Nifty surged as Trump almost blinked on Modi’s China card

 

·         Although Modi's China card seems to be working, Trump no longer seeks China decoupling; thus, India has to give the US significant trade concessions

·         MDAG (RIL) may visit Trump personally in the coming days to resolve the Russian oil punishment tariff of 25%

·         Trump may not approve 15% minimum tariffs on India, but may impose 20% tariffs (vs 25% present), if India ensures total tax on US goods ~27.5% from the present 32.5%

·         Now, US goods face 17.5% tariffs and 15% IGST in India; total tax 32.5%; similarly, Indian goods face 25% normal tariffs +7.5% average US state sales tax, totaling 32.5%

·         Trump wants full & fair access to US goods in the Indian market without any high tax or other regulatory barrier; the farm and MSME sectors are a big vote bank for both Trump and Modi

·         Apart from Russian oil, Trump has the leverage of tariffing Indian IT services in the US, which may force Modi to open up the Indian economy for US goods & services

·         At present, although India charges 18% IGST on US services, Indian services do not face any such taxes in the US generally

·         As the US contributes over 15% of India’s FX/USD reserve through trade deficit and remittances, Modi has to balance his vote & note bank along with Trump’s MAGA priority

The Indian stock market was under stress despite the big-bangGST reform (recalibration) and speedy implementations. India’s Dalal Street was concerned about not only the issue of non-availability of ITC (Input Tax Credit) in the 5-0% GST slabs. And India’s Main Street, as well as Dalal Street, was also concerned about the ongoing Trump tariff tantrum on India.

Trump’s reality show in India go on.

India Tariffs: On August 28, 2025, a 50% tariff on Indian goods took effect, comprising a 25% baseline tariff imposed on July 30, 2025, and an additional 25% tariff effective August 27, 2025, as a penalty for India's continued purchase of Russian crude oil. Trump justified these tariffs as a response to India's trade practices, accusing India of profiting from Russian oil purchases and selling it on the open market, which he claimed fuels Russia's war in Ukraine. He stated on August 29, 2025, "We'll determine that later, but right now, they're [India] paying a 50 per cent tariff," when asked if the punitive tariff would end if Russia agreed to a ceasefire.

Trump’s India Trade Policy: Trump described India's trade relationship with the U.S. as "totally one-sided" in a post on Truth Social on September 1, 2025, claiming that India exports massive amounts of goods to the U.S. while the U.S. exports little in return due to India's high tariffs. He noted that India offered to cut tariffs to "nothing," but he dismissed this as "too late," asserting that India should have acted earlier. He emphasized that India's high tariffs have historically disadvantaged U.S. businesses.

Trump comments about India:

“What few people understand is that we do very little business with India, but they do a tremendous amount of business with us. In other words, they sell us massive amounts of goods, their biggest “client,” but we sell them very little - Until now, a totally one-sided relationship, and it has been for many decades. The reason is that India has charged us, until now, such high Tariffs, the most of any country, that our businesses are unable to sell into India. It has been a totally one-sided disaster! Also, India buys most of its oil and military products from Russia, very little from the U.S. They have now offered to cut their Tariffs to nothing, but it’s getting late. They should have done so years ago. Just some simple facts for people to ponder!!!”

Fast forward, on September 4, after the SCO meeting concluded in China, Trump posted on his Truth: “Looks like we’ve lost India and Russia to deepest, darkest, China. May they have a long and prosperous future together! President Donald J. Trump”

On September 5, late Friday presser (daily reality shows), Trump was deliberately asked by India’s ANI, a known Modi-savvy ‘Godi Media’ about his Truth comments that the US has lost India to China. Trump responded casually: "I will always be friends with Modi; he is a great Prime Minister. India and the United States have a special relationship. There is nothing to worry about---I don't think we have---I get along very well with (Indian PM) Modi, as you know, he was here a couple of months ago, we went to the Rose Garden---“

On September 6, the Indian PM Modi tweeted with reference to ANI quotes: At the White House, US President Donald Trump made the following significant statements on the India-US relationship—

·         Deeply appreciate and fully reciprocate President Trump's sentiments and positive assessment of our ties.

·         India and the US have a very positive and forward-looking Comprehensive and Global Strategic Partnership.

Trump floated an idea to impose tariffs on Indian IT outsourcing services in the US.

Meanwhile, the Trump admin floated an idea that it would crush India's tech work (IT services outsourcing to the US). Trump is reportedly considering banning American tech companies from outsourcing their work to India. For decades, U.S. companies have sent IT work overseas because it’s cheaper. In fact, by 2023, they spent a jaw-dropping $132B on outsourcing, with nearly 4 out of 10 tech jobs shipped abroad.  Most of that work went to India, which has built a $62B industry off American companies alone. But Trump’s message is simple: if U.S. firms stop sending jobs to India, American workers win.  Supporters say it could bring back around 300,000 jobs a year that have been leaving the country.  Critics warn it could spark trade tensions with India, which has dominated outsourcing for decades thanks to lower costs.

This wouldn’t be Trump’s first move.  Back in his first term, he introduced rules to curb outsourcing, too, and now he’s hinting at doubling down. If the ban actually happens, it could be one of the biggest shake-ups in tech and trade in years, hitting India’s economy hard and forcing U.S. companies to either hire at home or pay the price/tariffs on Indian IT/any other service outsourcing. India now imposes 18% GST on most services including those provided by any US company and thus, as a pure reciprocity, the Trump admin may also impose equivalent 18% tariffs/levies/taxes on Indian outsourcing into the US. If it really happens, it would be a serious issue far more than the Russian oil as Indian IT service is the backbone of Indian blue-collar jobs.

On September 9, late Tuesday, Trump tweeted: “I am pleased to announce that India, and the United States of America, are continuing negotiations to address the Trade Barriers between our two Nations. I look forward to speaking with my very good friend, Prime Minister Modi, in the upcoming weeks. I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries!”

In response, Indian PM Modi also tweeted early September 10, Wednesday: “India and the US are close friends and natural partners. I am confident that our trade negotiations will pave the way for unlocking the limitless potential of the India-US partnership. Our teams are working to conclude these discussions at the earliest. I am also looking forward to speaking with President Trump. We will work together to secure a brighter, more prosperous future for both our people.”

The tariffs in question—initially 25% on Indian goods announced earlier in August, escalated to 50% effective August 27—have been explicitly linked to India's Russian oil imports, which reached record levels (about 1.75 mbpd in early 2025). Indian public and private refiners have imported over $52 billion worth of Russian crude in the past year, often reselling it at a windfall profit, which Trump has criticized as funding Russia's war efforts. Despite the pressure, Indian officials have stated they will continue buying discounted Russian oil for energy security, calling the tariffs "unjustified and unreasonable." This has strained U.S.-India relations, with bilateral trade (over $190 billion annually) at risk, though Trump has maintained a personal rapport with Prime Minister Narendra Modi.

August 25, 2025: President Trump on potential secondary tariffs: "They lost oil client India, which was doing about 40% of the oil, & China's doing a lot, if I did a secondary tariff, it would be devastating, if I have to, I will, maybe I won't have to do it." Trump hinted at flexibility on the impending 25% secondary tariff (bringing the total to 50%) but tied it to India's Russian oil buys. He claimed the U.S. pressure had already reduced Russia's market share, though Indian refiners like Reliance Industries continued imports. This was part of broader tariff announcements affecting 14 countries.

August 27, 2025-White House- Addressing Russian threats: "President Trump signed an Executive Order imposing tariffs on India in response to its continued purchase of Russian Federation oil... an additional 25% tariff on imports from India, effective August 27, due to India’s direct or indirect importation of Russian Federation oil." This formalized the 50% total tariff (25% base + 25% penalty), declaring it a "national emergency" response to Russia's actions in Ukraine. The order allows for similar measures on other countries but singles out India explicitly.

August 27, 2025-President Trump on the tariff escalation: "India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits. They don’t care how many people in Ukraine are being killed by the Russian War Machine."  Reiterating earlier Truth Social posts, Trump accused India of profiting from discounted Russian crude (bought below the G7 $60/barrel cap) and reselling it, justifying the tariff hike. He threatened "very substantial" increases if India doesn't comply.

August 28, 2025-Trade Advisor Navarro on India's oil trade: "New Delhi can easily get a 25% discount on additional tariffs if it stops buying oil from Russia. However, India does not want this, which causes bewilderment in Washington." Navarro called India a "laundromat" for Russian oil, accusing it of a "profiteering scheme." He emphasized the 50% tariffs (effective that day) as leverage, noting India's imports help Russia evade sanctions via a "shadow fleet" of tankers.

August 30, 2025-President Trump on trade imbalance: "India buys most of its oil and military products from Russia, very little from the U.S. They have now offered to cut their Tariffs to nothing, but it’s getting late. They should have done so years ago." Trump acknowledged India's offer for zero tariffs on U.S. goods but rejected it due to the oil issue, calling U.S.-India trade "one-sided." This came amid Modi's China visit, heightening tensions.

September 1, 2025, President Trump on India's overtures: "India has offered to cut its tariff rates to ‘NOTHING’--- What few people understand is that we do very little business with India."  Trump dismissed India's zero-tariff proposal as insufficient, linking it to low U.S. exports to India and ongoing Russian oil/weapons buys. He noted the trade relationship as a "totally one-sided disaster."

September 5-6, 2025, President Trump Reiterating oil disappointment: "I've been very disappointed that India would be buying so much oil from Russia... We put a very high tariff on India, 50%."  Trump emphasized the tariffs' role in signaling U.S. policy, while noting good relations with Modi. He accused India of fueling Russia's war but avoided broader escalation.

On September 10, 2025, White House Trade Advisor Navarro made additional remarks criticizing the U.S.-India trade relationship, building on his earlier statements from August 28. In an interview reported by Deccan Herald, Navarro stated: "The US doesn't need 'unfair trade' with India, but New Delhi is 'desperately' looking for access to the American markets."

Ukraine Conflict and Russia: Trump continued to focus on pressuring Russia to end the war in Ukraine. His tariffs on India were explicitly linked to geopolitical efforts to pressure Moscow, with the White House stating that India's oil purchases undermine U.S. efforts to counter Russia's actions in Ukraine. On August 28, 2025, Trump's trade adviser, Peter Navarro, controversially referred to the Russia-Ukraine conflict as "Modi's war," framing the tariffs as a response to India's role in sustaining Russia's economy through oil purchases.

Peace Talks: Trump did not make direct public comments about his August 15, 2025, summit with Russian President Vladimir Putin in Alaska during this specific period, but the context of his tariff actions suggests ongoing frustration with the lack of progress in Ukraine peace talks. He had previously set a 50-day deadline (from July 14, 2025) for Russia to agree to a ceasefire, threatening secondary tariffs on countries like India if no deal was reached.

Criticism of India's Trade and Geopolitical Stance: On August 29, 2025, Trump reiterated his criticism of India's oil purchases, stating that India "doesn’t care how many people in Ukraine are being killed by the Russian War Machine" by continuing to buy and resell Russian oil for profit. This echoed his earlier August 4, 2025, Truth Social post, which was referenced again in the media during this period.

Response to India's Offer: Trump's September 1, 2025, Truth Social post highlighted his rejection of India's offer to reduce tariffs, calling it a "disaster" for the U.S. due to decades of high Indian tariffs and unbalanced trade. He emphasized that India buys most of its oil and military equipment from Russia, not the U.S., further justifying his tariff stance.

Economic and Diplomatic Impact: Trump's comments and tariff actions drew significant criticism. U.S. House Foreign Affairs Committee Democrats, on August 28, 2025, called the 50% tariffs on India "harmful to Americans" and a "sabotage" of U.S.-India ties, questioning why India was targeted over China. Indian Prime Minister Narendra Modi responded defiantly, urging citizens to buy domestically made goods and emphasizing India's energy security needs for its 1.4 billion people.

Modi’s Strategy to Deepen India-China Relations:

Indian Prime Minister Narendra Modi’s strategy to deepen diplomatic and trade relations with China, particularly in the context of tensions with the US under President Trump, reflects India’s pursuit of strategic autonomy and a multi-alignment foreign policy. This approach aims to diversify India’s partnerships, reduce over-reliance on any single power, and leverage improved ties with China to navigate U.S. tariff pressures and geopolitical challenges.

Economic Stabilization and Trade Diversification:

India’s sudden shift to China pressured the Trump administration

U.S. tariffs on Indian goods, reaching 50% by August 28, 2025, due to India’s continued purchase of Russian oil, have strained U.S.-India relations and prompted India to seek alternative trade partners. China, as India’s second-largest trading partner with a bilateral trade volume of $113.5 billion in 2024-25 (though with a $99.2 billion trade deficit), offers a critical market to offset U.S. trade losses. Modi’s visit to China for the Shanghai Cooperation Organization (SCO) Summit in Tianjin (August 31–September 1, 2025) marked his first trip there in seven years. During bilateral talks with Chinese President Xi Jinping, both leaders emphasized being “partners, not rivals,” focusing on boosting trade and resuming direct flights suspended since 2020.

India is pushing to reduce its trade deficit with China by encouraging Chinese investment in manufacturing and renewables, sectors critical to India’s economic growth. Modi’s government has signaled openness to easing scrutiny on Chinese foreign direct investment, which slowed after the 2020 Galwan Valley clash. On August 20, 2025, Modi met China’s Foreign Minister Wang Yi in New Delhi, agreeing to enhance business and cultural exchanges and address the trade imbalance. By strengthening economic ties with China, India aims to cushion the impact of U.S. tariffs, which threaten its export-driven sectors like textiles. An export drive to 40 countries, including the UK and South Korea, was launched on August 29, 2025, to diversify trade further.

The 2020 Galwan Valley clash, which killed 20 Indian and four Chinese soldiers, froze India-China relations, with 50,000 troops still deployed along the Line of Actual Control (LAC). Modi and Xi’s meeting at the SCO Summit was built on a 2024 border patrol agreement reached in Russia, aiming to de-escalate tensions. Both leaders reaffirmed that “differences should not turn into disputes” and emphasized maintaining peace along the LAC. India’s Foreign Secretary Vikram Misri noted discussions on “de-escalation, delimitation, and boundary affairs,” signaling a pragmatic approach to managing the border issue without letting it derail economic cooperation. Stabilizing the border allows India to focus on economic and diplomatic engagement with China, reducing the risk of military escalation and freeing resources for development. This also signals to the U.S. that India can manage its security challenges independently.

India’s Efforts to Strengthen Multilateral Cooperation:

India participates in China- and Russia-led forums like the SCO and BRICS, which provide platforms to counter Western/Trump pressure and promote a multipolar world order. At the SCO Summit, Modi articulated India’s vision of “Security, Connectivity, Opportunity” (S, C, O), emphasizing connectivity projects like the Chabahar port and the International North-South Transport Corridor (INSTC) as alternatives to China’s Belt and Road Initiative (BRI). Modi’s meetings with Xi and Russian President Vladimir Putin during the SCO Summit reinforced India’s ties with both powers, with Modi and Xi discussing cooperation on terrorism and fair trade in multilateral settings. By aligning with China and Russia in multilateral forums, India projects itself as a leader in the Global South, enhancing its diplomatic clout and reducing dependence on U.S.-led alliances like the Quad.

Countering U.S. Tariff Pressure and Trump’s Bullying Tactics:

Trump’s 50% tariffs on Indian goods, including a 25% punitive tariff for India’s Russian oil purchases, were described by Trump on September 1, 2025, as a response to India’s “one-sided” trade practices. He accused India of high tariffs (averaging 14%) and profiting from Russian oil, which he claimed fuels Russia’s war in Ukraine. Modi’s high-profile engagement with China, particularly the SCO Summit meeting with Xi, sends a signal to Washington that India has alternative partners. This aligns with India’s historical non-alignment policy, which avoids over-reliance on the U.S. or even Russia. By strengthening trade with China, India can mitigate the economic impact of U.S. tariffs. For instance, increased Chinese investment could bolster India’s manufacturing sector, reducing dependence on U.S. markets.

India’s refusal to halt Russian oil purchases, despite U.S. pressure, underscores its strategic autonomy. Modi’s government has defended these purchases as vital for energy security, noting that India complies with the G7 price cap on Russian oil, unlike China, which faces no similar U.S. tariffs. Analysts suggest that India’s China pivot could pressure the U.S. to reconsider its tariff strategy, as alienating India risks pushing it closer to Beijing, undermining U.S. efforts to counter China in the Indo-Pacific.

India’s Geopolitical Balancing Act and playing the China card:

Trump’s tariffs and his perceived coziness with Pakistan’s military leadership (e.g., praising Field Marshal Asim Munir) have irritated India, especially given India’s rivalry with Pakistan. Trump’s trade adviser, Peter Navarro, made an inflammatory remark calling the Russia-Ukraine conflict “Modi’s war,” further straining ties. Modi’s meetings with Xi and Putin at the SCO Summit, coupled with his refusal to credit Trump for de-escalating India-Pakistan tensions in May 2025, project defiance against U.S. pressure. By warming ties with China, India signals to the U.S. that it can pivot to other powers if Washington’s policies become too punitive. This is reinforced by India’s deepening ties with other partners like Japan (visited by Modi on August 29, 2025) and France, which share India’s interest in strategic autonomy.

The India-China rapprochement, though cautious due to historical mistrust and border issues, creates diplomatic leverage by showing the U.S. that India is not a “natural ally” but a partner with options. This could prompt Trump to soften his stance to preserve India’s role in the Quad and as a counterweight to China. Trump’s public criticism of India, including calling its economy “dead” and imposing tariffs, has humiliated Modi domestically, prompting opposition parties to demand retaliation.

Modi’s engagement with China and Russia bolsters his image as a strong leader who can stand up to U.S. pressure without capitulating. His SCO Summit speech emphasized India’s commitment to a multipolar world, resonating with his nationalist base. By securing China’s support on issues like terrorism (noted by Foreign Secretary Misri) and trade, Modi counters U.S. narratives, such as Navarro’s claim that India is a “laundromat for the Kremlin.” Modi’s China outreach neutralizes domestic criticism by showcasing proactive diplomacy, while globally, it positions India as a resilient player capable of navigating great-power rivalries.

Challenges and Limitations

·         Historical Mistrust with China: Despite the thaw, the 2020 Galwan clash and ongoing border disputes (with 50,000 Chinese troops still deployed) limit the depth of India-China cooperation. India’s security establishment views China as a long-term threat, and public sentiment remains wary, with some opposition leaders accusing Modi of betraying the Galwan martyrs.

·         India’s trade deficit with China (~B100B) and reliance on Chinese imports give Beijing potential leverage, which India must carefully manage.

·         Balancing Quad Commitments: India’s role in the Quad (with the U.S., Japan, and Australia) is seen as a counterweight to China. A closer India-China relationship could strain Quad dynamics; Trump will not attend the 2025 Quad Summit in India.

·         India must balance its SCO and BRICS engagements with its Quad commitments to avoid alienating the U.S. entirely.

·         Trump’s selective targeting of India (while sparing China, a larger Russian oil buyer) undermines U.S. credibility. India’s leverage depends on Washington recognizing the strategic cost of pushing India toward China.

·         Modi’s earlier optimism about managing Trump, based on their personal rapport (e.g., “Howdy Modi” in 2019, “Namaste Trump” in 2020), has been challenged by Trump’s impulsive unilateralism, complicating negotiations

Conclusions

Modi’s strategy to deepen India-China relations is a calculated response to Trump’s tariff war and geopolitical pressures, rooted in India’s pursuit of strategic autonomy and economic resilience. By engaging China on trade, border de-escalation, and multilateral cooperation, Modi aims to offset U.S. tariffs, diversify partnerships, and bolster his domestic image. This pivot serves as leverage against the U.S. by diversifying India’s options and pressuring Trump to reconsider his approach to preserve India’s role as a strategic partner. However, India must navigate historical mistrust with China, manage Quad commitments, and address domestic skepticism to sustain this balancing act. Modi’s upcoming diplomatic engagements, including a potential U.S. visit and the 2025 Quad Summit, will test the effectiveness of this strategy.

On September 6, the Indian government also clarified that formal/informal trade deal talks with the US are ongoing aiming at reaching a BTA by October’25. But there was another FT report on September 9 that Trump may have told the EU to hit China and India with 100% tariffs to pressure Putin. The report said Trump has asked the EU to impose tariffs of up to 100% on India and China as part of a joint effort to increase pressure on Russia to end its war in Ukraine. The president made the extraordinary demand after dialing into a meeting between senior US and EU officials gathered in Washington to discuss ways to heighten the economic cost of the war for Moscow.

There is also another angle behind Trump’s sudden shift of mood for India, which coincided with the present situation in Nepal (riots/public unrest) and a potential change of government there, which may be too much US savvy rather than China. All these are happening after the Nepal riots and a potential US-savvy next government, most probably instigated by the US/CIA and may also be supported by India/RAW; Nepal is becoming too close with China and has abundant Rare Earth Materials (like Pak/Balochistan) and Trump/US and also India wants a part of them along with China.

Also, Trump-Modi ‘Bhai-Bhai’ (brotherly friendly relationship) got a boost after PM Modi decided not to attend the virtual BRICS meeting on September 8, called by Brazil’s President Lula, and was also attended by China’s President Xi and his Russian counterpart, Putin. Modi deputed his Foreign Minister Jay Shankar to attend the BRICS virtual meeting against Trump’s bellicose tariff policies, in which Jay Shankar took a moderate stance against Trump/US trade policies.

Modi's China card is definitely working, but Trump 2.0 now no longer seeks China decoupling. The Trump administration is now seeking strategic China derisking and cooperation, especially in rare earth materials. The Trump administration does not like India's delaying tactics in trade talks; India has to be decisive in opening its economy for the US with a lower tariff and GST. Trump-Modi drama not over; to keep India under pressure, Trump is pressuring the EU to impose 100% tariffs on India for Russian oil; Trump is trying hard to revive the ailing US farm sector by selling in EMs, including India; this sector is a vital vote bank for both Trump & Modi.

What’s next?

Although back-channel (informal) trade talks between the US and India were ongoing after a brief pause, the Indian trade team may visit the US next week to resume the formal trade negotiations. India will try to ensure a prompt withdrawal of the Russian oil punishment tariff of 25%. But Trump may not oblige easily until Putin goes for the Ukraine war ceasefire. Now it seems that Putin is intensifying his attack on the Ukrainian capital Kiev to ensure a favorable ceasefire deal, in Russian-occupied Eastern Ukraine, rich in rare earth materials.  Trump may also use a tariff threat on the Indian IT outsourcing service to ensure a favorable trade deal. The Indian IT service industry is vital for the Indian middle class and discretionary consumer spending. Any tariff on it will be far more serious for the economy than additional secondary tariffs of 25% for Russian oil.

Thus, India has to allow the US for a favorable trade deal, ensuring free & fair access of US goods into the country with minimal tariffs. The Trump admin is also considering India’s high GST as another tariff barrier and thus at ~17.5% weighted average India tariffs and 15% IGST, US goods now face 32.5% total tax in India. Against this, Indian goods are facing 25% normal Federal tariffs and 7.5% average sales tax in various US states, totaling the same 32.5%. This is Trump’s reciprocal tariffs policy and applicable to almost every country/trading bloc including the EU, which has 21.5% average tariffs in almost all member states. Thus, US goods face 0% tariffs +22.5% IVAT, totaling 22.5% tax. Against this, most of the EU goods will face 15% tariffs and 7.5% average US state sales tax, totaling the same 22.5% tax in the US.

Under the base case scenario, Trump may reduce tariffs on Indian goods from 25% to 20%; in that scenario, Indian goods will face a total 27.50% tax in the US. And India will have to ensure the same total tax on US goods. Indian IGST on US goods should be around 12.5% on a weighted average basis, from the previous 15% and thus India has to impose a maximum 10% average tariffs on all US goods (from the present 17.5%), totaling the same 22.5% tax. India may also have to consider its concept of a higher tax on luxury/sin goods.

Another issue will be India’s 18% GST on most of the services, including those from the US. Thus Trump admin may also want to impose similar tariffs/taxes on Indian services to promote American employment in line with Trump’s election campaign promise and overall extreme right MAGA sentiment. Thus, the coexistence of MAGA (Make America Great Again) and MIGA (Make India Great Again) may be very difficult, even if Trump and Modi prefer reconciliation rather than protracted escalations.

Also, India has to ensure its producers, especially MSMEs and farm sectors, are globally competitive rather than protected through obnoxious tariffs and other regulations. India has to modernize its agricultural sector to compete with the US or any other advanced economies. But the fact is that Indian producers are not yet ready to compete with the US or any other AE at this moment. Thus, Modi may face widespread protests from both the Vote bank and the note bank (corporate India). And as a mature politician, Modi may not risk his political future by going for a trade deal with the US with huge concessions. At the same time, Modi also has to manage Trump’s potential action to impose service tax/tariffs on Indian outsourcing to ensure political support from India’s middle class.

Also, US savvy MDAG (RIL) may meet Trump soon (through Ivanka Trump?) on September 12 to ‘sort out’ the Russian oil secondary sanction issue. RIL is the biggest buyer of Russian oil, and as per various reports, all is not well between MDAG and Modi for this Russian oil chapter, and also some other issues. There are also various reports that influential MDAG may be using Trump and other issues to topple the Modi government.

But Modi eventually won the recent VP election and thus MDAG may be now on the back foot; while China-savvy Adani is also ensuring some policy change for Modi to develop better relations with China. Interestingly, Trump offered formal trade negotiations soon after Modi won the VP election on September 9, which was also under some speculation that Trump-MDAG may be trying to topple the Modi government (?). Also Modi admin is targeting the Ambani family through the Bantara Ecological Zoo regulations and ADAG loan fraud allegations, something which was unthinkable a few months ago.

As per reports, ADAG has some ‘secret file’ of the Rafale jet scam involving the Modi admin and wants to show the same to the erstwhile VP Dhankar. Eventually, Modi kicked him out for his ‘interest’ in the Rafale scam file and called for a fresh VP election. MDAG reportedly has around 140 MPs along with various big names like Gadkari (next PM?) and RSS support. And Modi may have to retire gracefully after December’25 on the 75-year age issue. So there are some political & policy uncertainties in the Modi 3.0 administration including how to tackle Trump's trade war tantrum.

Bottom line

Unless Trump fully blinks on Modi’s China card, he may not give India any meaningful trade/tariff concessions. Trump 2.0 no longer treats China as hawkishly as during Trump 1.0, thanks to the prudence of US Treasury Secretary Besant. Thus, Modi has to carefully navigate and make a win-win trade deal with the US, ensuring good relations with the US, which is the biggest source of its FX reserve and the number one export destination. The US now contributes almost $95-100B if we consider both trade surplus and net remittances, almost 17% of India’s FX/USD reserve. India also has to pay China ~$100B for its trade deficit. The Modi admin also has to maintain good relations with China and other BRICS nations to make BRICS stronger and explore the potential of an alternative common trade currency to ensure no US unilateralism, USD hegemony and bullying tactics.

But will Modi’s halfhearted approach and the strategy of embracing both BRICS and QUAD help China trust India as a reliable partner for development and prosperity? This is the biggest issue despite the Hindi-China ‘bhai-bhai’ rhetoric by Modi in the recent SCO summit to counter Trump. And Trump may also use Modi to ensure no BRI currency, which may threaten the global reserve currency status of the ‘King USD’. Trump often says such ‘demise’ of the USD would be equivalent to accepting ‘loss in a major world war’.

Market impact: Trump-Modi ‘dosti’ (friendship)

Indian Stock Market Surges on September 10, 2025: Driven by Trump-Modi Reconciliatory Posts on Trade. These posts signaled a potential thaw in bilateral trade tensions, particularly around the 50% U.S. tariffs on Indian goods imposed in late August 2025 over India's Russian oil imports. The sudden conciliatory tone—contrasting Trump's earlier criticisms—boosted investor sentiment, leading to gains in key indices and export-heavy sectors like IT, textiles, pharmaceuticals, and others; Nifty surged 0.42%, while USDINR edged down.

Sector Highlights:

·         IT Sector: Led the rally with gains of 4-5% in mid-caps, driven by upbeat U.S. tech guidance (e.g., Oracle Corp.'s positive outlook). Oracle Financial Services Software surged 10% on upbeat guidance. Stocks like HCL Tech, TCS, Tech Mahindra, and Infosys advanced 1-2% on fading concerns of any Trump tariffs on outsourcing and generous shareholder return after INFY announced buybacks.

·         Banking and PSU: Nifty PSU Bank index up 0.74%, with Bank of India and Union Bank of India rising nearly 4% each, amid reports of potential government-led bank mergers.

·         Other Gainers: Bharat Electronics, Bajaj Finance, Axis Bank, and State Bank of India posted strong gains. NMDC Steel rose 4%.

·         Textile sector gains, supported by hopes of tariff relief and competitive positioning versus other Asian exporters

·         Also, additional tailwinds from EU clearance for 102 Indian fishery export facilities boosted seafood stocks.

·         Losers: Auto and cement stocks like Mahindra & Mahindra, Maruti, Tata Motors, and UltraTech Cement declined 0.5-1% (profit booking after the GST cut-related rally for the last few days)

US export-heavy textile stocks led the rally, with investors betting on improved U.S. market access following Trump’s and Modi’s reconciliatory posts. The sector, heavily export-oriented (the U.S. and EU account for ~47% of India’s textile exports, worth ₹3 lakh crore in 2023-24), had faced pressure from the 50% U.S. tariffs but rebounded on hopes of a trade deal.

·         Gokaldas Exports: strong U.S. export focus

·         Welspun Living: a leader in home textiles with significant U.S. sales

·         Pearl Global: apparel export optimism to the US

·         Kitex Garments: ~70% of revenue from the U.S.

·         KPR Mill: vertically integrated operations.

·         Raymond Lifestyle: Premium offerings to the US

·         Trident: Boosted by export demand for yarns and fabrics

 

Technical outlook: Nifty Future, Bank Nifty Future, and USDINR

Looking ahead, whatever may be the narrative, technically Nifty Future (CMP: 25050) now has to sustain over 25350 for a further recovery to 25500/25800 and a further rally to 26000 and 26100/26300-26400/26500; otherwise, sustaining below 25300/25250-25175/25100, Nifty Future may fall to 25050/25000-24900/24800 and further to 24600/24500-24400/24300 and 24000 and 23600/23350*-23900/23750 and 23400*/23100-22600/22200 and further 22000-21700* the coming days.

Technically, Bank Nifty Future (54500) now has to sustain over 55300-55600 for a recovery to 57000/57900 and only after sustaining 58100, may further rally to 58500/58900-60500/61000 and a further 61500-65750 in the coming days; otherwise, sustaining below 55200, BNF may further fall towards 55000-54900 and 54500/54000-53500*/53000 and 52500*-52000/51500 and further 51000/50500-50000/49700 and 49200-47700 in the coming days.

Technically, USDINR-I now (88.00) has to sustain over 88.00 for a further rally to 88.50/88.75-89.00/89.50 and 90.00/90.50-91.00/91.50 and 92.50-94.50 in the coming days; otherwise, sustaining below 87.50-87.00, USDINR may again fall to 86.50/86.00-85.50/;85.00 and 84.00-83.50 in the coming days.

Disclaimer:  I am an NSE-certified Level-2 market professional (Financial Analyst- Fundamental + Technical) and not a SEBI/SEC-registered investment advisor. The article is purely educational and not a proxy for any trading/investment signal/advice.  I am a professional analyst, signal provider, and content writer with over ten years of experience. All views expressed in the blog are strictly personal and may not align with any organization with, I may be associated.

If you want to support independent & professional market analytics, you may contribute to my PayPal A/C: asisjpg@gmail.com

For any professional consultation about the financial market (EQ/COMM/FX), investment, trading ideas, and real-time, professional-grade perfect signals, please DM: ashishghoshjpg@gmail.com or ping me at Telegram id: asisjpg