Editorial 1: ​Urbanisation and the challenge of ideal transit solutions

Context

Planners in India should check if they are choosing the most affordable and eco-friendly transport options.

Introduction

Among the different goals of Viksit Bharat by 2047, one key focus is a more urbanised India, since urban areas are expected to be the main drivers of economic growth. It is estimated that by the 2060s, over 60% of India’s population will shift from low-productive rural regions to highly productive urban centers.

• Large-scale urban mobility — the movement of people within cities from residential areas to workplaces — poses a major challenge for urban planners.
• Though smart cities are being planned to reduce the need for daily worker mobility, progress has been slower than expected, especially when compared to China.
• India’s newly planned smart cities are not developing as rapidly or effectively as envisioned.
• Meanwhile, existing metros and tier 1 cities continue to expand rapidly, creating more pressure on infrastructure and transportation systems.
• This growth results in increased transport demands and presents new policy challenges for meeting the needs of urban workers.

Public Transport Focus and Government Initiatives

Recent Schemes and Budget Highlights

Scheme/Initiative	Purpose/Impact
PM e-Bus Sewa – Payment Security Mechanism	To improve urban bus transport, with a goal of deploying ~10,000 new buses
PM e-Drive Scheme	Supports purchase of 14,000 e-buses, 1.1 lakh e-rickshaws, and e-trucks/ambulances
Metro Expansion	High budget allocation for metro networks in tier I cities

• India currently operates only 35,000 urban buses, while 2,00,000 are needed, highlighting a significant shortfall.
• Metro development is gaining momentum but is a long-term and costly project, often requiring central government funding.

Urban Transit Accessibility: Gaps & Challenges

Country	% Urban Population with Easy Access to Public Transport
India	37%
Brazil	50%+
China	50%+

• According to the Economic Survey, India lags far behind in ensuring access to public transit for its urban population.
• Many metro projects have not recovered full costs, as actual ridership is lower than projected.
• Fare sensitivity is high — even small fare hikes cause significant drops in footfall.

Structural and Financial Hurdles

• Cost recovery is only feasible if the metro runs along high-density routes.
• Last-mile connectivity issues reduce convenience and adoption of metro systems.
• Unlike some developed countries, India cannot afford large subsidies, making it harder to keep fares low and services accessible.

Road-Based Public Transport: The Need and the Gaps

• India needs affordable, road-based public transport to ensure better last-mile connectivity, especially in urban and metro regions.
• The 2025 Budget has increased allocations for urban bus systems, continuing support for expanding capacity.
• However, private sector investment remains limited due to uncertain returns on such infrastructure.

Shift in Government Priorities

Past Focus	Current Focus	Emerging Options
CNG buses	Shift toward costlier e-buses	Electric, CNG, hydrogen, biofuel-based transport models

• Although the government is now prioritising electric buses, there is a risk of high costs and limited scalability.
• Future bottom-up transport models are likely to explore a diverse mix of cleaner technologies.

Missed Opportunity: Trams and Trolleybuses

• Trams and trolleybuses are often overlooked in current policies.
• However, life cycle cost and revenue analysis show that these modes can often outperform e-buses in financial efficiency.
• These systems are mature, proven, and environmentally sustainable, and deserve serious policy attention in India’s urban transport planning.

Assessing Financial Viability of Urban Road-Based Transport

• Revenue generation and economic sustainability over time are key metrics for evaluating the profitability or deficit of urban road-based transport systems.
• Analyzing Profit & Loss (P&L) percentages over a system’s life cycle is essential for informed policy decisions regarding future transit investments.

Comparative Life Cycle Profitability (Over 70 Years)

Transport Mode	Profit/Loss Over Life Cycle	Remarks
Trams	+45% Profit	High profitability, long life span, scalable, and climate-friendly
E-Buses	−82% Loss	High operational and replacement costs hinder long-term sustainability
Trolleybuses	Slight Loss	Moderately efficient, but still less beneficial than trams

• Trams emerge as the most economically viable and sustainable option over the long term, aligning well with both climate goals and urban scalability.
• While e-buses are the current priority, they face serious financial drawbacks over time.
• Trolleybuses, though better than e-buses, still do not match the comprehensive advantages of trams.

Conclusion

This brings us to a crucial point of reflection: Are current investments in urban mobility genuinely sustainable and cost-effective, or are they building a system reliant on ongoing public subsidies? It is essential to evaluate whether our transit choices will stand the test of time, both economically and environmentally. In this context, the planned reintroduction of trams in Kochi could become a significant turning point in India’s approach to urban transport. Far from being a nostalgic nod to history, as seen in Kolkata, this move represents a strategic and forward-thinking decision. Embracing such proven, low-emission and long-life transit systems may offer a more viable alternative to costly, high-maintenance options, and help lay the foundation for a financially stable and climate-resilient future in urban mobility.

Editorial 2: Trump’s tariffs and a U.S.-India trade agreement

Context

India should avoid getting into any less-than-ideal deal with the United States.

Introduction

Ultimately, it wasn’t a major clash between nations, but a lawsuit filed by five small U.S. businesses that posed the most significant challenge yet to President Donald Trump’s broad tariff policies.

Key Concepts and Events

• Tariffs are not arbitrary; they are the outcome of rigorous trade negotiations and are codified in laws and regulations.
• They are legally bound through schedules in trade agreements, offering certainty and predictability to cross-border businesses.
• President Trump’s sweeping tariffs (ranging from 10% to 135%, targeting over 100 countries) were a stark violation of trade norms.
• The tariffs even covered remote areas like the Heard and McDonald Islands (uninhabited Arctic marine reserves), highlighting the absurdity of the order.
• This executive action undermined the separation of powers — legislature, executive, and judiciary — a core element of democratic constitutions.
• It raised concerns about the absence of checks and balances even in the U.S., often seen as a model democracy.
• In response, five small and mid-sized U.S. businesses challenged the order at the U.S. Court of International Trade (U.S. CIT), citing economic harm.

Details of the Case

Aspect	Details
Nature of Tariffs	Broad, unilateral, ranging from 10% to 135%, covering 100+ countries
Violation Highlighted	Breach of WTO commitments, ignoring due process, and trade law structures
Symbol of Excess	Included remote, uninhabited islands like Heard & McDonald — showing executive overreach
Democratic Concern	Eroded the separation of powers, bypassing legislature and judiciary
Challenging Businesses	5 small/mid-sized firms in wines, plastics, bicycles, musical circuits, and fishing gear
Legal Venue	U.S. Court of International Trade (U.S. CIT)
Core Argument by Businesses	Tariffs were unlawful and damaging to business operations and viability

Trump Administration’s Rationale for Tariffs

• Claimed a “national emergency” due to the U.S. trade deficit with multiple countries.
• A trade deficit occurs when imports exceed exports.
• However, a trade deficit does not inherently harm a country’s economy:
  • It may reflect strong consumer purchasing power.
• The administration excluded service exports in its trade calculations.
  • Example: With India, the U.S. cited a $44.4 billion goods trade deficit.
  • However, services and arms trade paint a different picture.

Corrected Trade Balance with India

Component	Amount (Estimated)
Goods Trade Deficit	-$44.4 billion
Services & Arms Export	+$80-85 billion approx.
Net Trade Position	+ $35 to $40 billion

Source: Global Trade Research Initiative (GTRI)

Legal Judgment by U.S. Court of International Trade (CIT)

Court Ruling – May 28, 2025

• Tariffs exceeded legal authority granted to the President.
• Warned against misuse of “national emergency” provisions.
• Key Observations:
  • Mere invocation of emergency cannot override constitutional checks.
  • President cannot unilaterally revise international tariff agreements.

Impact of the Judgment

• Stayed the very next day by the U.S. Appeals Court.
• As a result:
  • Tariffs remain in force.
  • Negotiating pressure on trade partners continues.

Arguments & Future Concerns

Trump Administration’s Argument

• Claimed tariffs offer leverage in trade negotiations.
• The court rejected this, stating it does not justify illegality.

Future Legislative Push – OBBB

Feature	Details
Name	One Big Beautiful Bill (OBBB)
Nature	Proposed omnibus law
Key Concern	May grant executive immunity from judicial enforcement
Implication	Undermines judicial review and rule of law

Status of India-U.S. Trade Talks

• Both governments are pushing for an early trade agreement, with pressure mounting due to the U.S. deadline of July 8.
• Despite negotiations, the U.S. has doubled existing tariffs on:
  • Steel: from 25% -> 50%
  • Aluminium: from 10%  – > 50%

WTO Dispute & India’s Withdrawal

Issue	Details
WTO Rulings (2022)	Found U.S. steel/aluminium tariffs under “national security” invalid
Complainants	Switzerland, Norway, China, Türkiye
India’s Action	Initially filed a WTO dispute against U.S. tariffs
Withdrawal	2023, based on a “mutually agreed solution”
Outcome	Did not prevent new 50% tariffs on Indian exports

India’s Options at WTO

• Contemplated retaliation at WTO.
• Blocked by the U.S., resisting India’s efforts to reinitiate or escalate action.

Geopolitical Angle: China & Strategic Uncertainty

• U.S. Targeting of China: Trump administration cites China’s economic rise as a core concern.
• Strategic Opportunity for India?
  • Initially perceived as a chance for India to benefit from U.S.-China tensions, but this is now diminished due to:

Development	Impact
1. U.S.-China Truce	Both paused retaliatory tariffs, are negotiating a deal
2. U.S. Threats to Apple	Tariffs threatened if Apple manufactures in India, undermining India as an alternative hub

Implications for India

• The U.S. has taken a harsh transactional approach under Trump.
• This approach undermines India’s position in three ways:
  1. Trade leverage is eroded.
  2. No assurance of geopolitical backing (e.g., during potential standoffs with China).
  3. Investment risks increase, particularly in sectors like electronics (Apple case).

India’s Priorities in a Trade Agreement with the United States

• Strategic Considerations: Any trade deal must carefully balance India’s core economic and strategic interests.
  • India must ensure that the agreement safeguards its long-term trade sovereignty.
• Key Demands in Negotiation
  • Complete removal of additional U.S. tariffs on Indian exports, particularly on steel and aluminium.
  • Clear assurances against retaliatory tariffs on U.S. companies investing or manufacturing in India, including those like Apple.
  • Exclusion of Indian remittances from the proposed 3.5% tax under the OBBB Act.
  • Protection against retaliatory action from the U.S. concerning India’s digital services tax regime.
• Mobility and Services Trade
  • Secure commitments on H-1B and other work visas, which are essential for Indian professionals, particularly in the tech sector.
  • Ensure the trade deal addresses the visa needs critical to the services sector, which forms a substantial part of India’s trade with the U.S.
• Cross-border Data and Service Regulation
  • Resolve outstanding issues related to the delivery of cross-border services, including:
    • Data flow governance
    • Digital trade regulations
    • Regulatory cooperation on digital infrastructure
• Alignment with Multilateral Obligations
  • Ensure that any bilateral trade agreement is fully consistent with India’s WTO commitments.
  • Despite the U.S.’s reduced reliance on multilateral frameworks, WTO rules remain the only dependable global safeguard.
  • India must continue to uphold and reinforce the multilateral trading system, as reaffirmed during its G20 presidency.

Conclusion

India must retain the flexibility to opt out of any trade agreement that does not adequately serve its national interest. While the tariffs imposed by the Trump administration are undoubtedly burdensome, they are expected to be short-lived, with the most significant opposition to them emerging from within the United States itself.