India and Russia increase trade despite Ukraine war

Good morning. Today we will cover:

• Temasek’s caution towards China

• China’s creaking power grid

• India’s superpower potential

But let’s start with Narendra Modi’s trip to Russia: The Indian prime minister and Vladimir Putin agreed to boost trade between their two countries, resisting Western efforts to pressure the Russian economy over the invasion of Ukraine.

During Modi’s visit to Moscow on Monday and Tuesday, he and Putin pledged to increase annual bilateral trade volume from the current $65 billion to $100 billion by 2030. India should import more Russian oil and fertilizers and export more agricultural and industrial products.

Modi, who is seeking to counter Russia’s increasingly close ties with India’s strategic rival China, praised Russia as India’s “all-weather friend” during his visit.

India does not condemn Russia’s invasion of Ukraine and has not taken sides in the war, but calls for an end to hostilities. At the same time, it is offering Moscow an important lifeline against Western sanctions by increasing its purchases of Russian oil at discounted prices.

Ukrainian President Volodymyr Zelensky criticized Modi’s trip, calling it “a devastating blow to peace efforts.” Read the full story.

And here’s what I’m keeping an eye on today:

• Economic data: China releases inflation figures for June.

• Monetary policy: New Zealand announces its interest rate decision.

• Thailand: The country’s Constitutional Court will hold a hearing in a case seeking the removal of Prime Minister Srettha Thavisin over the appointment to his cabinet of a lawyer who was detained for contempt of court. (Reuters)

• TSMC: Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, reports its sales for June.

Five more top stories

1. Singapore’s Temasek has announced that it will prioritize US investments and be “cautious” toward China. its third-largest market. The state fund warned in its annual report that growth from investments in the US and India would be “offset by the underperformance of Chinese capital markets”.

2. Australia has accused a Chinese state-backed cyberhacking group of targeting Australian government and private sector networks. Yesterday’s statement was backed by allies including the US, UK and Japan, and claimed the group had conducted “malicious cyber operations” for China’s Ministry of State Security.

3. The Democratic divide over the fate of Joe Biden’s re-election campaign widened yesterday after lawmakers spent a tense and somber day negotiating whether to back the US president or urge him to withdraw his candidacy. Biden won the support of some key Democrats – but also faced a new defection – as his position as the party’s nominee remained uncertain.

• More from Washington: European delegations are meeting with Donald Trump’s foreign policy aides at a NATO leaders’ summit in the U.S. capital this week, as nervousness grows within the military alliance over President Joe Biden’s re-election chances.

4. Shein is setting up a €200 million fund to address the problem of fashion waste, according to its CEO. amid concerns about the brand’s sustainability and supply chain. The move comes as the China-founded online fast-fashion group – which faces allegations over its links to forced labor in China’s Xinjiang region – plans an IPO in London.

5. Saudi Aramco assumes that the combustion engine will be around for a “very, very long time” after the company agreed to invest 740 million euros in Horse Powertrain, a company specializing in the construction of fuel-based engines. Aramco’s Executive Vice President explains the reasons for the deal.

Detailed news

China’s rapid shift from coal-fired power to renewable energy has put pressure on the country’s electricity grid and poses a major obstacle to the transition to green energy. Beijing’s response: an unprecedented investment of more than $800 billion over the next six years to modernize the ailing grid.

We also read …

Chart of the day

Narendra Modi believes India will be developed by 2047, when the country celebrates 100 years of independence. In his latest column, Martin Wolf argues that India is likely to be a superpower by then – even if the Indian prime minister’s goal is not achieved.

Take a break from the news

FT Weekend columnist Nilanjana Roy calls for a return to reading, not as a niche activity but as an essential part of growing up. But for this generation of children, finding time and the right books to read is a huge challenge. In the age of smartphones and with library closures widening inequality, how can we get children interested in reading?

Additional contributions by Camille De Guzmán and Gordon Smith