Trending positive: Elon Musk on India-US trade ties

Elon Musk discusses the future of US-India trade relations, advocating for reduced trade barriers and enhanced collaboration in technology and space exploration. He engages with Indian business leaders as the India Global Forum expands into the US, ahead of Donald Trump’s second presidential term.

India’s gems and jewellery exports saw a 10.29% decline in December 2024 compared to the previous year due to economic uncertainties and a shift towards gold as a safe-haven investment. The export of Cut & Polished diamonds and gold jewellery also declined, though a ceasefire between Israel and Hamas may boost trade activities soon.

The US ambassador to India emphasized the need for India to reduce high tariffs to attract investment and compete with Southeast Asia amidst escalating US-China trade tensions. Despite some progress, India still struggles with a challenging business environment and faces competition from Vietnam.

The depreciating rupee will elevate India’s import bill due to higher costs for vital commodities and machinery. Despite conventional wisdom suggesting a weaker currency boosts exports, India’s decade-long data reveals significant export growth in high-import sectors like electronics, while low-import, labour-intensive sectors like textiles decline.

India’s oil meal exports decline by 25% in December 2024 due to a fall in rapeseed and castor seed meal exports. Overall, exports from April to December 2024 decrease by 10% compared to the previous year. Increased competition and production issues contribute to uncertainty in future soybean meal exports.

India needs to bolster partnerships with Japan and South Korea to obtain high-quality components for electronics, solar panels, and EVs, aiming to reduce dependence on China amidst its export restrictions. These restrictions are viewed as part of a broader trade war strategy responding to India’s curbs on Chinese investments and visas.

Commerce and Industry Minister Piyush Goyal is set to visit Brussels to discuss India-EU trade and progress in the Free Trade Agreement with new EU Trade Commissioner Valdis Dombrovskis. The negotiations, after multiple rounds, require political direction to address sensitivities and aim to significantly enhance bilateral trade and investment.

India needs to enhance partnerships with Japan and South Korea to source electronic components due to China’s export restrictions. This move follows India’s curbs on Chinese investments and visas, leading to disruptions in electronic, solar, and EV sectors. Such measures highlight the broader trade war and geopolitical tensions between India and China.

Indian electronics, solar, and EV sectors face delays due to China’s export restrictions on key inputs and machinery, which may be a response to India’s curbs on Chinese investments. Strengthening ties with Japan and South Korea is suggested to reduce reliance on Chinese imports and build resilient supply chains.

India’s trade deficit widened to $21.94 billion in December, with a contraction in exports for the second consecutive month. Imports rose to $59.95 billion. Gold imports saw significant revisions, affecting deficit calculations. Key export sectors faced declines while electronics and garments reported growth. Multiple FTAs are under negotiation.