Morning Brief: India Hunts Bargains In US-China Crossfire; RBI Likely To Slash Rates Further; March Inflation Expected To Stay Below 4 Per Cent; And More

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India Hunts Bargains In US-China Crossfire

With high tariffs on Chinese imports, India has recognised 10 vital sectors, like apparel, chemicals, plastics, and vehicles, where it now holds a competitive advantage in the US market. This comes as part of a strategy to capitalise on these sectors to offset losses in areas impacted by tariffs. Despite India facing a 10 per cent baseline tariff, it stands to benefit significantly from the 145 per cent tariff on Chinese goods.

Sectors like apparel, where India’s share is only 3.8 per cent compared to China’s 25 per cent, offer growth opportunities. Other sectors such as electronics, gems, and iron products are also seen as potential areas for increased exports.

Meanwhile, India is also exploring ways to negotiate better deals with Chinese suppliers, aiming to leverage US-China trade tensions to its advantage.

With a significant trade imbalance — $101.7 billion in imports versus $16.7 billion in exports in FY24 — the government is encouraging industry to seek discounts, especially in sectors affected by US tariffs.

Discussions are underway in sectors like toys, paints, and steel, where China’s surplus and US-bound order cancellations have created openings for cost reductions. While there’s no formal commitment yet, the government is monitoring the situation, weighing safeguard duties, and gathering stakeholder input before moving forward.

RBI Likely To Slash Rates Further

The Reserve Bank of India is expected to cut the repo rate by up to 100 basis points more in the ongoing easing cycle, say economists. After two back-to-back 25 bps cuts, the repo rate now stands at 6 per cent, with the RBI also shifting its stance to ‘accommodative’.

Nomura forecasts the terminal rate could fall to 5 per cent by end-2025, citing below-potential growth, lower oil prices, and stable inflation. Nuvama Research also expects the repo rate to ease to 5–5.25 per cent, with the RBI actively managing liquidity to support the system. The current trend signals a decisive move away from restrictive policy towards supporting growth.

March Inflation Expected To Stay Below 4 Per Cent

Retail inflation for March 2025 is expected to have settled between 3.8 and 4 per cent, according to early estimates based on the Consumer Price Index (CPI). The Reserve Bank of India has revised both GDP and inflation projections for FY26 downward by 20 basis points, with CPI now forecast at 4.0 per cent. February CPI had already eased to an eight-month low of 3.61 per cent, with food inflation at its lowest since May 2023.

Analysts from CRISIL and HDFC Bank expect March inflation at around 3.9 per cent, though rising temperatures may push FY26 inflation higher. With headline inflation staying close to the RBI’s 4 per cent target, the central bank is likely to stay comfortable with its recent rate-cutting stance.

Other Developments

Shein-Reliance Deal Under Cloud Amid China Pushback

Shein, China’s fast fashion giant, is renegotiating its sourcing partnership with Reliance Retail as Beijing moves to prevent companies from relocating manufacturing abroad amid rising tensions with the US. The tie-up was originally designed to position India as a key global supply hub for Shein, but the plan is now being reconsidered.

Shein had aimed to integrate 25,000 Indian MSMEs into its supply chain and revive its presence in India through a Reliance-operated app, but those ambitions may now be scaled back. The two companies are exploring ways to adjust the agreement in light of new Chinese restrictions discouraging offshore production.

Following the arrest of fugitive jeweller Mehul Choksi in Antwerp on 12 April, Indian officials from the CBI and ED are set to travel to Belgium to finalise the extradition process. The agencies have selected two to three officers from each to coordinate with the Belgian government and manage the required documentation.

Choksi's legal team has already begun preparing an appeal against his arrest, citing his medical condition and arguing that he is not a flight risk. A joint team of CBI, ED officials, and their legal counsel will work closely with Belgian authorities to ensure the extradition procedure is executed. Antwerp police confirmed the arrest, stating that it followed an extradition request and a foreign arrest warrant enforcement.

US Probes Pharma And Chip Imports For Tariffs

The Trump administration has initiated investigations into pharmaceutical and semiconductor imports, citing national security concerns over the US's reliance on foreign production. These probes could pave the way for new tariffs aimed at boosting domestic manufacturing in these critical sectors.

The investigations follow recent exclusions for certain electronics from steep reciprocal duties. Tariffs on pharmaceuticals and semiconductors could be announced by mid-May, with possible rates ranging from 10-25 per cent.

If tariffs are imposed on pharmaceuticals, it could hurt India significantly, as the US accounts for over 31 per cent of India's total pharmaceutical exports.

From The States

Murshidabad Hindus Seek Shelter After Violence

A large number of people have fled their villages in Murshidabad, West Bengal, after violence broke out last week when Muslim mobs attacked Hindus over the new Waqf law. Around 400 men, women, and children are now living in one such camp set up in a high school in Parlalpur, with some having travelled over 60 km to escape the violence. Many fear they may never be able to return to their homes, a report in the Indian Express says.

The clashes have claimed three lives, including 72-year-old Hargobindo Das and his 40-year-old son Chandan Das, who were dragged out of their home and lynched by a mob. While police say the situation is under control and over 200 people have been arrested, the displaced remain deeply anxious.

Telangana Implements SC Sub-Categorisation For Reservations

Telangana has become the first state in India to implement sub-categorisation of Scheduled Caste reservations, classifying 59 sub-castes into three groups, with the move timed to coincide with Ambedkar's 135th birth anniversary. Under this system, 1 per cent reservation is allocated to Group I (15 sub-castes), 9 per cent to Group II (18 sub-castes), and 5 per cent to Group III (26 sub-castes) in education and employment.

The state government has pledged to adjust the quota in line with the SC population growth after the 2026 census.

A Week Of Rebuke For UP Government

The Uttar Pradesh government faced harsh criticism from the Supreme Court last week, with two separate benches condemning the state’s police and the Prayagraj Development Authority (PDA) for illegal and overbearing actions. On 1 April, the court imposed a Rs 60 lakh penalty on the PDA for unlawfully demolishing homes, calling it a violation of the right to shelter. The court slammed the PDA for failing to adhere to safeguards, including proper notice and time for appeal before demolitions.

Six days later, the Chief Justice of India criticised the UP Police for converting civil disputes into criminal cases, warning that costs could be imposed if the practice continues. The court also questioned the legality of the police's actions in a case involving criminal breach of trust and hinted at contempt proceedings.

You’re all caught up—until next time.