India and Russia to boost trade despite Ukraine war

Good morning. Today we’re covering:

• Temasek’s caution on China

• China’s creaking power grid

• India’s superpower potential

But we start with Narendra Modi’s trip to Russia — the Indian prime minister and Vladimir Putin agreed to boost trade between their two countries, defying western efforts to squeeze the Russian economy over its invasion of Ukraine.

During Modi’s visit to Moscow on Monday and Tuesday, he and Putin pledged to increase annual bilateral trade to $100bn by 2030, up from $65bn at present, with India importing more Russian oil and fertilisers and seeking to export more agricultural and industrial products.

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

India has not condemned Russia’s invasion of Ukraine or taken sides in the war, but has called for an end to hostilities while offering Moscow a critical lifeline from western sanctions by ramping up discounted purchases of Russian oil.

Ukraine’s President Volodymyr Zelenskyy criticised Modi’s trip, calling it “a devastating blow to peace efforts.” Read the full story.

And here’s what I’m keeping tabs on today:

• Economic data: China publishes June inflation figures.

• Monetary policy: New Zealand announces its rate decision.

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

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

Five more top stories

1. Singapore’s Temasek has said it will prioritise US investments and be “cautious” about China, its third-biggest market. The state-owned fund warned in its annual review that growth from investments in the US and India was “offset by the underperformance of China’s capital markets”.

2. Australia has accused a Chinese state-backed cyber hacking group of targeting the country’s government and private sector networks. The statement yesterday was backed by allies including the US, UK and Japan, and alleged that the group conducted “malicious cyber operations” for China’s Ministry of State Security.

3. The Democratic rift over the fate of Joe Biden’s re-election campaign widened yesterday after lawmakers held a tense and gloomy day of talks on whether to rally around the US president or push him to drop his bid. Biden received the backing of some important Democrats — but also suffered a new defection — as his standing as the party’s nominee remained in limbo.

• More from Washington: European delegations to a Nato leaders’ summit in the US capital this week are holding meetings with foreign policy associates of Donald Trump, as nervousness rises inside the military alliance regarding President Joe Biden’s re-election prospects.

4. Shein is launching a €200mn fund that its executive chair says will tackle fashion waste, 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 labour in China’s Xinjiang region — is planning a London listing.

5. Saudi Aramco is betting the internal combustion engine will be around for a “very, very long time” after agreeing to invest €740mn in Horse Powertrain, a company dedicated to building fuel-based engines. Aramco’s executive vice-president explains the reasons for striking the deal.

News in-depth

China’s rapid shift from coal power to renewable sources has piled pressure on its electricity grid, posing a major obstacle to progress on the country’s green energy transition. Beijing’s response: an unparalleled investment of more than $800bn in the next six years to upgrade the creaking grid.

We’re also reading . . . 

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 it is likely that India will be a superpower by that time — 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 the time and the right books to read is a serious challenge. In this age of smartphones and with library closures widening the equality gap, how do you make reading attractive to children?

Additional contributions from Camille De Guzmán and Gordon Smith