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Pakistan and Saudi Arabia sign mutual defence pact, India responds cautiously

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9 months ago

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Saudi Arabia and Pakistan have signed a strategic mutual defence agreement during Prime Minister Shehbaz Sharif’s state visit to Riyadh, formalising decades of military cooperation between the two nations. A key clause of the pact declares that “any aggression against either country shall be considered an aggression against both.”

The signing took place at the Al-Yamamah Palace, where Sharif met Crown Prince Mohammed bin Salman. Pakistan Army Chief, Field Marshal Asim Munir, was also present at the meeting.

India’s reaction

India, reacting to the development, said it was aware of the long-standing security arrangement between Riyadh and Islamabad. The Ministry of External Affairs (MEA) issued a statement noting that New Delhi would assess the implications for national security and regional stability.

“We have seen reports of the signing of a strategic mutual defence pact between Saudi Arabia and Pakistan. The Government was aware that this development, which formalises a long-standing arrangement between the two countries, had been under consideration,” the MEA said.

It added: “We will study the implications of this development for our national security as well as for regional and global stability. The Government remains committed to protecting India’s national interests and ensuring comprehensive national security in all domains.”

A historic partnership

According to the joint statement, the pact builds on an eight-decade-long relationship rooted in “brotherhood, Islamic solidarity, shared strategic interests and close defence cooperation.” Both countries stressed that the agreement aims to enhance defence ties, strengthen deterrence and contribute to regional peace.

“This agreement reflects the shared commitment of both nations to enhance their security and to achieving peace in the region and the world,” the statement said.

Broader regional context

The agreement comes at a sensitive time when India-Pakistan relations remain strained following the Pahalgam terror attack and New Delhi’s retaliatory Operation Sindoor.

Saudi Arabia had earlier condemned the Pahalgam attack during Prime Minister Narendra Modi’s visit to Riyadh in April this year. In a joint statement, India and Saudi Arabia had “called on all States to reject the use of terrorism against other countries, dismantle terrorism infrastructure where it exists, and bring perpetrators of terrorism to justice swiftly.”

India-Saudi ties on an upward track

Despite Pakistan’s closer defence ties with Riyadh, India has steadily expanded its own strategic and economic partnership with Saudi Arabia. New Delhi is now the Kingdom’s second-largest trading partner.

Prime Minister Modi has visited Saudi Arabia three times, and in 2016 he was awarded the country’s highest civilian honour, the King Abdulaziz Sash. The two sides continue to deepen cooperation in energy, infrastructure, and counter-terrorism.

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India considers tax relief to attract foreign investors amid Iran war impact

India is evaluating tax incentives, including a possible capital gains tax exemption on government securities for foreign investors, to support capital inflows amid economic pressures linked to the Iran war.

Published

8 hours ago

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June 4, 2026

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India is considering a set of measures aimed at attracting more foreign investment as the ongoing Iran war continues to create pressure on the country’s economy, according to reports citing government sources. One of the key proposals under discussion is the removal of capital gains tax on investments made by foreign portfolio investors (FPIs) in government securities.

The move comes at a time when geopolitical tensions in West Asia have pushed up global oil prices, weakened investor sentiment and increased pressure on the Indian rupee. India, which imports a significant share of its crude oil requirements, has been among the countries closely monitoring the economic fallout from the conflict.

Government exploring ways to boost capital inflows

Officials are reportedly evaluating tax-related incentives to make Indian debt markets more attractive to overseas investors. The proposed exemption on capital gains from government securities is aimed at encouraging foreign portfolio investment and supporting capital inflows during a period of heightened global uncertainty.

The government is seeking to counter the impact of foreign capital outflows that have intensified amid concerns over the Iran conflict and its implications for energy markets and global economic growth.

Rupee and markets under pressure

Recent weeks have seen increased volatility in financial markets, with foreign investors pulling money out of Indian equities. Analysts have linked part of the pressure on the rupee to rising oil prices and continued overseas investor withdrawals.

Market participants believe that measures aimed at attracting foreign investment into government securities could help improve investor confidence and provide support to the domestic currency.

Broader economic concerns

The Iran war has added to concerns about inflation, economic growth and India’s external sector. Higher energy prices can increase import costs and put pressure on inflation, while sustained foreign capital outflows may affect financial market stability.

While no final decision has been announced, discussions on easing tax rules for foreign investors reflect the government’s efforts to strengthen capital inflows and cushion the economy from external shocks.

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US proposes new tariffs on India over forced labour concerns amid trade negotiations

The United States has proposed additional tariffs on imports from India and 59 other economies following a Section 301 investigation into forced labour-related trade concerns.

Published

1 day ago

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June 3, 2026

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Donald Trump statement

The United States has proposed imposing additional tariffs on imports from India and 59 other economies after concluding that these countries have not taken sufficient steps to prevent the importation of goods allegedly linked to forced labour. The proposal was announced by the Office of the US Trade Representative (USTR) as part of an investigation conducted under Section 301 of the US Trade Act.

According to the USTR’s findings, India could face an additional tariff of 12.5% on goods exported to the United States. The proposed measure is part of a broader plan targeting 60 economies, with tariff rates ranging between 10% and 12.5% depending on the findings related to each country.

India among countries facing higher tariff proposal

The USTR said India had not effectively enforced restrictions on imports made using forced labour, describing the issue as a burden on US commerce. The agency argued that inadequate enforcement by major trading partners creates unfair competition for American workers and businesses.

While countries including Canada, Mexico, the European Union and the United Kingdom are proposed to face a 10% tariff, India is among a larger group of economies that could be subjected to a 12.5% duty under the recommendation.

Proposal comes during India-US trade discussions

The tariff proposal has emerged while Indian and US officials are engaged in trade negotiations aimed at strengthening economic ties between the two countries. A US delegation led by Assistant USTR Brendan Lynch is currently holding discussions with Indian officials in New Delhi.

India’s Commerce Ministry has indicated that discussions with the United States on the matter are continuing and noted that the proposed tariffs have not yet been finalised. The USTR has invited public comments on the proposal until July 6, with a public hearing scheduled for July 7 before any final decision is taken.

Certain products may remain exempt

The proposed tariffs include exemptions for several categories of goods, including some energy products, pharmaceuticals, rare earth materials and selected agricultural commodities. Additional details regarding sector-specific measures, including proposed textile-related actions, are expected to be released separately.

The latest move follows a Section 301 investigation launched earlier this year into forced labour concerns across global supply chains. Any final decision on imposing the tariffs will be made after the consultation process is completed.

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Trump reportedly rebukes Netanyahu over Lebanon strikes amid ceasefire concerns

Published

2 days ago

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June 2, 2026

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US President Donald Trump reportedly delivered a sharp rebuke to Israeli Prime Minister Benjamin Netanyahu during a phone call over Israel’s military actions in Lebanon, as concerns grow that renewed hostilities could jeopardise fragile diplomatic efforts in the region.

According to multiple reports, Trump expressed frustration over Israeli strikes linked to ongoing tensions with Hezbollah in Lebanon. The reported exchange came at a sensitive time, with Washington attempting to prevent further escalation while also pursuing broader diplomatic discussions involving Iran.

Reports point to unusually tense exchange

Sources cited in international reports said Trump used unusually strong language during the conversation, warning that continued military actions risked damaging efforts to stabilise the situation. One report claimed Trump told Netanyahu that his actions were hurting Israel’s international standing and complicating diplomatic initiatives.

The reported disagreement followed Israeli operations against Hezbollah-linked targets in Lebanon. While Israeli officials argued that the actions were a response to security threats and ceasefire violations, the US administration has been pushing for restraint to avoid a wider regional conflict.

Lebanon fighting threatens broader diplomatic efforts

The latest tensions come amid efforts to maintain a ceasefire framework between Israel and Hezbollah. US officials have been involved in discussions aimed at reducing hostilities and preventing attacks on major Lebanese population centres, including Beirut.

Reports indicate that Trump personally intervened to discourage further escalation and support negotiations intended to preserve regional stability. Hezbollah has reportedly signalled a willingness to consider a broader ceasefire arrangement if reciprocal commitments are made.

Differing public messages after the call

Despite reports of a heated conversation, Trump later suggested publicly that discussions had been constructive and that progress had been made toward reducing tensions. Netanyahu, however, maintained that Israel would continue to respond to security threats and would not alter its overall approach toward Hezbollah if attacks persisted.

The developments highlight growing challenges facing diplomatic efforts in the Middle East, where the conflicts involving Israel, Lebanon and Iran remain closely interconnected. Analysts say any major escalation in Lebanon could further complicate ongoing negotiations and increase instability across the region.

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