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

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


Indias Prime Minister Narendra Modi addresses the nation during Independence Day celebrations at the historic Red Fort in Delhi, India, August 15, 2025. — Reuters
India’s Prime Minister Narendra Modi addresses the nation during Independence Day celebrations at the historic Red Fort in Delhi, India, August 15, 2025. — Reuters 
  • 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.





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US Greenlights $825 Million Missile Sale to Ukraine

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US Greenlights 5 Million Missile Sale to Ukraine



The United States on Thursday announced its approval of an $825 million sale of 3,350 Extended Range Attack Munition (ERAM) air-launched missiles and related equipment to Ukraine.

Kyiv will fund the purchase with support from Denmark, the Netherlands, and Norway, along with a US-backed loan guarantee, the US Defense Security Cooperation Agency (DSCA) said in a statement.

“This proposed sale will enhance Ukraine’s ability to address current and future threats by further equipping it for self-defense and regional security operations,” DSCA added.

The agency also noted that the sale “supports the foreign policy and national security objectives of the United States by strengthening the security of a partner nation that contributes to political stability and economic progress in Europe.”

The State Department has approved the potential missile sale, and the DSCA has submitted the required notification to the US Congress, which still must approve the transaction.

Russia’s President Vladimir Putin launched the full-scale invasion of neighboring Ukraine in 2022 and has shown little willingness to end the conflict despite pressure from the United States.

Under former president Joe Biden, Washington committed to providing more than $65 billion in military assistance to Ukraine, but his successor Donald Trump long skeptical of assistance for Kyiv has instead pushed for Europe to play a greater role in funding further military aid.



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Trump ‘not surprised’ as Russian strikes kill 21 in Kyiv

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Trump ‘not surprised’ as Russian strikes kill 21 in Kyiv


People take shelter inside an underground parking during Russian drone and missile strike, amid Russias attack on Ukraine, in Kyiv, Ukraine on August 28, 2025. — Reuters
People take shelter inside an underground parking during Russian drone and missile strike, amid Russia’s attack on Ukraine, in Kyiv, Ukraine on August 28, 2025. — Reuters 
  • EU, UK summon Russian envoys to protest over Kyiv attacks.
  • White House spox says Trump will have more to say about strikes.
  • Says perhaps both sides are not ready to end it themselves.

KYIV: US President Donald Trump has said that he was “not surprised” after Russia rained down missiles and drones on Kyiv, killing at least 21 people in the Ukrainian capital early on Thursday. 

The deadly strikes came as the US president continues to push for peace talks between Moscow and Kyiv, even as the war grinds on.

White House press secretary Karoline Leavitt said Trump “was not happy about this news, but he was also not surprised,” given that the two countries had been at war for a long time.

Ukraine’s President Volodymyr Zelensky said the strike, the second-largest attack since Russia launched a full-scale invasion in February 2022, was Moscow’s answer to diplomatic efforts to end its war.

US special envoy Keith Kellogg commented on X: “The targets? Not soldiers and weapons but residential areas in Kyiv – blasting civilian trains, the EU & British mission council offices, and innocent civilians.”

The European Union and Britain summoned Russian envoys to protest. There were no reports of casualties at either site.

Zelensky said the strikes also damaged a Turkish enterprise and the Azerbaijan embassy.

Leavitt told a regular briefing that Trump would have more to say about the situation later.

Leavitt said the Russian attacks had been deadly and that Ukrainian attacks had done significant damage in August to Russian oil refineries.

“Perhaps both sides of this war are not ready to end it themselves,” she said. 

“The president wants it to end but the leaders of these two countries need it to end and want it to end.”

The strikes took place less than two weeks after Trump hosted Russian President Vladimir Putin at a summit in Alaska, a meeting the US president hoped would advance his peace efforts.

“Russia chooses ballistics instead of the negotiating table,” Zelensky said on X, calling for new sanctions on Russia. “It chooses to continue killing instead of ending the war.”

Russia said its attack had hit military industrial facilities and air bases, and that Ukraine had attacked Russian targets. The Kremlin said it was still interested in pursuing peace talks.

Moscow has regularly denied targeting civilians. Ukrainian officials say scores of civilians have died in Russian strikes on densely populated areas in recent months, and thousands since the start of the war.

During the attack on Kyiv, explosions rang out as clouds of smoke rose into the night sky. Drones whirred overhead.

Mayor Vitali Klitschko described it as one of the biggest attacks on the city in recent months. At least 63 people were wounded in the hours-long assault, which damaged buildings in all city districts, officials said.

Across the country, Ukraine’s military said Russian attacks struck 13 locations. National grid operator Ukrenergo said energy facilities were hit, causing power cuts.

A push by Ukraine and its allies to end the invasion has yielded little, despite Trump’s meetings this month with Putin, then Zelensky.

Russia has stepped up air strikes on Ukrainian towns and cities far behind the front lines and pushed a grinding offensive across much of the east in an effort to pressure Ukraine into giving up territory.

‘Another grim reminder’

“This is another grim reminder of what is at stake. It shows that the Kremlin will stop at nothing to terrorise Ukraine, blindly killing civilians and even targeting the European Union,” EU Commission President Ursula von der Leyen told reporters in Brussels.

She said two missiles had struck near the EU office within 20 seconds of each other.

EU countries would soon come up with a 19th package of sanctions against Russia and were advancing work on how to use frozen Russian assets to help Ukraine, she added.

“We discussed our diplomatic efforts to stop the killings, to end this unprovoked Russian aggression, and to guarantee real security for our people,” Zelensky wrote on X after talks with von der Leyen.

Zelensky also said that he had discussed security guarantees for Ukraine with Turkey’s President Tayyip Erdogan and they would be set out on paper next week.

British Prime Minister Keir Starmer condemned the assault, which he said had damaged the British Council building. “Putin is killing children and civilians and sabotaging hopes of peace,” he wrote on X.

Ukraine’s military said air defences downed 563 of nearly 600 drones and 26 of 31 missiles launched by Russia across the country.

Russia’s Defence Ministry said Russian air defences destroyed 102 Ukrainian drones overnight in at least seven regions.

Ukraine’s drone force said it had struck the Afipsky and Kuybyshevskyi oil refineries as part of that attack.





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Europeans launch UN sanctions process on Iran, says letter

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Europeans launch UN sanctions process on Iran, says letter


Nuclear symbol and Iran flag are seen in this illustration, July 21, 2022. — Reuters
Nuclear symbol and Iran flag are seen in this illustration, July 21, 2022. — Reuters
  • Britain, France, Germany send letter to UN Security Council.
  • E3 hopes move will push Iran to make commitments.
  • “E3’s commitment to diplomatic solution remains steadfast.”

Britain, France and Germany launched a 30-day process to reimpose UN sanctions on Iran over its nuclear programme on Thursday, a step likely to stoke tensions two months after Israel and the United States bombed Iran, according to a letter sent by E3 to the UN Security Council seen by Reuters.

The trio, known as the E3, said in a statement they had decided to trigger the so-called snapback mechanism before they lose the ability in mid-October to restore sanctions on Tehran that were lifted under a 2015 nuclear accord with world powers.

They have held several rounds of talks with Iran since Israel and the United States struck its nuclear installations in mid-June, aiming to agree to defer the mechanism but they deemed that talks in Geneva on Tuesday did not yield sufficiently tangible commitments from Iran.

The E3 have pressed ahead now over accusations that Iran has violated the 2015 deal that aimed to prevent Tehran from developing a nuclear weapon. The United States, which was party to that deal, pulled out under President Donald Trump in 2018, and held failed indirect negotiations earlier this year with Tehran.

The E3, whose ministers informed US Secretary of State Marco Rubio of their decision on Wednesday, said they hoped that Iran would engage by the end of September to provide commitments over its nuclear programme that will convince them to defer concrete action.

“The E3 are committed to using every diplomatic tool available to ensure Iran never develops a nuclear weapon. That includes our decision to trigger the ‘snapback’ mechanism today through this notification,” they said in the letter.

“The E3’s commitment to a diplomatic solution nonetheless remains steadfast. The E3 will fully make use of the 30-day period following the notification in order to resolve the issue giving rise to the notification.”

Meanwhile, Britain, France, and Germany’s move to reimpose all UN sanctions on Iran is “illegal and regrettable”, a senior Iranian official told Reuters, adding that Tehran was reviewing its options including withdrawing from the Non-Proliferation Treaty.

“The move is an action against diplomacy, not a chance for it … However, Iran will continue diplomacy with the E3 … (But) Iran will not concede under pressure,” added the senior official.

The E3 had offered to extend the snapback for as much as six months to enable serious negotiations if Iran resumes full UN inspections — which would also seek to account for Iran’s large stock of enriched uranium that has not been verified since the June strikes — and engages in talks with the United States.

Growing frustration in Iran

The UN process takes 30 days before sanctions that would cover Iran’s financial, banking, hydrocarbons and defence sectors are restored.

Growing fears of renewed United Nations sanctions under the snapback mechanism are fuelling frustration in Iran, where economic anxiety is rising and political divisions are deepening, three insiders close to the government said.

As the prospect of tighter international restrictions threatens to further isolate the Islamic Republic, officials in Tehran remain split — with hardliners urging defiance and confrontation, while moderates advocate diplomacy.

Iran’s rial weakened sharply since Wednesday after a Reuters report about the E3 moving to trigger the return of United Nations sanctions.

Iran has been enriching uranium to up to 60% fissile purity, a short step from the roughly 90% of weapons-grade, and had enough material enriched to that level, if refined further, for six nuclear weapons, before the strikes by Israel started on June 13, according to the IAEA.

Actually producing a weapon would take more time, however, and the IAEA has said that while it cannot guarantee Tehran’s nuclear programme is entirely peaceful, it has no credible indication of a coordinated weapons project.

The West says the advancement of Iran’s nuclear programme goes beyond civilian needs, while Tehran denies it is seeking nuclear weapons.





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