Trump’s Strategy Misfit

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In today’s edition — US president Donald Trump’s mercantilist nationalism is a misfit in the modern world; new electric vehicle (EV) investment rules are on the horizon in India; and India needs more pilots, soon. 

THE TAKE 

Google, Tesla In India Show Trump's Vision Not Viable In A Modern World

Trump began his new term with a bang, exploding convention, propriety and traditional ties with allies. There are early indications that his term will end with a whimper.

Trump’s latest tariff salvo has been on pharmaceuticals. He said drugs imported into the US could face an import duty of 25%. At the same time, he also said that he would give American drug companies some time to phase in domestic manufacture of the drugs currently being imported. Indian drug company stocks fell, irrationally.

Elsewhere, the US president has not only initiated talks with Russia to end the Ukraine war but also made it clear that he holds the concerns of America’s European allies in NATO in contempt, placing them right alongside Ukraine president Volodymyr Zelensky in his scale of esteem. Trump called Zelensky a dictator who started the war, enjoys the support of only 4% of his countrymen and possesses just one skill — the ability to play Joe Biden like a fiddle.

Trump also laid claim to half of Ukraine’s mineral wealth, estimated to be worth several trillion dollars, as just compensation for all the military aid the US had provided Ukraine over the last three years of war. This outlandish claim not only does not have any legal backing but is likely to be roundly rejected by Europe and even by Russia, as some of the minerals in question lie in areas of Ukraine now under Russian control

Meanwhile, billionaire and Trump ally Elon Musk has announced the launch of Grok 3, touted as the most advanced reasoning model of artificial intelligence (AI) yet. While this is likely to please Trump — after all, he has no personal stake in the success of the Star Gate AI project by Musk’s rival Sam Altman and Masayoshi Son — he even presided over the launch, the sentiment was different towards Musk’s proposal to manufacture Tesla cars in India.

Trump’s Tesla Grouse

India proposes to allow Musk to import a limited number, 8,000, of Tesla cars at a concessional import duty of 15%, as against the normal import duty of 110%, provided he commits to invest at least $500 million in a manufacturing plant in India. Trump sees the move to set up a Tesla plant in India as a loss to the American economy.

It is not just Musk who is pursuing his economic interests outside the perimeter of mercantilist nationalism that president Trump has chosen to champion. Google has unveiled one of its biggest campuses anywhere in Bengaluru, a modern architectural marvel the company has given an Indian name, Ananta, meaning endless.

These developments point to the limits to the viability of Trump’s project to return to a nineteenth-century style aggressive nationalism of expansion and appropriation by force, unbound by multilateral rules, whether in economic or political relations. 

PODCAST

On Episode 514 of The Core Report, financial journalist Govindraj Ethiraj talks to Pranav Haldea, Managing Director at PRIME Database Group; Kunal Shah, Head of Commodities at Nirmal Bang as well as Amit Pabari, Managing Director at CR Forex Advisors

1. The large caps are weak but the mid and small cap segments are rising.

2. The untold story. FPIs sold Rs 120,000 crore of stock in 2024 but they also bought Rs 120,000 crore worth of IPOs.

3. Gold prices hit a fresh high as banks struggle to move bullion bars around the world.

4. The rupee is on firmer footing this week.

5. Why companies from Schneider Electric to ABB are reporting sharp rises in profits.

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FROM THE PERIPHERY

—🚗 The Indian government is planning to ease import duties for EV manufacturers like Tesla by introducing a new policy requiring companies to invest Rs 4,150 crore and generate Rs 2,500 crore in revenue by the second year. The move aims to attract global players but it remains to be seen how the new relaxed policies will be received by domestic EV players. Meanwhile, the government is also reportedly considering including EV charging infrastructure investments under the mandated capex requirements. This is required since without a robust charging network, widespread EV adoption will remain sluggish. The policy, however, is still evolving, leaving room for debate on whether it sufficiently balances foreign investment with domestic industry growth.

—🧑‍✈️ India’s aviation sector is soaring, but a pilot shortage threatens to slow its momentum. Civil aviation Minister K Rammohan Naidu warned that India needed at least 20,000 more pilots in the coming years to keep up with rising demand. High training costs and competition from airlines have worsened the crisis. Speaking at UDAAN Bhawan in Delhi, he highlighted plans for 50 new airports in five years. To ease licensing, India has launched the Electronic Personnel License (EPL), becoming the second country after China to do so. EPL enables real-time verification, improving efficiency and supporting India’s Digital India mission.

—💸 If you’re among the Indians who pay bills through Google Pay, you may now pay convenience fees for certain transactions. Google Pay, the second-most used UPI app in India after PhonePe, has begun charging convenience fees for bill payments through debit and credit cards. The Economic Times reported that the app will charge 0.5% to 1% of the transaction value as fees aside from the usual goods and services tax imposed on the payments. This will apply to payments for electricity, gas and water bills. But payments made directly using the bank account connected to Google Pay will continue to be free. Reports suggest that this move is to monetise UPI transactions. 

—📱 Apple has launched the iPhone 16E, a refreshed entry-level model, assembled in India for both local and export markets. With this, Apple has now localised production for its entire line-up of iPhone 16 series smartphones, continuing its push to expand manufacturing in India. The company previously assembled base models of the iPhone 15, 14, and 13 through its contract partners. The iPhone 16E, priced at Rs 59,900, features Apple’s A18 chip and an in-house 5G modem but faces stiff competition from older iPhone models. Analysts suggest that the cheaper iPhone model’s success hinges on its pricing strategy and camera performance.

Corrigendum: In our February 18 newsletter, Ola Consumer IPO: More Hype Than Value?, we incorrectly stated that SBI Mutual Fund’s new JanNivesh SIP scheme offers the lowest-ever SIP entry point in India at Rs 250. We would like to clarify that there are existing SIP options in India with lower entry points, starting at Rs 100 and below. We regret the error and appreciate our readers' attention to detail.

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