up to

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Speaker 2: fifty percent last August. Then on Monday, things took a

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Speaker 2: dramatic turn. Well prision on Trump saying that those tariffs

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Speaker 2: are going to be slashed after Prime Minister and Arrangermodi

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Speaker 2: agreed to stop buying Russian oil, President Trump in India's

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Speaker 2: Prime Minister Modi announced the US would lower the so

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Speaker 2: called res ziprocal terar frates on Indian imports to eighteen

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Speaker 2: percent from twenty five. In a statement posted to X,

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Speaker 2: Modi thanked President Trump on behalf of the one point

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Speaker 2: four billion people of India. Trump echoed his sentiment on

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Speaker 2: truth social writing. Prime Minister Mody and I are two

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Speaker 2: people that get things done, something that cannot be said

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Speaker 2: for most.

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Speaker 1: It did catch people buy a surprise, you know, at

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Speaker 1: least from where we stand as reporters.

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Speaker 2: That's Bloomberg, Shooty Rune and Sen who covers India's economy

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Speaker 2: and government from New Delhi. As part of the deal,

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Speaker 2: Trump says India will stop buying cheap Russian oil, but

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Speaker 2: Shoody says that might be easier said than done.

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Speaker 1: As of now, the understanding from the American side, from

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Speaker 1: the uside is India is going to completely stop buying

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Speaker 1: Russian oil. The Indian position is different, and the Indian

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Speaker 1: position is that India will source energy from wherever it

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Speaker 1: is the cheapest.

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Speaker 2: The stakes are high. India's ships almost a fifth of

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Speaker 2: its export to the US, and the combined fifty percent

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Speaker 2: tariff on inding goods was the steepest imposed on any

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Speaker 2: major trading partner. And although a trade deal could help

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Speaker 2: reset the relationship, Shody says India's celebrating the news cautiously.

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Speaker 1: India still thinks of the US market and the US

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Speaker 1: relationship is one of the most important relationship, but it

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Speaker 1: will not perhaps allow itself to be completely dependent on

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Speaker 1: the US our on the whims and fallas seas of

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Speaker 1: the US.

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Speaker 2: I'm one Ha and this is the Big Take Asia

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Speaker 2: from Bloomberg News. Every week we take you inside some

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Speaker 2: of the world's biggest and most powerful economies and the markets,

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Speaker 2: tycoons and businesses that drive this ever shifting region. Today

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Speaker 2: on the show, the new US India Trade deal. What's

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Speaker 2: in the agreement, what it could mean for India's economy,

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Speaker 2: and how it might shape the other key relationships that

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Speaker 2: India has developed around the world. Judy, thanks so much

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Speaker 2: for joining us, given how frosty things have been. I mean,

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Speaker 2: you had Trump calling India a dead economy last year

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Speaker 2: and Modi declining Trump's invitation to the White House. Did

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Speaker 2: the sudden warm tone of their social media posts feel

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Speaker 2: like a genuine breakthrough?

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Speaker 1: It did catch people by a surprise. The relationship had deteriorated.

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Speaker 1: There were problems. We saw Prime Minister more the not

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Speaker 1: going to Malaysia last year for the Asian Summit, and

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Speaker 1: we have reported the Prime Minister did not go because

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Speaker 1: India didn't want or India didn't want to be there

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Speaker 1: where President Trump would be. The relationship had gone to

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Speaker 1: that level that it had freed, but it hadn't broken down,

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Speaker 1: and there were always efforts to hold the relationship together

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Speaker 1: and try to improve it. All those things were swirling

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Speaker 1: around while there was working in the background try to

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Speaker 1: hold it out.

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Speaker 2: Even before Trump rolled out his tariffs in April last year,

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Speaker 2: the two leaders had been working just months earlier to

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Speaker 2: deepen bilateral trade ties and India was also one of

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Speaker 2: the first to start negotiations before Trump surprised India with

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Speaker 2: these effective tariffs of fifty percent last year. What's it

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Speaker 2: been like for India's economy over the past year.

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Speaker 1: While there was an apprehension that the US tariffs who

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Speaker 1: really hit the economy very hard, final numbers that have

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Speaker 1: come out in the budget and the economic survey that

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Speaker 1: was placed in the Parliament of India earlier, it didn't

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Speaker 1: do so badly. In fact, it's you know, revised its

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Speaker 1: growth figures slightly upwards. It's about seven point four percent

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Speaker 1: growth rate, which is not a small number for such

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Speaker 1: a big economy.

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Speaker 3: To grow at.

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Speaker 1: On the whole, the Indian economy held very well and

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Speaker 1: it's performed very well despite the tariffs.

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Speaker 2: What's the reaction to the deal on the ground in.

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Speaker 3: The government has welcomed it.

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Speaker 1: If you look at the stock market, the nifty to

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Speaker 1: fifty index rose the most in five years. The rupee,

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Speaker 1: which was under pressure, just helped, you know, it's strengthed,

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Speaker 1: showing that there is a lot of good feeling around

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Speaker 1: this entire announcement that has happened.

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Speaker 2: Now, SHOOTI Mody and Trump have agreed to a deal,

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Speaker 2: or at least a framework of a deal might be

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Speaker 2: a better way to describe it. What do we know

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Speaker 2: at this point?

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Speaker 1: So from the social media post by President Trump, what

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Speaker 1: we know is that from fifty percent tariff, which was

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Speaker 1: one of the highest in the world, tariffs have come

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Speaker 1: down to eighty. The punitive tariffs of twenty five percent

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Speaker 1: for Russian oil buying Russian oil has gone. And that's

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Speaker 1: a huge relief for India because we know that India

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Speaker 1: had been lobbing very hard with the US administration to

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Speaker 1: get that twenty five percent traditional tariff off and then

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Speaker 1: start negotiating on the reciprocal tariff that the United States

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Speaker 1: said slap plast year so eighteen that's the tariff that

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Speaker 1: Indian exports to America is going to attract You haven't

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Speaker 1: seen a clear clarification yet from the government of India,

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Speaker 1: but what President Trump's social media posts says is that

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Speaker 1: India is going to relieve his tartifs to zero, and

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Speaker 1: not only tariffs but also tariff barriers. It is unlikely

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Speaker 1: that India is going to completely reduce the tariff's. President

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Speaker 1: Trump also says that there is an overall commitment not

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Speaker 1: to buy India will not buy Russian oil. There is

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Speaker 1: also mention about India buying five hundred billion dollar worth

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Speaker 1: of American goods. Now, we've seen that happen with other countries,

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Speaker 1: as in the case of South Korea, so it's a

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Speaker 1: similar kind of an announcement. Now, again there is no

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Speaker 1: clarity as to is it goods, what exactly is this

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Speaker 1: five hundred billion. I would still wait for more clarity

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Speaker 1: from both sides to come.

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Speaker 3: The finer details as to which sectors.

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Speaker 1: Say sectors like energy, electronics they're protected, Farma they're protected.

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Speaker 3: So it is a remaining figure.

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Speaker 1: The remaining sectors that there is a question mark on,

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Speaker 1: and importantly issues like dairy and therefore agriculture, which India

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Speaker 1: is very sensitive about those details haven't come out very

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Speaker 1: clearly from the announcement of press INDROP.

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Speaker 2: We've done a lot of reporting of specific Indian export

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Speaker 2: hubs like textile, jewelry, toymakers. They were telling us that

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Speaker 2: they were getting crushed by the fifty percent tariffs. How

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Speaker 2: much damage was done in some sectors and how quickly

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Speaker 2: can these companies, especially those that really export rely on

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Speaker 2: exports to the US, how quickly can they adjust to

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Speaker 2: undo the damage.

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Speaker 1: When the tariffs swell being announced and there was it

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Speaker 1: was known that tartiffs are coming. A lot of these

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Speaker 1: exports textiles and leather and stuff like that, and as

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Speaker 1: with other sectors, there was front loading of it, so

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Speaker 1: a lot of export orders or goods had been rushed

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Speaker 1: through the customs at that point of time. That was

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Speaker 1: a way that the markets kind of device to soften

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Speaker 1: the blow. But those supplies cannot last forever. Now, the

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Speaker 1: crunch was supposed to come in now because those supplies

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Speaker 1: were getting over. Not only that it is the beginning

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Speaker 1: of a new year, so new orders.

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Speaker 3: Would have come.

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Speaker 1: And the question mark therefore was that what happens now

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Speaker 1: if the deal doesn't happen.

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Speaker 3: But luckily enough, the deal did come through.

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Speaker 1: And then now there is euphoria that things are going

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Speaker 1: to fall into place with Indian goods again being welcome

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Speaker 1: back into the United States, not at such a huge

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Speaker 1: tariff level, so things will be if not as good

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Speaker 1: as the last time last to last year, but not

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Speaker 1: as bad as well.

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Speaker 2: We also did see sectors and industries basically spend the

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Speaker 2: better part of a year adjusting their businesses, and I

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Speaker 2: wonder what does it look like for India to undo

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Speaker 2: the US tariffs in key industries. Is that going to

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Speaker 2: be a quick thing that they'll just be able to

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Speaker 2: basically flip the switch and exports will start rolling out

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Speaker 2: to the US.

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Speaker 3: See flip the switch or not?

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Speaker 1: Difficult to say, but one thing that I can see

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Speaker 1: is that while the use market is back, it is

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Speaker 1: available and the tariff rates are lesser than what was

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Speaker 1: expected and what was slapped on India. There is also

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Speaker 1: that sentiment that is there. While India would want to engage,

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Speaker 1: would want to do more trade with the United States,

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Speaker 1: there is a level of caution, extra layer of caution

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Speaker 1: that is coming because the United States is increasingly transactional.

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Speaker 3: So the question is it.

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Speaker 1: The only one or there will be more could there

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Speaker 1: be sudden changes, So all those questions I'm sure is

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Speaker 1: going to be in the minds of people with money

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Speaker 1: wanting to invest and expand capacity, just looking at the

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Speaker 1: US market.

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Speaker 2: Now, this deal came after India unveiled an annual budget

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Speaker 2: that included moves to shield India's economy from Trump's tariffs.

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Speaker 2: This of course included we saw support for exporters battered

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Speaker 2: by the US, renewed backing for strategic sectors, as well

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Speaker 2: as increasing defense spending. You've got to admit that timing

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Speaker 2: is interesting. What does that tell us about the negotiations

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Speaker 2: or the deal that they were working on.

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Speaker 1: So what it tells us is for India, the US

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Speaker 1: relationship is important, but at the same point of time,

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Speaker 1: it has decided that it shall not be only dependent

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Speaker 1: on the US, and which is why it's taking steps

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Speaker 1: to strengthen its own fundamentals. The Indian economy is much

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Speaker 1: more consumption driven, unlike other economies which are exported driven.

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Speaker 1: Steps where being taken so that you internally strengthen the

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Speaker 1: fundamentals of the Indian economy, strengthen yourself ideo better prepared.

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Speaker 1: So very clearly India is diversifying and looking at alternatives,

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Speaker 1: alternative partners, alternative markets.

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Speaker 2: The key to this new trade deal appears to be

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Speaker 2: an agreement from India not to buy Russian oil, but

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Speaker 2: that might not be as simple as it sounds. Does

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Speaker 2: Modi even have the power to make that happen? And

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Speaker 2: if he does, does he risk alienating a key trading

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Speaker 2: partner in Russia that's coming up after the break. Now,

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Speaker 2: in addition to the reduced tariffs on India, Trump is

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Speaker 2: also removing an extra twenty five percent duty that was

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Speaker 2: put in place to punish India's purchases of Russian oil. Now,

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Speaker 2: India has not traditionally been an importer of Russian crude,

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Speaker 2: but it did emerge as a key buyer following the

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Speaker 2: twenty twenty two invasion of Ukraine, and obviously Russia offered

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Speaker 2: it attractive prices. There what pledges have actually been made

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Speaker 2: on this as far as you can sell.

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Speaker 1: So going back to the social media posts, and that's

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Speaker 1: only thing that we have as of now that the

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Speaker 1: understanding from the American side, from the US side is

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Speaker 1: India is going to completely stop buying Russian oil. However,

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Speaker 1: the Indian position is different, and the Indian position is

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Speaker 1: that India will source energy from wherever it is the cheapest,

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Speaker 1: and India's argument has been that it is for a

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Speaker 1: for private companies which do the buying of oil and energy,

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Speaker 1: to decide which is the best sauce. B India is

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Speaker 1: not buying sanctioned commodity in the sense that oil is

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Speaker 1: not being sanctioned.

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Speaker 3: So while we've seen the.

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Speaker 1: Announcement from the US saying that India will not buy

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Speaker 1: Russian India's position has not changed. Official position still remains

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Speaker 1: that it will buy oil. And then again it's up

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Speaker 1: to individual companies that buy energy.

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Speaker 2: Because for India to enforce it, you're saying it would

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Speaker 2: have to like somehow sanctioned companies or would have somehow

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Speaker 2: have some kind of enforcement mechanism to stop private companies

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Speaker 2: from buying Russian oil. Is not India the state that

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Speaker 2: is buying this oil.

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Speaker 1: India as a state doesn't buy any oil. It is

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Speaker 1: only oil companies. Some of it, of course, are state owned,

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Speaker 1: but the biggest refiners, so to say, Reliance is not

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Speaker 1: state owned. And we've seen statements, official statements from India

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Speaker 1: saying that it's impossible for our government to tail a

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Speaker 1: private company.

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Speaker 3: To where to sources raw materials.

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Speaker 1: From they are in a market economy, they're free to

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Speaker 1: buy from where they find it the cheapest, as long

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Speaker 1: as those are not under sanctions. And then again, India

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Speaker 1: doesn't accept or follow unilateral sanctions. The only sanctions that

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Speaker 1: India officially endorses is a sanctions by the United Nations,

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Speaker 1: and Russian oil, by the way, is not yet sanctioned

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Speaker 1: by the United Nations.

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Speaker 2: So it sounds like there may be potentially wiggle room

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Speaker 2: there for India.

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Speaker 3: There could be wigger room.

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Speaker 1: And I would go back to the fact that because

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Speaker 1: companies find the European market, the American market and the

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Speaker 1: other market's much more lucrative, why would the risk that

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Speaker 1: for a little bit of a cheaper oil which may

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Speaker 1: land them in bigger trouble That perhaps will is a

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Speaker 1: bigger data than just a policy fiat, a policy announcement

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Speaker 1: or a fiat from the government.

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Speaker 2: Now, Trump mentioned in his social media post on the

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Speaker 2: deal that India will buy oil from the US and

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Speaker 2: potentially Venezuela too. How does this make sense for India

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Speaker 2: in terms of its oil needs, Whether Venezuela can fill

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Speaker 2: that gap at the right price.

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Speaker 1: So the Venezuelan oil when President Trump has made a

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Speaker 1: lot of it. The sense we've been given from the

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Speaker 1: government is that Venezuelan oil in the oil industry cannot

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Speaker 1: come back online.

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Speaker 3: By a flip of a switch. Is going to take time,

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Speaker 3: is going to take.

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Speaker 1: Investments for it to start producing as much as India needs.

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Speaker 1: Of course, there is an entire issue of distance that

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Speaker 1: is there because the travels of larger distance than the

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Speaker 1: current sources of energy for India. It's going to be

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Speaker 1: a gradual process and it will depend on the market forces,

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Speaker 1: the market dynamics of it all.

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Speaker 2: The last time you were on the show, we spoke

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Speaker 2: at length about India's long and warm relationship with Russia

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Speaker 2: that includes a strategic and trade partnership. Could this new

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Speaker 2: deal spark friction between Mody and Putin?

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Speaker 1: It is very unlikely that there will be a friction

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Speaker 1: between Russia and India because a the relationship is a

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Speaker 1: very mature relationship. It's been nurtured and there is a

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Speaker 1: lot of good feeling around a relationship.

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Speaker 3: So the relationship is very strong.

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Speaker 1: And also what India and Russia have done is they

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Speaker 1: have broadened out the relationship. Earlier it was a defense

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Speaker 1: buyer purchaser relationship with some technology coming in from Russia.

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Speaker 3: Then, of course energy After twenty twenty two Russias.

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Speaker 1: Ukraine war, energy became a major factor in the relationship.

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Speaker 1: Even that is reducing, but the relationship is unlikely to

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Speaker 1: be dimmed. There may be minor disagreements friction. But even

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Speaker 1: if India were to say, in hypothetically, say reach a

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Speaker 1: situation where they say we are not buying Russian oil,

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Speaker 1: I do not see the relationship souring. I do not

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Speaker 1: see the relationship going completely south.

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Speaker 2: It sounds like you think there is a way in

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Speaker 2: which India can move forward, have ties between the US

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Speaker 2: and Russia simultaneously without provoking the other side.

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Speaker 3: Very definitely.

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Speaker 1: If you look at India's foreign policy and the way

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Speaker 1: India pitches itself, they call it multi alignment, they call

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Speaker 1: it multilateralism, having relationships with countries that themselves may not

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Speaker 1: be friendly but are friendly with India. That is also

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Speaker 1: part what India says and which is what is being

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Speaker 1: talked about by other countries as well. Is strategic autonomy.

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Speaker 1: Then a country has the ability to decide who its

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Speaker 1: friends are all are and not be in an either

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Speaker 1: or situation.

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Speaker 2: Now, last year as the relations between Mody and Trump

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Speaker 2: were frosty. We saw Modi playing pesties with she and Putin.

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Speaker 2: There was that photo I'm sure that you'll remember the

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Speaker 2: three of them hugging at a summit. Mody's been obviously

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Speaker 2: rebalancing the relationships with China and Russia. How do you

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Speaker 2: think China is likely going to view this trade deal

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Speaker 2: with the US and what does this mean for India's

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Speaker 2: relationship with China.

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Speaker 1: China has been historically very cagey about India's relationship with China.

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Speaker 1: If you go back into the history those nineteen sixty

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Speaker 1: two war, the India US relationship has been a cause

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Speaker 1: of concern, and from Chinese statements, we have seen the

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Speaker 1: indications that why is a third party or another power

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Speaker 1: coming closer to their borders, so that the remains a

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Speaker 1: perennial cause of concern. Having said that, China itself is

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Speaker 1: trading with President Trump and the United States for better

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Speaker 1: trading relation, so it should not as a mature power,

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Speaker 1: China should not have an issue if India where to

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Speaker 1: have a good trade deal with the United States.

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Speaker 2: On the broad level view, I mean it does look

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Speaker 2: like Mody is backing down after all and acquiescing to

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Speaker 2: the US's demands. How does this make Mody look at

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Speaker 2: home and on the world stage. Is there a way

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Speaker 2: that he can spin this to make it look like

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Speaker 2: a win for him to.

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Speaker 3: The government is spinning it as a win.

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Speaker 1: We have seen the Trade Minister yesterday saying that Prime

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Speaker 1: Minister has protected the key sectors. He has not allowed

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Speaker 1: agriculture dairy which employs a lot the number of people

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Speaker 1: in India and is very sensitive to open it up

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Speaker 1: to the United States despite pressure. That's been the pitch

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Speaker 1: that the government has taken. Government is also pitching the

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Speaker 1: trade deal as a major breakthrough for economic growth. There

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Speaker 1: are questions being raised by the opposition. Does it mean

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Speaker 1: that actually India is reducing all its caiffs and nontariffs

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Speaker 1: barriers for goods from the United States. If the economy

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Speaker 1: does well, then I guess all sins are forgiven.

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Speaker 2: Last question, Shoulty, what's the next thing you're looking out for?

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Speaker 1: The big thing I'm looking out for is when does

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Speaker 1: President Trump and Prime Minister or the meet and when

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Speaker 1: is this deal going to be signed? By all accounts,

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Speaker 1: I think it is going to be a huge bilateral

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Speaker 1: geopolitical event. Which India and both the United States are

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Speaker 1: going to play out and try to take maximum leverage and.

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Speaker 3: Benefit of this trade team.

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Speaker 1: So I'm looking out for when the two leaders agree

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Speaker 1: to meet and the deal is signed, and then therefore

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Speaker 1: what other door are the open and what kind of

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Speaker 1: cooperation then starts?

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Speaker 2: This is The Big Take Asia from Bloomberg News. I'm

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