Politics
Modi’s tax overhaul to strain finances but boost image amid US trade tensions

- Modi announces most major tax reform in eight years.
- Move could spur consumption but pinch tax revenues.
- Decision seen helping Modi in trade fight and local politics.
NEW DELHI: Indian Prime Minister Narendra Modi’s deepest tax cuts in eight years will strain government revenues but are winning praise from businesses and political pundits who say they will bolster his image in an ongoing trade fight with Washington.
In the biggest tax overhaul since 2017, Modi’s government on Saturday announced sweeping changes to the complex goods and services tax (GST) regime which will make daily essentials and electronics cheaper from October.
At the same time, in his Independence Day speech on Friday, Modi urged Indians to use more goods made domestically, echoing calls from many of his supporters to boycott US products after Donald Trump hiked tariffs on imports from India to 50% as of August 27.
The tax cut plan comes with costs given GST is a major revenue generator. IDFC First Bank says the cuts will boost India’s GDP by 0.6 percentage points over 12 months but will cost the state and federal government $20 billion annually.
But it will improve weak stock market sentiment and bring political dividends for Modi ahead of a critical state election in the eastern state of Bihar, said Rasheed Kidwai, a fellow at New Delhi-based Observer Research Foundation.
“GST reduction will impact everyone, unlike cuts to income tax, which is paid by only 3%-4% of the population. Modi is doing this as he is under a lot of pressure due to US policies,” said Kidwai.
“The move will also help the stock market, which is now politically important as it has a lot of retail investors.”
India launched the major tax system in 2017 that subsumed local state taxes into the new, nationwide GST to unify its economy for the first time.
But the biggest tax reform since India’s independence faced criticism for its complex design that taxes products and services under four slabs – 5%, 12%, 18% and 28%.
Last year, India said caramel popcorn would be taxed at 18% but the salted category at 5%, triggering criticism about a glaring example of GST’s complexities.
Under the new system, India will abolish the 28% slab – which includes cars and electronics – and move nearly all of the items under the 12% category to the lower 5% slab, benefitting many more consumer items and packaged foods.
Government data shows the 28% and 12% tax slabs together garner 16% of India’s annual GST revenue of roughly $250 billion last fiscal year.
‘A brighter gift’ and politics
Bihar is a key state politically and goes to the polls by November. A recent survey by the VoteVibe agency showed Modi’s opposition has an edge largely because of a lack of jobs.
“Any tax cut has wide public appreciation. But of course, the timing is purely determined by political exigencies,” said Dilip Cherian, a communications consultant and co-founder of Indian public relations firm Perfect Relations.
“It seems to be an indication of some mixture of frustration as well as recognition that there is a broad public pushback against high and crippling rates of taxation.”
Modi’s ruling Bharatiya Janata Party has seized on his tax announcement, posting on X that on the Hindu festival of lights, Diwali, “a brighter gift of simpler taxes and more savings is waiting for every Indian.”
Modi has vowed to protect farmers, fishermen and cattlemen, following Trump’s surprise tariff announcement on India, after trade talks between New Delhi and Washington collapsed over disagreement on opening India’s vast farm and dairy sectors and stopping Russian oil purchases.
The latest round of trade talks between the two nations set for August 25-29 has also been called off.
Politics
Supreme Court justices skeptical of Trump order to restrict birthright citizenship

- Trump first president to attend Supreme Court arguments.
- Babies born in the US are recognised as American citizens.
- Trump’s policy targets children of certain immigrants.
With President Donald Trump present, US Supreme Court justices signalled scepticism on Wednesday toward the legality of his directive to restrict birthright citizenship in the US, part of his hardline immigration approach that would upend the long-held understanding of a key constitutional provision.
In his historic visit to the top US judicial body, Trump, wearing a red tie and dark suit, sat in the front row of the public gallery of the ornate courtroom after arriving by motorcade from the White House. The Republican president then left midway through the proceedings not long after the Justice Department lawyer arguing for his administration completed his presentation.
Most of the nine justices, conservatives and liberals alike, grilled the lawyer with questions about the legal validity of Trump’s executive order and its practical implications. The court has a 6-3 conservative majority.
The justices heard more than two hours of arguments in the administration’s appeal of a lower court’s decision that blocked his directive. Trump’s order had instructed US agencies not to recognise the citizenship of children born in the United States if neither parent is an American citizen or legal permanent resident, also called a “green card” holder.
Trump became the first sitting president to attend a Supreme Court oral argument, according to Clare Cushman, the Supreme Court Historical Society’s resident historian. Joined by White House Counsel David Warrington, Commerce Secretary Howard Lutnick and Attorney General Pamela Bondi, Trump was at the courthouse for a bit more than an hour and a half.
‘Priceless and profound gift’
US Solicitor General D John Sauer, representing the administration, told the justices that most nations do not grant automatic birthright citizenship.
“It demeans the priceless and profound gift of American citizenship,” Sauer said. “It operates as a powerful pull factor for illegal immigration and rewards illegal aliens who not only violate the immigration laws but also jump in front of those who follow the rules.”
The United States is among 33 countries with automatic birthright citizenship policies, according to the Pew Research Centre. Trump wrote on social media after the arguments that the United States is “STUPID” for having birthright citizenship.
The lower court found that Trump’s directive violated citizenship language in the US Constitution’s 14th Amendment as well as a federal law codifying birthright citizenship rights, acting in a class-action lawsuit by parents and children whose citizenship is threatened by the directive.
The 14th Amendment has long been interpreted as guaranteeing citizenship for babies born in the United States, with only narrow exceptions such as the children of foreign diplomats or members of an enemy occupying force.
The provision at issue, known as the Citizenship Clause, states: “All persons born or naturalised in the United States, and subject to the jurisdiction thereof, are citizens of the United States.”
The administration has asserted that the phrase “subject to the jurisdiction thereof” means that being born in the United States is not enough for citizenship, and excludes the babies of immigrants who are in the country illegally or whose presence is lawful but temporary, such as university students or those on work visas.

Conservative Chief Justice John Roberts told Sauer that his arguments limiting who qualifies for citizenship at birth seemed “quirky.”
Noting that historically the phrase “subject to the jurisdiction thereof” excluded the children of ambassadors or enemies during a hostile invasion, Roberts said Sauer is trying to expand those examples to everyone in the US illegally.
“I’m not quite sure how you can get to that big group from such tiny and sort of idiosyncratic examples,” Roberts said.
Roberts also challenged Sauer to provide evidence for the administration’s stated concern over “birth tourism,” by which foreigners travel to the United States to give birth and secure citizenship for their children.
“Do you have any information about how common that is or how significant a problem it is?” Roberts asked.
“No one knows for sure,” Sauer replied, while citing media reports of birth tourism companies abroad.
The 14th Amendment was ratified in 1868 in the aftermath of the Civil War of 1861-1865 that ended slavery in the United States, and overturned a notorious 1857 Supreme Court decision that had declared that people of African descent could never be US citizens.
Liberal Justice Elena Kagan said the administration’s interpretation of the 14th Amendment is not supported by the provision’s text.
“You’re using some pretty obscure sources to get to this concept,” Kagan told Sauer.
American Civil Liberties Union attorney Cecillia Wang, arguing for the challengers, told the justices Trump’s order was unlawful.
“Ask any American what our citizenship rule is and they will tell you, ‘Everyone born here is a citizen, alike,'” Wang said. “That rule was enshrined in the 14th Amendment to put it out of the reach of any government official to destroy.”
Politics
Tehran residents on edge after month of war

For Tehran resident Fatemeh, the highlight of her day in a city beset by deadly daily US-Israeli strikes in the now month-long war is to make the short journey to her local cafe.
“When I make it to a cafe table, even for a few minutes, I can almost believe the world hasn’t ended,” said the 27-year-old dental assistant.
“It feels like stepping out of this damn war and into an ordinary day, or at least imagining a world that isn’t filled with the constant fear of losing your life, or where you stay alive but lose a loved one or everything you have,” she told AFP.
If a lull in the bombing allows a better night’s sleep, Fatemeh said she will put on make-up and dress up to make her visit to the cafe extra special.
“And then I go back home, back to the reality of living through war, with all its darkness and weight,” she said.
Residents of Tehran who spoke to AFP’s team covering the war in Paris painted a picture of a city that is still clinging to some routine, with cafes and restaurants open, no shortages reported in supermarkets or petrol stations, and people trying to keep up some vestige of a social life.
But they know that life is anything but normal with the US and Israel maintaining a relentless pace of bombardment on the capital since the war started on February 28 with the martyrdom of Supreme Leader Ayatollah Ali Khamenei and other top officials.
There are security checkpoints on what were peaceful streets, the internet has been blocked or drastically slowed for everything except domestic services, and windows are taped up to prevent them shattering in case of attack.
As well as fear of being killed or losing a loved one in an attack, people are gripped by anxiety over the future, over what kind of country they will live in and how they will make ends meet amid a collapsing economy.
The people who agreed to share messages with AFP gave only their first names for fear of the consequences were they to be identified by authorities.
‘Only thing left’
“These days, I mostly stay at home and only go out if I absolutely have to. The only thing left from my life routine before the war that helps me keep my spirit up is cooking,” said Shahrzad, 39.
But she added: “Sometimes I find myself crying in the middle of it. I miss ordinary days… A life where I didn’t have to constantly think about explosions, death, or losing my loved ones.
“I try to stay strong for my daughter… But when I think about the future, I can’t form any clear picture in my mind that I can hold on to with hope.”

People in Tehran have, over the last week, been trying to make the best they can out of the main traditional Persian holiday of Nowruz, a festival that normally sees people leave the city or celebrate at home with family.
“There is no famine, everything is available. Cafes are open, and we still go out to cafes,” said Shayan, 40, a photographer. “There is gasoline, water and electricity.”
“But there is a sense of helplessness in all of us. We don’t know what to do, and there’s really nothing we can do.
“There was no real Nowruz atmosphere at all, but we tried to force ourselves,” he said.
While shops and restaurants are open until 9pm, “many people don’t go out after the afternoon”, he added.
‘I miss a peaceful night’s sleep’
Elnaz, 32, a Tehran-based painter, said when attacks did relent and she had time to think, she remembered how much she missed “living a simple life”.
“We miss the simplest things, going out at night, or just being able to go to another part of the city.
“I miss something as ordinary as shopping somewhere other than the small grocery store or bakery on my street.
“I miss reading in a cafe, going to the park… all those very, very simple things.”
She added: “And more than anything, I miss a peaceful night’s sleep.”
Elnaz said that on some nights the attacks are so intense it feels like “all of Tehran is shaking”.
“Everything goes back to one state — survival. Thinking only about staying alive with all the people I love. My friends, my family, and the people of my city, who look kinder than ever in this difficult time,” she said.
Kaveh, 38, a visual artist, said a piece of a missile struck about 50 metres from his house a few days ago.
“I brought it home with me. I want to make something out of it when I get the chance,” he said, recalling that dust was falling from the sky and several windows were shattered immediately.
He described how, at night in some areas, groups of people who back the clerical system drive around, honking and gathering, “while just a few streets away, there are checkpoints where cars and phones of normal people are being searched”.
“If you have something to do in the city, you’ll likely pass through multiple checkpoints in a single day — each run by different groups. Cars are searched, phones are checked, and months of accumulated frustration are taken out on people at these checkpoints.
“These are just parts of our daily reality under these circumstances,” he said.
The morose atmosphere, residents say, has been compounded by unseasonably rainy weather that contrasts with the spring sunshine people are used to enjoying at Nowruz.
Portraits of children killed in attacks are displayed in squares, while giant flags of the Islamic Republic cover buildings that have been reduced to ruins.
“In the end, for many people, the most important concern is the future of Iran and its people, and what might actually improve the situation,” said Kaveh.
Politics
Trump says US could end Iran war may end in two to three weeks

US President Donald Trump said the United States could end its military attacks on Iran within two to three weeks, and Tehran did not have to make a deal as a prerequisite for the conflict to wind down.
The remarks underscored the shifting and at times contradictory statements from Washington about how the war, now in its fifth week, might end.
“We’ll be leaving very soon,” Trump told reporters at the White House on Tuesday, saying the exit could take place “within two weeks, maybe two weeks, maybe three.”
Asked if successful diplomacy with Iran was a prerequisite for the US to conclude what it has dubbed “Operation Epic Fury”, Trump said it was not.
“Iran doesn’t have to make a deal, no,” he said. “No, they don’t have to make a deal with me.”
The White House later said Trump would address the nation “to provide an important update on Iran” at 9pm EDT on Wednesday (0100 GMT on Thursday).
Washington previously threatened to intensify military operations if Tehran did not accept a 15-point US ceasefire framework that had among its core demands that Iran commit not to pursue nuclear weapons, halt all uranium enrichment and fully reopen the Strait of Hormuz.
Earlier on Tuesday, US Defence Secretary Pete Hegseth said Trump was willing to make a deal with Iran to end the war that has killed thousands, spread across the region, disrupted energy supplies and threatened to send the global economy into a tailspin.
The United Arab Emirates is preparing to help the US and allies open the Strait of Hormuz by force, the Wall Street Journal reported late on Tuesday, in an effort to end the effective closure of the shipping lane through which about a fifth of the world’s daily oil and liquefied natural gas supply usually passes.
The UAE is seeking a UN Security Council resolution for the action and suggested the US occupy strategic islands, according to the report.
While the United States has said talks with Iran were ongoing, Iranian Foreign Minister Abbas Araqchi said on Tuesday that he has been receiving direct messages from US special envoy Steve Witkoff but they do not constitute “negotiations”, Qatar’s Al Jazeera TV cited him as saying.
The messages include threats or exchanged views delivered through “friends,” he added.
Iran’s Revolutionary Guards on Tuesday hit back with a new threat against US companies in the region starting on Wednesday.
It listed 18 businesses, including Microsoft, Google, Apple, Intel, IBM, Tesla and Boeing, that would be targeted from 8pm Tehran time.
When asked if he was concerned about threats to the companies, Trump said no.
War continues to rage
The war has also revived conflict between Israel and the Iran-backed Lebanese group Hezbollah.
At least seven people were killed and 24 wounded in two Israeli strikes in the Beirut area, the Lebanese health ministry said on Wednesday, in attacks that hit vehicles in Beirut’s southern outskirts and in an area just south of the capital.
Israel’s military said on Wednesday it carried out two separate strikes targeting a senior Hezbollah commander and another senior member of the Iran-aligned group in the Beirut area. It did not identify them or say whether they had been killed.
There was no immediate comment from Hezbollah on the strikes.
With the conflict in the Middle East showing no sign of easing, Pakistan is seeking to mediate in the war.
The foreign ministers of China and Pakistan on Tuesday called for an immediate ceasefire, urging peace talks to be held as soon as possible after they met in Beijing.
Iran has remained defiant despite heavy US and Israeli attacks for the past month, as neighbours have been pulled into the conflict.
Syrian state television reported that explosions heard in Damascus were the result of Israeli air defences intercepting Iranian missiles.
A weather station’s radar and building in the Iranian port of Bushehr were put out of service on Tuesday after being hit twice in US-Israeli attacks, a regional official told state media.
The Mobarakeh steel plant in the central city of Isfahan was attacked for the second time in a week, according to the semi-official Tasnim news agency, and parts of the Sefiddasht Steel Complex in the city of Borujen were targeted, according to the Fars news agency.
Reuters could not immediately verify the battlefield reports.
Higher oil and fuel prices have started to weigh on US household finances and are a political headache for Trump and his Republican Party before the November midterm elections.
The US national average retail price of gasoline crossed $4 a gallon for the first time in over three years on Monday, data from price-tracking service GasBuddy showed.
Two-thirds of Americans believe the US should work to end its involvement in the Iran war quickly, even if that means not achieving the goals set out by the Trump administration, a Reuters/Ipsos poll found.
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