Weekly India Digest: Politics, Policy, and Global Affairs (Apr 6, 2025)

The first week of April 2025 has been a busy one for India, with impactful developments spanning across foreign relations, economic shifts, defense partnerships, and civic issues. From geopolitical maneuvers with neighboring countries to internal reforms and societal challenges, each event highlights the country’s evolving priorities and its role in regional and global contexts. Here's a curated roundup of India’s top headlines that shaped the nation this past week—without venturing into the realm of entertainment.

U.S. Tariffs Rekindle India’s Push for Big-Bang Reforms

• As the United States reintroduces aggressive trade tariffs under shifting global dynamics, economists and policymakers in India are debating the urgency of structural reforms similar to the 1991 liberalization wave. India’s average tariff rates have steadily risen in the last decade—from about 13% in 2010 to nearly 18% today—creating a less competitive environment for exports.

• Currently, India’s manufacturing sector contributes only about 13% to the national GDP, a noticeable drop from its 17% share in the early 2000s. This decline has alarmed trade analysts, especially when juxtaposed with China’s sustained industrial output. Many believe it's time India lowers trade barriers, enhances ease-of-doing-business policies, and reinvigorates labor and land reforms to attract global investors wary of over-relying on China.

• These new U.S. tariffs may serve as the external pressure India needs to re-engage with deep structural policy reforms and integrate more confidently into global supply chains.

iPhone Manufacturing in India Soars, But Trade Agreements May Be the Key

• India’s smartphone production industry is experiencing a golden phase, especially with Apple increasingly shifting its iPhone assembly from China to India. By the end of 2025, nearly 25% of all iPhones may be made in India, according to JPMorgan and other industry insiders.

• However, global manufacturing isn’t solely driven by cost-efficiency—it also hinges on favorable trade treaties. India currently lacks bilateral or regional free trade agreements with several major markets, unlike Brazil or Mexico, which offer better access to the U.S. and Latin American regions.

• Saudi Arabia, too, is emerging as an unexpected electronics manufacturing hub, offering tax benefits, reduced import duties, and aggressive economic diversification under its Vision 2030 plan. For India to maintain its edge, experts suggest it must invest in logistics infrastructure, fast-track export incentives, and most critically—negotiate meaningful trade deals with the EU, ASEAN, and other blocs.

India Reduces Coal Imports as Renewable Energy Surges

• India’s coal imports saw a marked 10% decline in the first quarter of 2025, signaling an accelerating transition toward renewable energy. The drop aligns with India’s long-term goals under its National Electricity Plan, which aims for 50% of energy capacity from non-fossil fuel sources by 2030.

• Domestic coal production has also picked up pace, allowing India to cut its dependence on costly imports from Australia, Indonesia, and South Africa. Meanwhile, the country is doubling down on solar and wind energy capacity, battery storage investments, and green hydrogen pilot projects.

• In contrast, countries like Vietnam and Bangladesh increased their coal imports during the same period to meet growing energy demands. India's decline reflects not just a shift in energy sourcing but also strategic self-reliance under the Atmanirbhar Bharat initiative.

Jagtar Singh Johal’s Continued Detention Sparks Legal and Human Rights Debate

• Despite being acquitted by a Punjab court of terrorism charges last week, British Sikh activist Jagtar Singh Johal remains in solitary confinement under another case with nearly identical charges. Legal scholars and human rights watchdogs have raised serious concerns over the potential breach of Article 20 of the Indian Constitution, which protects citizens from being tried twice for the same offense.

• Johal, arrested in 2017 while attending a family wedding, was accused of aiding a pro-Khalistan plot. His detention, described by the UN Working Group on Arbitrary Detention as arbitrary and without sufficient evidence, has drawn criticism from UK lawmakers and international rights groups.

• The continuation of his solitary confinement despite acquittal has reignited debates on custodial justice in India, and whether international diplomatic pressure will lead to a resolution remains to be seen.

Trump’s Potential Tariffs on Russian Oil Pose a Strategic Dilemma for India

• Former U.S. President Donald Trump’s recent remarks hinting at imposing a 50% tariff on Russian oil if re-elected have stirred anxiety among Indian policymakers. India has become one of Russia’s largest crude oil buyers since the Ukraine war disrupted global supply chains. The country has been importing discounted Russian crude, refining it domestically, and exporting refined products, generating significant economic gains.

• If such tariffs are implemented, India could face a dual challenge—limited access to cheap Russian oil and growing pressure from Western allies to reduce ties with Moscow. The Indian government may be forced to rebalance its oil sourcing strategy, likely increasing imports from Gulf nations, which could push domestic fuel prices higher.

• Experts argue that this looming risk underscores the need for India to diversify its energy import basket and speed up clean energy adoption to reduce geopolitical vulnerabilities.

Adelaide–Delhi Direct Flights in the Works as South Australia Deepens India Ties

• South Australian Premier Peter Malinauskas, during a multi-city visit to India last week, announced the government’s interest in launching a direct flight between Adelaide and Delhi. The move aims to cater to the rapidly growing Indian diaspora in South Australia and to boost tourism, student mobility, and bilateral trade.

• Currently, travelers between Adelaide and India face long transit times via Sydney, Singapore, or the Middle East. A direct air corridor would not only shorten travel time but also enhance business connections and educational exchanges. India is already South Australia’s third-largest trading partner, with key sectors being wine, agribusiness, education, and renewable energy.

• The announcement is seen as part of a broader push to elevate India–Australia ties beyond cricket and education, focusing instead on long-term economic collaboration.

IMF Maintains India’s GDP Forecast at 6.5%; Reforms Still Crucial for Long-Term Growth

The International Monetary Fund (IMF) last week reaffirmed its bullish stance on India’s economy, projecting stable 6.5% GDP growth for both FY 2024–25 and FY 2025–26. India remains the fastest-growing major economy in the world, buoyed by strong domestic demand, policy consistency, and rising private investment.

However, the IMF also emphasized the urgent need for structural reforms in labor, land acquisition, and taxation. Economists believe that without these reforms, India may hit a "middle-income trap" by the 2030s, unable to transition into a fully developed economy by 2047.

Meanwhile, global investment firms had varied takes:

• S&P Global pegged India’s GDP growth at 6.8%, crediting the country’s resilient services sector.

• Goldman Sachs was more cautious, forecasting 6.4%, citing concerns over a weakening rupee and slowing global demand.

India and Sri Lanka Forge Strategic Defense and Energy Partnerships

• During a landmark visit to Sri Lanka, Indian Prime Minister Narendra Modi and Sri Lankan President Anura Kumara Dissanayake signed pivotal defense and energy agreements. A highlight of the visit was the inauguration of a 120-megawatt solar power plant, symbolizing India's commitment to sustainable energy collaboration in the region. These initiatives aim to bolster India's strategic and economic influence in Sri Lanka, especially amid concerns over China's expanding footprint through substantial infrastructure projects. However, the agreements have sparked domestic protests in Sri Lanka, with critics fearing potential compromises to national sovereignty.

India and UAE Collaborate on Sri Lanka Energy Hub to Counter Regional Influence

• In a strategic move to enhance regional cooperation, India and the United Arab Emirates (UAE) have agreed to jointly develop an energy hub in Trincomalee, Sri Lanka. This partnership includes plans for a multi-product pipeline and potentially utilizing an existing fuel tank farm. The collaboration underscores India's proactive approach to strengthening ties with neighboring countries and countering China's growing influence in South Asia. The initiative also reflects the UAE's deepening engagement in the region's energy sector.

Bangladesh's Shift Towards China Raises Concerns in India

• Nobel laureate Muhammad Yunus has been advocating for Bangladesh to position itself as China's gateway to South Asia, emphasizing its strategic role in the region. This potential pivot in foreign policy could strain Bangladesh's historically close relations with India, especially amid ongoing issues such as the treatment of Hindu minorities and extradition requests. India views this development with caution, as it may alter the geopolitical dynamics of South Asia and impact regional cooperation frameworks.

U.S. Revises Tariffs on Indian Imports, Impacting Key Sectors

• The United States has adjusted its reciprocal tariff on Indian imports from 27% to 26%, affecting a range of products including textiles, electronics, and jewelry. This move has significant implications for India's export-driven industries, particularly the gems and jewelry sector, which faces potential job losses. The Indian government is carefully analyzing the situation to mitigate adverse effects and explore opportunities arising from these tariff changes.

Reserve Bank of India Cancels March 31 Bank Holiday for Year-End Closures

• To ensure seamless financial reporting and year-end closures, the Reserve Bank of India (RBI) has directed all agency banks to remain open on March 31, 2025, despite it being a public holiday in several states. This decision aims to prevent discrepancies in financial transactions and underscores the importance of accurate fiscal management as the financial year concludes.

India and Maldives Strengthen Defense Ties Amid Regional Security Concerns

• India and the Maldives have deepened their defense cooperation, with India providing defense equipment worth ₹35 crore to the island nation. Discussions also covered ongoing military collaboration and maritime security initiatives. This partnership reflects India's commitment to supporting the security and stability of its neighbors and maintaining a strategic balance in the Indian Ocean region.

India's Foreign Policy Priorities Highlighted Amid Global Challenges

• India's foreign policy in 2025 focuses on strengthening ties with key global players, including the United States and France, while navigating complex relationships with neighboring countries like Bangladesh and Canada. The government aims to balance strategic partnerships and regional interests, emphasizing economic cooperation, defense collaborations, and active participation in international forums to address global challenges.

IMF Projects Slight Weakening of Indian Economy in 2025

• The International Monetary Fund (IMF) has indicated that the Indian economy is likely to experience a slight slowdown in 2025. Factors contributing to this outlook include global economic volatility and domestic challenges. The IMF suggests that India may need to adjust its fiscal policies to stimulate growth and address emerging economic concerns.

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