Russia built covert trade channel with India despite US warnings, leaked letters show #IndiaFinance

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Good morning. Today we’re covering:

• Kamala Harris’s pledges for small business owners

• China’s trade probe into canola imports from Canada

• The exodus of Brazilians from X to Bluesky

But first, leaked correspondence seen by the Financial Times has revealed that Russia has been secretly acquiring sensitive goods in India, and explored building facilities in the country to secure sensitive electronics components with civilian and military applications for Vladimir Putin’s war effort.

Moscow’s industry and trade ministry drew up confidential plans to spend about Rs82bn ($1bn at the time) on securing critical electronics through channels hidden from western governments, aiming to use the “significant reserves” of rupees amassed by Russian banks from booming oil sales to India. It saw India as an alternative market to source crucial goods “previously supplied from unfriendly countries”.

India’s ties with Moscow have been a growing source of friction with Washington.

Wally Adeyemo, the US deputy treasury secretary, wrote in July to three of India’s top business organisations warning them that “any foreign financial institution that does business with Russia’s military industrial base risks being sanctioned itself”. Today’s revelations show how New Delhi’s economic ties with Moscow deepened as Narendra Modi, India’s prime minister, brought his country closer than ever into US orbit.

Here’s what else I’m keeping tabs on today:

• Economic data: Bank of Canada has rate decision. US Federal Reserve issues Beige Book.

• UN security council: The UN Security Council is expected to meet on Gaza.

• Russia: Vladimir Putin will meet leaders from Malaysia, China and Serbia in Vladivostok, which is hosting the Eastern Economic Forum.

• Companies: Hewlett Packard Enterprise and Dollar Tree report.

Five more top stories

1. Nippon Steel has pledged to appoint a board for US Steel with a majority of US citizens if its $14.9bn bid for the company is approved, after both vice-president Kamala Harris and former president Donald Trump signalled they would not support the acquisition.

2. Linda Sun, a former aide to New York governors Kathy Hochul and Andrew Cuomo, has been charged with acting as an unregistered agent for China, allegedly using her position to attempt to make her bosses’ public statements more favourable to the Chinese at Beijing’s behest, prevent senior state politicians from meeting Taiwanese officials and helping visiting Chinese delegations fraudulently obtain visas.

3. Democratic presidential nominee Kamala Harris is set to propose drastically expanding tax relief for Americans starting small businesses from $5,000 to $50,000 today, alongside other measures to cut red tape, such as making it easier for owners to file taxes and loosening requirements for occupational licences.

4. Social media site Bluesky registered almost 2mn new users in just four days as Brazilians flocked to the platform following the suspension of Elon Musk’s X by the country’s Supreme Court.

5. China has said it will open a trade probe into canola imports from Canada. This follows Ottawa’s announcement last week that it would impose 100 per cent tariffs on Chinese-made electric vehicles and a 25 per cent levy on Chinese steel and aluminium.

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The Big Read

The growing intersection of economic policy and national security in the US has many roots, but the biggest factor has been China. Fears about espionage and dual-use technologies have fused with economic nationalism to create an American mindset unrecognisable from the country’s post-cold war free market attitude — with dramatic implications for the future of the global economy.

We’re also reading . . . 

• Video games: Politicians are realising that they can reach into game spaces to access new potential voters, writes Tom Faber.

• Federal Reserve: Rather than wait for weak labour market conditions, the onus is on the US central bank to forestall them, writes Andrew Law, chair of Caxton Associates.

• Post-Trump populism: The lesson of 2024 so far is that American populism will find Trump hideously difficult to replace, Janan Ganesh writes.

Chart of the day

Goldman Sachs has slashed its 2025 copper price forecast by a third, clouding the profit outlook for leading miners of the metal. The Wall Street bank warned this week that an expected rally would not materialise as the Chinese property rout depresses demand for commodities.

Take a break from the news

Scientists are studying — and recreating — molecules that no longer exist, in a field known as “molecular de-extinction”, writes Anjana Ahuja. No, this isn’t about bringing back the dodo or the woolly mammoth, but rather trying to see whether their genomes hide long-lost molecules that offer solutions to our modern problems.

Additional contributions from Tee Zhuo and Benjamin Wilhelm