Nifty slips despite US trade deal hopes as Modi skips Trump

 

·         PM Modi confirmed he is not attending the ASEAN summit in Malaysia next week, contrary to an earlier Mint report of a Realty Shows with Trump

·         The Modi admin may not sign the BTA before the mid-November Bihar election, as it may project Modi as a 'weak leader' amid Trump's bullying tactics

·         The opening of the farm and MSME sectors for US goods is a politically sensitive issue, and thus the Modi admin has to move carefully for the sake of note & vote bank

·         To get 15-20% US tariffs, India has to impose a maximum of 10-15% tariffs to reciprocate

·         India may delay the implementation of the US BTA  9-12 months after a potential signing by December’25 to prepare a level playing ground for domestic producers

On October 22, 2025, India 50 (Gift Nifty) surged almost 1.3% and made a high of 26342.00, almost at a time high of 26440.50 made in Septgember'24 after a Mint report about an imminent US-India trade deal (BTA). The Trump admin may give some concessions to India and may impose 15% tariffs vs the present 50% (25% normal + Russian oil cess 25%). The deal could slash these to 15-16%, offering major relief to Indian exporters. The BTA could be signed at the ASEAN Summit later this month (October 2024) between US President Trump and Indian Prime Minister Modi, though unconfirmed. Broader outlines are ready, but sensitive issues need political approval. India targets a wrap-up by November 2025, with a built-in review clause (e.g., after one year) for revisiting tariffs and U.S. access for Indian markets.

Highlights of the Mint article

Energy: India may

·         Gradually reduce Russian oil imports (currently 34% of crude; discounts narrowed from $23/barrel in 2023 to $2-2.50 in mid-October, saving $3.8B in FY25).

·         Gradually increase US crude/gas buys (already 10% of needs, worth $12-13B annually; potential for more without refinery tweaks).

·         Allow US ethanol imports.

·         End Russian oil purchases as a precondition (per Trump)

·         Boost US energy exports. |

Agriculture: India may

·         Raise quota for US non-GM maize (from 0.5M tonnes/year) to meet poultry, dairy, and ethanol demand.

·         Consider non-GM soymeal imports for human/livestock use

·         Expanded access for corn (US exports down from $18.57 billion in 2022 to $13.7B in 2024, hit by China cuts)

·         Cut some meat. Tariff on dairy (e.g., high-end cheese) -still unclear.

Notable Quotes

·         India’s Commerce Secretary Rajesh Agarwal (October 15): "India is open to increasing its crude and gas imports from the US if prices remain viable for domestic refiners."

·         Anonymous source: “Talks are also advancing on permitting imports of non-GM soymeal... However, there is still no final clarity on tariff reductions for dairy products."

·         Another source: "The agreement is likely to include a review mechanism... to ensure flexibility for future trade adjustments."

Potential Impacts

·         Positive: Boosts Indian exports, helps US offload agri products (e.g., corn hit by China's import drop from $5.2B in 2022 to $331M in 2024), and diversifies supply chains. For India, cheaper US imports could aid ethanol exports despite surplus production.

·         Potential Challenges: Domestic backlash—e.g., Soybean Processors Association's D.N. Pathak warns US soymeal could crash local prices, hurting farmers already below minimum support levels. India must safeguard "red lines" on agriculture, digital trade, IP, and avoid anti-China clauses for strategic autonomy. Past deadlines missed; US won't match Russian discounts.

Overall, the Mint article portrays an optimistic but cautious path forward, driven by Trump's push and India's pragmatic stance. No responses from key figures like Commerce Minister Piyush Goyal or the US Trade Representative as of October 22, 2025. But all these floating balloons by the Modi admin are not new, but may be designed to test the mood on Dalal Street as well as Main Street. Like Trump, Modi has to also ensure vote bank (rural/agri and urban middle class-MSMEs) and note bank (corporate India), while doing any BTA with the US.

Analysis of the Proposed Tariff Parity in the India-US Trade Deal

Trump is seeking a balanced, reciprocal approach to tariffs under the ongoing India-US Bilateral Trade Agreement (BTA) negotiations, aiming for "open and fair access" by equalizing effective tax burdens. If Indian goods indeed face 15% tariffs in the US under BTA, total tax on Indian goods will be around 22.5% (after considering 7.5% average US state sales tax across various US states); the US has no Federal sales tax/VAT/GST like India, the EU, China, or Japan.

India now has around 12.5% IGST on imported goods, including from the US. Thus, to equalize the total tax component, India has to impose a maximum 10% tariff on all US goods, vs an earlier 17% (weighted average/MFN rates). India recently reduced/recalibrated GST, and IGST should be around 12.5% vs earlier ~15.5%.

Based on the latest updates as of October 22, 2025, negotiations are advancing toward a first-phase deal by November 2025, with tariffs potentially dropping to 15-16% for Indian exports. India has signaled willingness to cut duties on ~55% of US imports (valued at $23B+), including substantial reductions or zeroing out on select goods, to shield its $66B in exports.

Modi admin may go slow on US-India BTA before the Bihar election for the sake of 'Vote Bank'

As the Bihar Legislative Assembly elections approach, with polling scheduled for November 6 and 11, 2025, and results due on November 14, the Modi administration faces a delicate balancing act in its negotiations for the India-US Bilateral Trade Agreement (BTA). Reports suggest the government may deliberately delay any formal acknowledgment or signing of the deal—initially targeted for fall 2025—to avoid alienating key voter bases among small farmers and micro, small, and medium enterprises (MSMEs), whose livelihoods could be disrupted by increased US agricultural imports like non-GM corn and soymeal. This electoral calculus underscores a broader strategy of timing major policy announcements to safeguard the NDA's vote bank in Bihar, a state where agriculture employs over 70% of the workforce and MSMEs contribute significantly to rural employment.

Electoral Sensitivities in Bihar: Farmers and MSMEs as Core Vote Banks

Bihar's agrarian economy, dominated by smallholder farmers growing maize, rice, and pulses, makes it particularly vulnerable to the BTA's concessions. The US has pushed for expanded quotas on non-GM maize (from 0.5 million tonnes) and soymeal, which could flood local markets, potentially crashing prices below minimum support levels (MSP) and exacerbating farmer distress—a recurring flashpoint in Indian politics. Industry bodies like the Soybean Processors Association have already warned of a 10-15% price drop, mirroring concerns in states like Madhya Pradesh and Maharashtra, but amplified in Bihar due to its maize-centric production. With the NDA—comprising BJP, JD(U), and allies like LJP(R)—contesting 243 seats in a high-stakes battle against the RJD-led INDIA bloc, any perception of compromising farmer interests could erode support among backward castes and rural voters, who form the backbone of Nitish Kumar's and Narendra Modi's coalitions.

MSMEs, numbering over 1.5 million in Bihar and concentrated in textiles, leather, and food processing, face similar risks from reciprocal tariff cuts (e.g., a proposed 10% minimum on US goods plus 12.5% IGST). These could invite cheaper US imports, squeezing margins by 5-10% and threatening 10-15% revenue losses in labor-intensive sectors—precisely the hubs like Patna and Muzaffarpur where NDA's development narrative hinges on job creation promises. Opposition leaders, including Tejashwi Yadav, have already amplified these fears, framing the BTA as a "sellout" that prioritizes US surpluses over Bihar's youth unemployment crisis. Social media sentiment echoes this, with users speculating that the government is holding off announcements until post-November 14 to avoid backlash: "Modi won't announce deal before Bihar election. After Bihar, there are no elections for another 5-6 months."

The NDA's campaign, led by Prime Minister Modi with 12 rallies starting October 24 in Samastipur and Begusarai, emphasizes welfare schemes like ₹10,000 aid to 21 lakh women and infrastructure worth thousands of crores—moves timed for maximum electoral impact just before the Election Commission finalized dates on October 6. Yet, amid seat-sharing finalized at 101 each for BJP and JD(U) on October 12, any BTA-linked controversy could fracture this unity, especially with allies like Chirag Paswan demanding safeguards for local jobs.

Potential Summit Snub: Modi's Absence from ASEAN in Malaysia

Compounding this caution is Prime Minister Modi's reported decision to skip the ASEAN Summit in Kuala Lumpur (October 26-28, 2025), where a BTA signing was speculated as a possibility during a Modi-Trump sideline meeting. Citing "scheduling issues" and ongoing Diwali festivities, Modi will participate virtually, with External Affairs Minister S. Jaishankar representing India in person—a rare downgrade from his usual in-person attendance at such forums. This move, confirmed by Malaysian PM Anwar Ibrahim on October 23, also postpones a planned Cambodia visit, avoiding any optics of a high-profile US engagement amid domestic polls. Analysts view it as a deliberate sidestep: A face-to-face with Trump could spotlight unresolved tariff tensions or force premature BTA concessions, risking headlines that fuel opposition narratives of "surrender" on farmer protections.

While talks have progressed—covering 55% of US imports worth $23 billion—with a review clause for flexibility, the government's "red lines" on agriculture and MSMEs remain firm. Commerce Minister Piyush Goyal has reiterated no compromises on sensitive sectors, aligning with Modi's assurances during recent rallies. Post-election, a deal could materialize by December, boosting $500 billion bilateral trade targets, but for now, Bihar's 7.5 crore voters—and the NDA's projected majority—take precedence. This approach, while pragmatic, highlights the interplay of geopolitics and domestic politics in Modi's playbook.

Indian PM Modi does not want to look like a weak leader before the Bihar election. Thus, expect the official BTA announcement as per Trump's T&Cs after the Bihar election in late November. On late October 22, in his daily TV Reality shows, Trump also confirmed India is now gradually abandoning Russian oil and will completely abandon it by December'25, as a sudden complete withdrawal is not possible. The Modi administration may not acknowledge any BTA with the US against the 'interest' of small farmers & MSMEs before the Bihar election; otherwise, the vote bank may be affected; Modi may not even attend the Malaysia summit next week.

Potential Ethanol Imports in India-US Trade Deal: Sugar Lobby Poised for Protests amid Rural Economic Concerns

As India edges closer to finalizing a Bilateral Trade Agreement (BTA) with the United States—potentially by November 2025—the prospect of easing restrictions on ethanol imports has emerged as a flashpoint, drawing sharp scrutiny from the country's influential sugar lobby. This concession, part of broader negotiations to secure a reduction in US tariffs on Indian exports from 25%/50% to 15-16%, ties into Washington's demands for diversified energy trade, including ramping up US crude, gas, and ethanol purchases in exchange for phasing out India's reliance on discounted Russian oil (currently 34% of crude imports, down from 2023 highs but still saving $3.8 billion in FY25). With the US ethanol lobby aggressively pushing for market access amid its own surplus production, Indian stakeholders fear a domestic backlash that could disrupt the sugar industry's ethanol blending ambitions and exacerbate farmer distress.

The Ethanol Conundrum: US Push Meets Indian Resistance

Ethanol, a biofuel derived primarily from corn in the US and sugarcane molasses in India, sits at the intersection of energy security and agricultural policy. The BTA discussions, ongoing since early 2025, include provisions for India to lift import curbs—currently prohibitive due to high tariffs and non-tariff barriers—to accommodate US exports. This aligns with India's ethanol blending targets (20% by 2025-26, rising to 30% by 2030), but imports could undercut domestic production, which hit 15.9 billion liters in the 2024-25 season, supporting sugarcane farmers amid a 1.4 billion liter surplus. Commerce Secretary Rajesh Agrawal noted on October 15 that India is "open to increasing crude and gas imports from the US if prices remain viable," but ethanol remains contentious, with no final clarity amid stalled farm talks over dairy, GM crops, and biofuels.

The US, facing a glut from record corn harvests (exports down to $13.7 billion in 2024 from $18.57 billion in 2022 due to China cuts), views India as a prime market for its corn-based ethanol. However, this clashes with India's "food vs. fuel" debate, where diverting sugarcane for ethanol already strains food security, prompting a December 2023 ban on sugar exports and ethanol from syrup/juice to prioritize domestic supplies. Allowing imports could flood the market, depressing molasses prices and squeezing mill revenues, which rely on ethanol sales for 20-25% of income.

Sugar Lobby's Influence: Protests and Political Leverage-Big impact on Note Bank (political funding)

India's sugar industry, represented by powerful groups like the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF), is gearing up for resistance. With over 5 million farmers and 500 mills concentrated in Uttar Pradesh, Maharashtra, and Karnataka—key electoral battlegrounds (swing states)—the lobby wields significant clout, having successfully lobbied for export bans and higher MSPs in the past. Analysts warn that imports could trigger protests similar to the 2020-21 farm law agitations, eroding mill profitability by 10-15% and risking arrears to farmers (already ₹15,000 crore in dues as of mid-2025).

ISMA President Deepak Ballani has publicly opposed unrestricted imports, arguing they threaten the "Atmanirbhar" (self-reliant) ethanol program, which has saved ₹1 lakh crore in forex via blending since 2014. Rural economy braces for impact, with potential price crashes below ₹4,000/quintal for sugarcane, hitting smallholders already grappling with climate volatility. This sentiment echoes broader farm standoffs that stalled talks in July 2025, with ethanol alongside GM corn and dairy as unresolved "red lines."

Broader Implications amid Elections and Trade Goals

The issue gains urgency with Bihar elections looming (November 6-11, 2025), where agrarian voters could sway outcomes; the Modi administration may delay BTA announcements to avoid vote bank erosion, especially after skipping the ASEAN Summit (October 26-28) for domestic priorities. While the deal promises $500 billion in bilateral trade by 2030, balancing US demands with domestic protections remains tricky—potentially via phased quotas or exemptions to appease the lobby. As one anonymous source noted, "Talks are advancing on ethanol, but clarity is pending," -highlighting the lobby's role in shaping a deal that safeguards rural interests without derailing negotiations.

Corporate India's Unease with Cheaper US Imports under BTA: Heightened Competition and the Shadow of Political Funding (Note Bank)

As India and the United States inch toward a Bilateral Trade Agreement (BTA) that could reduce US tariffs on Indian exports to 15-16% by November 2025, a wave of apprehension is rippling through Corporate India over the reciprocal influx of cheaper US imports. This deal, aimed at boosting bilateral trade to $500 billion by 2030 while addressing punitive duties tied to India's Russian oil purchases, mandates concessions like a 10% minimum tariff floor plus 12.5% IGST on US goods—equating to a 22.5% effective burden that still undercuts many domestic costs. Sectors such as automobiles, electronics, agriculture, and chemicals face intensified competition, potentially eroding margins by 5-10% and triggering short-term earnings downgrades amid already volatile markets. Experts warn that without robust safeguards, this could mirror past import surges, forcing corporates to diversify or innovate rapidly to survive.

The discontent stems from the BTA's emphasis on reciprocity: In exchange for US tariff relief boosting Indian exports in textiles and gems, India must open markets to US surpluses in corn, soymeal, ethanol, and machinery—areas where domestic players enjoy protective duties of 30-100%. Commerce Minister Piyush Goyal has assured "red lines" on sensitive sectors, but industry leaders remain skeptical, citing potential revenue hits of 10-15% for MSME-linked corporates and a broader GDP drag of 0.3-0.5% from unchecked imports. Recent market rallies, with Nifty reclaiming 26,000 on deal hopes, mask underlying fears; stocks in autos and agri-processing dipped in April 2025 amid tariff escalations, signaling vulnerability.

Compounding this is the intricate nexus between Corporate India and political funding, which could amplify lobbying against pro-import clauses. Post the Supreme Court's February 2024 scrapping of electoral bonds—a scheme that funneled anonymous donations worth over ₹16,000 crore, predominantly to the BJP—corporates have pivoted to electoral trusts for influence. Donations via these trusts surged threefold to ₹1,075 crore in 2023-24, with entities like Prudent Electoral Trust channeling funds to major parties (₹945 crore to BJP, ₹156 crore to INC). This shift, while ostensibly more transparent, raises concerns over quid pro quo: Data reveals patterns where donor corporates faced eased regulatory scrutiny post-contributions, potentially extending to trade policy tweaks.

In the BTA context, conglomerates in affected sectors—backed by lobby groups like FICCI and CII—may leverage funding ties to push for exemptions or phased implementations, especially amid Bihar elections where rural vote banks overlap with corporate supply chains. Critics argue this perpetuates an "unholy nexus," where big donors influence outcomes on imports, echoing pre-bond eras when corporate funding swayed policies. As one analyst noted, "Corporate unease isn't just economic—it's political leverage in play," potentially delaying the deal or softening import terms to appease funders.

Potential Competition from US Imports

·         Automobiles (Maruti Suzuki, Tata Motors): Cheaper US auto parts/EVs under 10% tariffs (?), eroding 10-15% market share.;4-6% EBITDA cuts; firms with funding history (e.g., via trusts) may lobby for duty hikes, influencing policy amid elections.

·         Agriculture & Processing (Godrej Agrovet, Ruchi Soya): Non-GM corn/soymeal/ethanol surges, crashing local prices by 10-20%; 5-8% margin squeeze; sugar lobby protests could amplify via donations to rural-heavy parties. |

·         Electronics & Chemicals (Aarti Industries, and Dixon Technologies): Imported machinery/components at 22.5% effective duty (?) undercutting domestic; 5-10% revenue drag; post-bond scrutiny may push transparent funding for policy favors.

Ultimately, while the BTA promises long-term gains, Corporate India's pushback—fueled by competition fears and funding clout—could force a more insulated deal, balancing global ties with domestic imperatives.

India is adopting a go-slow strategy in both signing and implementing BTA/FTA with the US, UK, EU, and various other trading blocs to prepare the domestic stakeholders for a level playing ground to compete with potentially cheaper imports. For decades after decades, India provided protectionism to domestic industries and agriculture, which has caused inefficiencies. India also has to reset from politics to policies to provide a level playing ground for domestic producers to compete globally.

India has to undergo various structural reforms in land, labor, law, and energy, borrowing costs, GST & tariffs simplifications, so that Indian manufacturing and farm products can compete globally & also with cheaper imports. The US farm/agri products are much cheaper than those in India due to mechanization and availability of large lands, rather than manual and small/fragmented farm lands in India. The Indian Government also has to lower borrowing costs significantly, around 4-5% or below, for business in line with advanced economies (US/EU), and also China. Indian energy (electricity, fuel) costs are much higher than those in the US/EU/China, causing an uneven playing field for domestic producers. India also has to ensure proper GST & tariffs reform & implication to eliminate complexity, corruption, and to ensure lower cost of business/compliance burden.

Thus, Indian politicians & policymakers have to open the economy for cheaper imports gradually and carefully after ensuring a proper level playing ground for domestic producers; otherwise, it may cause both vote and note bank for the ruling party in power.

Irrespective of any geopolitical narrative, India needs to maintain good trade & diplomatic relations with the US, EU, UK, and even Bangladesh for its overall FX/USD reserve. The US contributes almost $93B USD, followed by $56B by the EU, $25B by the UK, $12B by Bangladesh, and $11B by the UAE, if we consider net export and remittances. The US and EU alone contribute over $150B USD to India, almost 25% of India's FX reserve, vital for paying to top importers like China, Saudi Arabia, and Iraq. India imports almost 85% of its oil requirements, requiring a critical need for USD as a trade settlement currency. But after the Ukraine war, Russia now does not accept USD because of US sanctions. The same narrative is also partially true for Iranian and Venezuelan oil; India has to settle trade by goods & services and other acceptable currencies like Chinese Yuan (CNY) or Saudi AED.

Trump has many ‘Triumph’ cards against Modi’s India, from tariffs, techs, and work visas (H1B). Presently, India charges ~18% IGST on almost all US services, while no such sales tax is applicable in the US for Indian services. Now, the Trump admin is also preparing a bill (HIRE Act) to impose a 25% cess/tax on all such services by foreign entities, either remote or in-person. Trump himself often says that the US does not need India, but India does.

Modi now has only one card to play-the China 'friendship' card. But still, Trump 2.0 is now no longer seeking decoupling with China, but strategic derisking; China is also seeking the same with the US. India’s stance should also be the same to lower overdependence on the US and diversify external trade, along with ensuring stronger domestic consumption.

Market wrap

On October 23, India’s benchmark stock index Nifty stumbled almost 100 points from the opening session high around 26175 as India’s PM Modi will skip the Malaysia ASEAN summit to avoid Trump for a potential finalization of the US-India BTA ahead of the Bihar election.

PM Modi tweeted:

“Had a warm conversation with my dear friend, Prime Minister Anwar Ibrahim of Malaysia. Congratulated him on Malaysia's ASEAN Chairmanship and conveyed best wishes for the success of the upcoming Summits. Look forward to joining the ASEAN-India Summit virtually, and to further deepening the ASEAN-India Comprehensive Strategic Partnership.”

Also, there were some social media chatters that the US/CIA may have tried to kill Modi at the SCO meeting in China to ‘kill two birds with one arrow’; such killing of Modi in China will not only destabilize India, but also the growing relation with China. It has been reported by various social media posts that Russia's KGB got hints of the CIA plot, and after that, Putin informed Modi about it personally and escorted Modi in his car!

Although overall Modi assassination attempt by the US CIA sounds like a spy thriller, not really believable, in reality, the US has no permanent friends & foes; only permanent interests. Thus, irrespective of any geopolitical narrative, businessman and top deal maker Trump will not allow Modi/India any undue concessions in trade deals unless India reciprocates.

RIL dragged the index after it announced 'recalibration' of Russian crude oil purchase in line with any change in Indian policy. Shifting from Russian oil to other sources may affect the GRM of RIL. Trump also imposed fresh sanctions on the two largest Russian oil companies, Rosneft and Lukoil, which may affect the supply of crude oil to various Indian refiners and the oil price.

On Thursday (October 23, 2025), Ni8fty was boosted by techs (H1B visa relief-less hawkish policy) led by INFY (promoters refrained from buyback), HCLTECH, TCS, Wipro, Shriram Finance (gold, ONGC (higher oil), Axis Bank, and Titan, while dragged by RIL,  BPCL, Ultratech Cement, Eichermotors, Bharti Airtel, and JSW Steel.

Bottom line

In line with India's go-slow strategy, the Trump admin also may not be in a hurry to withdraw Russian oil secondary tariffs of 25% (on top of the normal tariff of 25%) till at least December'25, unless India fully stops the purchase of Russian oil and signs the BTA. Also, India may not be in a hurry to implement the BTA before 9-12 months. Thus, Indian exports to the US may be affected even under 25% normal US tariffs, as competitors Bangladesh, Indonesia, or Vietnam have lower tariffs and lower production costs. Indian exporters may also have to sacrifice margin in the process.

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

Looking ahead, whatever may be the narrative, technically Nifty Future (CMP: 26400) now has to sustain over 26600 for a further rally towards 26850/27175-27600/28050  and further 28800 in the coming days; otherwise, sustaining below 26500-26400/26300, Nifty Future may slip to 25950/25700-25500/25300 and 25100/25000-24800/24600 and 24400-24200 in the coming days.

Technically, Bank Nifty Future (58000) now has to sustain over 58300 for a further rally to 58500/59050-59200/59700 and 60200/60500-61000/61500 in the coming days; otherwise, sustaining below 58100-57900, BNF may again fall towards 57200/56700-56000/55500 and 55000/54400-54000/53700 in the coming days.

Technically, USDINR-I now (87.90) has to sustain over 87.50-87.00 for a rebound to 88.50/89.00-89.50/90.00 and 90.50-91.00/91.50 and 92.50-94.50 in the coming days; otherwise, sustaining below 86.50 USDINR may further fall to 86.00-85.50/85.00 and 84.00-83.50 in the coming days.