Musk, big tech, and the Trump-Modi two-step

With less than 48 hours until the U.S. announces retaliatory tariffs against countries with higher tariffs than its own, India's list of pre-emptive concessions is still growing. Who is benefiting most so far? That's the focus of our analysis this week.

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India's swap markets are signalling another interest rate cut and looser cash conditions when the central bank announces the results of its next monetary policy review on April 9. Scroll down for more on that.

As U.S. trade partners await word on reciprocal tariffs, due Wednesday, India has seemed eager to make pre-emptive concessions on trade - more so than, say, China or Canada, even though economists estimate tariffs would trim Indian GDP growth by just 0.1-0.6%.

And while the U.S. tariff drama is still playing out, some early winners are already emerging from the Indian government's conciliatory efforts, including the companies of Elon Musk, a close adviser to President Donald Trump, and other big players in the U.S. technology sector.

Musk's Starlink last month signed surprise deals with a couple of its biggest Indian telecoms rivals, just weeks after his EV maker Tesla started to move on long-delayed plans to enter the Indian market.

India has hinted at a broad range of concessions to the U.S. that could cut tariffs on more than half of U.S. imports into India, Reuters journalists Sarita Chaganti Singh, Aftab Ahmed and Manoj Kumar reported. LNG imports and selected farm goods such as almonds and lentils may be among them.

India has also cut import tariffs on raw materials needed to manufacture mobile phones and EV batteries.

In a revision to its annual budget announced on Feb. 1, India agreed to scrap a 6% tax on digital advertising that raised costs for U.S. tech giants such as Google, Meta and Amazon. The tax was introduced in 2016 but applied only to foreign firms, drawing criticism at the time from the U.S.

Read here the full list of concessions made by India in trade negotiations with the U.S.

Since Trump's inauguration a little more than two months ago, Prime Minister Narendra Modi has taken a number of steps to appease the new U.S. administration and build on what analysts considered an amicable relationship during Trump's first term.

As the India File wrote in a previous edition, Tesla's entry into India gathered momentum after Modi spoke with Musk on the sidelines of meetings in February with U.S. officials in Washington.

More surprising were announcements over the past two weeks of Starlink partnerships with India's two largest telecoms service providers: billionaire Mukesh Ambani's Reliance Jio and Sunil Mittal's Bharti Airtel. Starlink had been widely seen as heading towards a conflict with Ambani, who has made clear his ambitions of dominating India's telecoms sector.

If Musk succeeds in India, that could help to unlock opportunities for Starlink in other emerging markets, Reuters' Nivedita Bhattacharjee writes. Read that analysis here.

But whatever Modi hopes for from his relationship with Trump or from increasingly unpredictable U.S. policies, the dance between the two could still involve some complicated footwork with unforeseen spins.

Analysts are now starting to worry about the U.S. also targeting non-tariff barriers, which Nomura economists said would make the already-chaotic approach to retaliatory tariffs "more complex and less transparent".

China and India stand out among Asian nations not just for higher tariffs, Nomura said, but for non-tariff barriers.

One potential area of friction: Data localisation.

India has pushed Amazon, MasterCard and Visa, among other big U.S. companies, to store data related to Indian transactions locally. This has become the latest sticking point in India-U.S. trade negotiations, the Business Standard newspaper reported last week.

Who are the emerging winners and losers in the trade negotiations between India and the U.S.? Write to me with your views at ira.dugal@thomsonreuters.com.

"I don't fear this mob and I will not be hiding under my bed, waiting for this to die down."

Indian stand-up comedian Kunal Kamra faced a social media backlash and police scrutiny over a performance that provoked anger among supporters of a party allied with Prime Minister Modi.

The incident fanned concerns about the limits of free speech in the world's largest democracy.

India's swap markets are now pricing in at least two more 25-basis-point rate cuts over the current monetary easing cycle after the central bank's cut in February, the first in five years.

Banks are also pushing for more predictable cash infusions into the banking system by the central bank as liquidity conditions remain volatile.

Overseas investors are lapping up Indian government bonds ahead of the anticipated easing, with foreign holdings of Indian bonds now exceeding 3 trillion rupees.

Gold demand in India has remained sluggish as prices trade at record highs. Jewellery stores across the country were reporting lower footfalls.

Globally, gold prices have soared as investors flock to the safe-haven asset amid fears of a global trade war triggered by U.S. President Donald Trump's latest tariffs.

This newsletter was edited by Edmund Klamann, Deputy Head, Asia Desk in Singapore.

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