Newspaper Summary - 170126

 Despite US tariffs, exports of ready-made garments rose 3% in Dec, aided by diversification By T E Raja Simhan, Chennai

In a silver lining to the ailing industry, exports of ready-made garments (RMG) rose 3 per cent year-on-year in December 2025, reaching $1.5 billion compared with December 2024. These export numbers were up 16 per cent when compared to December 2023.

The industry faced initial setbacks when US tariffs on the textile sector came into effect on August 27, resulting in a year-on-year decline in exports during September and October. However, figures bounced back in November and posted marginal growth in December, according to data from the Apparel Export Promotion Council (AEPC). This recovery was further aided by favourable currency movements.

For the broader period of April-December 2025, RMG exports reached $11.58 billion, representing a 2.4 per cent increase over the same period in 2024 and a 14.2 per cent growth compared to April-December 2023. This performance reflects the resilience and adaptability of the industry in a challenging global environment.

The outlook for 2026 is described as cautiously optimistic. While demand in key international markets has been pressured, India is considered well-positioned to gain market share through its reliable supply chain, improved compliance standards, and growing design capabilities. Industry leaders, such as Thirukkumaran Natarajan, Chairman of Esstee Exports India Pvt Ltd and Secretary of the Tiruppur Exporters Association, note a stronger focus on value-added segments. With sustained policy support, there is confidence that the apparel sector will return to a stronger growth trajectory.

Maruti Suzuki begins export of Victoris to Latin America, Africa & Middle East

Our Bureau, Ahmedabad

Maruti Suzuki India announced on Friday that it has commenced the export of its premium SUV, Victoris. An initial shipment of over 450 units was dispatched from the Mundra and Pipavav ports in Gujarat to various global markets, including Latin America, the Middle East, and Africa.

The Victoris is produced at the company’s Haryana manufacturing facility. Since its domestic introduction in September 2025, the model has seen strong demand, securing 70,000 bookings as of January 1, 2026. Official sources noted that 35,000 units have already been dispatched to the domestic market. In international markets, the premium SUV will be sold under the brand name Across.

Hisashi Takeuchi, Managing Director & CEO of Maruti Suzuki India, stated that the company’s export strategy is firmly aligned with the "Make in India, Make for the World" vision. He highlighted that the company currently exports approximately 18 models manufactured in India. In 2025, Maruti Suzuki emerged as the country's largest passenger vehicle exporter for the fifth year in a row, with total exports exceeding 3.9 lakh vehicles.

The past year also saw the company re-enter the European market with the export of its first battery electric vehicle, the e VITARA, which is manufactured at the Hansalpur facility in Gujarat.

Takeuchi pointed out the significant growth in the company's export volume, noting that from 2020 to 2025, Maruti Suzuki’s exports grew 4.67 times, while the rest of the industry grew by 1.43 times. He expressed optimism that the addition of the Victoris will further support the company's export ambitions and be well-received by global consumers.

SC’s Tiger Global verdict puts spotlight on F&O trades from DTAA countries

Suresh P Iyengar, Mumbai

The Supreme Court verdict in the Tiger Global case has placed significant focus on the futures and options (F&O) derivatives trading conducted in India by foreign portfolio investors (FPIs) under the assumption that their income remained tax-free under Double Taxation Avoidance Agreements (DTAA). The ruling is expected to have a far-reaching impact on foreign investment in India by reinforcing the legal position that tax treaty benefits under Sections 90 and 90A of the Income-Tax Act, 1961, are reserved for genuine commercial arrangements rather than structures designed primarily for tax avoidance.

Hemen Asher, Partner – Direct Tax at Bhuta Shah & Co LLP, noted that while most FPIs have historically treated their F&O derivatives income as exempt under respective DTAAs, they may now be required to satisfy the new threshold established by the Supreme Court. He cautioned that global investors will need to factor capital gains tax costs into their models, which could potentially increase the overall risk of India as a country due to litigation uncertainty.

Treaty Implications Pranav Sayta, National Leader, International Tax and Transaction Services at EY India, explained that while the judgment specifically concerned the India-Mauritius Treaty, the principles laid down are likely to impact taxpayers from various jurisdictions, including those seeking relief under the India-Singapore Treaty. Sonam Chandwani, Managing Partner at KS Legal & Associates, added that the judgment is declaratory and interpretative in nature, meaning it will apply to all pending assessments, appeals, and disputes currently examining treaty entitlement or substance.

The verdict materially strengthens India’s negotiating and enforcement stance by judicially endorsing anti-abuse principles. It serves as a signal to foreign investors that treaty protection will not shield structures that lack real economic substance or commercial justification.

S Vasudevan, Executive Partner at Lakshmikumaran & Sridharan attorneys, stated that the ruling proves that the possession of a Tax Residency Certificate (TRC) is no longer sufficient proof to claim DTAA benefits. This is especially critical for investments made prior to April 2017; the judgment implies that treaty benefits can now be questioned even for shares acquired before that date. Consequently, countries may feel inclined to relook at tax treaties and revisit "limitation of benefit" clauses. This shift is expected to create significant uncertainty for overseas investors regarding their business and exit plans for Indian investments.

SEBI proposes netting of funds by FPIs

Our Bureau, Mumbai

The Securities and Exchange Board of India (SEBI) on Friday proposed permitting the netting of funds for cash market transactions by Foreign Portfolio Investors (FPIs). This move is aimed at reducing funding costs and improving operational efficiency, particularly during high-volume trading days such as index rebalancing.

Under the proposal, FPIs would be allowed to use sale proceeds from cash market transactions on a given day to fund purchases executed on that same day. This would allow them to meet only their net fund obligation instead of settling all trades on a gross basis. SEBI noted that the current framework often leaves FPIs “underinvested” for at least a day because they are currently required to bring in full funds for purchases regardless of sales made on the same day. For example, an FPI purchasing ₹100 crore of one stock and selling ₹100 crore of another would currently still need to provide the full ₹100 crore for the purchase instead of adjusting the amount against sale proceeds.

The issue becomes more pronounced during index rebalancing, when FPIs typically experience large simultaneous inflows and outflows. However, the proposed netting will be limited to “outright” transactions, where an FPI has either a buy or a sell position in a security in a settlement cycle, but not both. Trades involving both buy and sell positions in the same security will continue to be settled on a gross basis, effectively excluding intra-day round-tripping from the benefit.

SEBI clarified that the settlement of securities will also continue on a gross basis, and charges such as the Securities Transaction Tax and stamp duty will remain unchanged. Furthermore, if the value of outright sales exceeds outright purchases, the excess sale proceeds cannot be used to fund other buy obligations.

In response to concerns regarding settlement risk shifting to custodians, the regulator stated that robust safeguards already exist, such as the default waterfall mechanism and the Core Settlement Guarantee Fund (Core SGF). SEBI also suggested that netting could actually reduce the likelihood of fund-related trade rejections. Implementing the proposal will require amendments to regulatory frameworks issued by both SEBI and the Reserve Bank of India.

Public comments on the proposal have been invited until February 6. SEBI Chairman Tuhin Kanta Pandey stated that the regulator is sharpening its focus on capital formation and market depth by reducing friction for investors and easing fund-raising processes. Analysts have welcomed the move, suggesting it could make India a more promising market for global investors and help attract stable foreign capital.

Grok, a test for AI governance

In recent weeks, Grok — the AI system developed by Elon Musk’s xAI — has been generating nonconsensual, sexualized images of women and children on the social-media platform X. This has prompted investigations and formal scrutiny by regulators in the European Union, France, India, Malaysia, and the United Kingdom. European officials have described the conduct as illegal, and British regulators have launched urgent inquiries, warning that Grok’s output might violate domestic criminal and platform-safety laws. Far from marginal regulatory disputes, these discussions get to the heart of AI governance.

Governments worldwide increasingly agree on a basic premise: systems deployed at scale must be safe, controllable, and subject to meaningful oversight. Whether framed by the EU’s Digital Services Act (DSA), OECD’s AI Principles, or UNESCO’s ethics framework, these norms are clear. AI systems that enable foreseeable harm, particularly sexual exploitation, are incompatible with society’s expectations. There is also broad global agreement that sexualized imagery involving minors constitutes one of the clearest red lines in technology governance.

Grok’s generation of such material reflects a fundamental failure of the system’s design, safety assessments, oversight, and control. The ease with which it can be prompted to produce sexualized imagery involving minors and the absence of publicly verifiable safety testing point to a failure to meet baseline expectations for powerful AI systems. Musk’s announcement that the image-generation service will now be available only to paying subscribers does nothing to resolve these failures.

This is not a one-off problem; in July, Poland’s government urged the EU to investigate Grok’s “erratic” behaviour, and in October, over 20 civic organisations urged the US to suspend its planned deployment across federal agencies. Many AI safety experts have argued that Grok’s security and safety architecture is inadequate for a system of its scale. These concerns were largely ignored as political leaders sought to partner with xAI, exposing a deep structural problem: advanced AI systems are being deployed without safeguards proportionate to their risks.

As governments integrate AI into public administration, retaining public trust will require assurances that these technologies comply with international obligations and respect fundamental rights. Regulators must use the Grok case to demonstrate that their rules are not optional. Suspending a model’s deployment pending rigorous assessment is consistent with global best practices and demonstrates that governance frameworks are operational constraints with real consequences.

The Grok episode underscores that governance lapses can scale as quickly as technological capabilities. Harms do not remain confined to a single platform but propagate globally. For European regulators, this is a defining test of whether the DSA will function as a binding enforcement regime or merely a statement of intent. A response limited to public statements of concern will signal that enforcement lacks teeth; instead, investigations, suspensions, and penalties are needed to show that certain lines cannot be crossed.

Grok should be treated as a serious violation, requiring formal investigation and meaningful enforcement. Lax security, inadequate safeguards, or poor transparency should incur consequences, including the application of penalties or fines provided by law. Anything less risks signaling to large technology companies that they can deploy AI systems recklessly without fear of accountability, even when crossing the brightest of legal and moral red lines.

The writer is Big Tech Accountability Advocate at Public Citizen.

Electronic goods shipments boost merchandise exports in April-December 2025

Sourashis Banerjee, Chennai

Exports to the US, India’s biggest export destination, rose by 9.75 per cent year-on-year during the first nine months of FY26 (April-December 2025), despite the imposition of 50 per cent US tariffs, according to the latest merchandise trade data from the Ministry of Commerce. Total merchandise exports during this period reached $330 billion, a 2.44 per cent increase compared to the $322 billion recorded in the same period the previous year.

This growth was primarily driven by electronic goods, which saw an increase of $9.16 billion, followed by engineering goods, which rose by $3.38 billion.

China’s Comeback The US maintained its position as India’s top export market, with shipments growing from $60 billion in 2024 to $65.9 billion in 2025. This growth is attributed to strong exports of non-tariffed items, including electronic goods (up 35 per cent), pharmaceuticals (up 6.4 per cent), and engineering goods (up 3.88 per cent).

In contrast, exports to the UK—a country with which India recently sealed an FTA—declined by approximately 7 per cent, falling from $10.8 billion to $10 billion. However, a significant shift occurred with China, where Indian exports surged by 36.7 per cent, jumping from $10.4 billion to $14.2 billion. This helped China climb from the fifth to the third spot among India’s top export destinations.

Commerce Secretary Rajesh Agrawal noted that the growth in exports to China was not the result of a specific strategy but rather the overall recalibration of global supply chains.

Sectoral Focus The data highlighted the resilience of marine products, which grew 15.5 per cent year-on-year to $6.56 billion across all geographies, despite facing tariffs in the US. This suggests successful market diversification by Indian exporters.

On the other hand, petroleum products saw a 14.5 per cent decline in export value, dropping from $49.3 billion in 2024 to $42.1 billion in 2025. The Petroleum Planning & Analysis Cell (PPAC) stated that while export volumes remained stable, lower global crude prices significantly impacted total export earnings.

Reliance Industries’ Q3 profit growth flat on higher expenses, revenue up 10.5%

Our Bureau, Mumbai

Reliance Industries reported a virtually flat net profit growth in the third quarter of FY26, missing analyst estimates on higher expenses, while higher revenues from oils-to-chemicals (O2C) and digital businesses were offset by weakness in the oil and gas segment. The conglomerate reported a consolidated net profit of ₹18,645 crore and revenue of ₹2.69 lakh crore, representing a 10.5 per cent year-on-year increase.

Operating margin during the quarter fell to 17.08 per cent from 17.96 per cent a year ago, though operating profit rose 5.1 per cent to ₹50,355 crore. Chairman and Managing Director Mukesh Ambani stated that the performance reflected “consistent financial delivery and operational resilience across businesses.”

Both the O2C and digital services businesses saw robust growth during the quarter. Reliance Jio was aided by strong subscriber additions and higher average revenue per user (ARPU), while an increase in fuel cracks and operational flexibility supported the O2C segment. Fuel retailing through Jio-bp saw significant expansion, further supported by favourable ethane cracking economics. Despite oil procurement challenges posed by international sanctions, the company was able to quickly pivot its sourcing strategy.

In contrast, the retail business saw its topline affected by GST rate rationalization and festive demand being split with the previous quarter. Reliance Retail's bottomline was further impacted by heavy discounting during the Diwali period and aggressive investments in hyperlocal commerce through JioMart.

The oil and gas segment remained a drag on profits due to lower volumes and price realization for KGD6 gas. Officials noted during an analyst presentation that efforts are underway to slow the decline in KGD6 well volumes while working to augment production from new wells.

Capital expenditure for Q3 stood at ₹33,826 crore ($3.8 billion), which was covered by a cash profit of ₹41,303 crore. This capex was primarily driven by growth projects in O2C and new energy businesses, as well as continued investment in strengthening the Jio and retail networks. Reliance also noted that its new energy vertical is shaping well, with solar cell manufacturing lines becoming operational during the quarter.

Pricey Vacay No Hurdle for Gen Z: Travel to Neighbouring Nations

Our Bureau

The travel industry is experiencing a significant surge in demand, particularly from Gen Z travellers, for whom "pricey" vacations are not a deterrent. Bookings have gained momentum for neighboring nations such as Sri Lanka, Bhutan, Maldives, Dubai-Abu Dhabi, and Thailand, with Indonesia also seeing increased interest according to Thomas Cook India.

Industry leaders, including Mehra, expect this market share to grow further. Greece is also projected to be a standout destination for travelers this year.

Long Weekend Demand The upcoming January 26 long weekend is a major catalyst for this growth, generating 45-50% more volume than a regular January weekend. Many travelers are extended their breaks by taking leave on January 23 to maximize their time off. Currently, international travel accounts for approximately 50% of all long-weekend bookings.

Shift in Travel Patterns Sabina Chopra of Karvat noted that long-weekend voyagers are increasingly choosing short-international trips in addition to domestic ones. Varun Agarwal, director at Cox & Kings, explained that “incidental travel”—short, spontaneous trips taken during holiday periods—has become a “structurally important demand segment,” now contributing to 40-45% of domestic leisure trips. He further highlighted that booking volumes during these periods are growing at a robust 25-30% year-on-year.

Cross-border ecomm gets a Legup, Postal Exports Put on Par with Cargo Shipments

Our Bureau, New Delhi

In a major boost to cross-border e-commerce, the government has overhauled customs rules, treating exports made through the postal channel on par with regular cargo shipments. The reforms, which take effect on February 1, are expected to enable speedier clearances for e-commerce exports through postal services. Furthermore, they provide smoother access to key export incentives such as duty drawback, the Remission of Duties and Taxes on Exported Products (RoDTEP), and the Rebate of State and Central Taxes and Levies (RoSCTL), which were previously often delayed or denied to postal exporters.

Maturing Ecosystem The changes, which began taking effect on January 15, address a long-standing procedural bottleneck that had kept postal exports—especially from MSMEs, artisans, and online sellers—out of the mainstream incentive framework. The move targets low-value, high-volume exports that have grown rapidly with cross-border e-commerce and are increasingly routed through India Post and foreign postal networks. Currently, India's cross-border e-commerce exports are estimated at $5 billion, with a goal to reach $2 trillion by 2030.

Operational Changes The Central Board of Indirect Taxes and Customs (CBIC) has issued notifications according electronic export entries filed for postal shipments the same legal standing as traditional shipping bills used for air and containerized cargo. This alignment addresses a compliance gap and allows for the automated processing of incentive claims. Exporters can now use a single electronic Dak Niryat form, with specialized versions for e-commerce parcels and other exports. The government has already notified 28 foreign post offices and established over 1,000 Dak Niryat Kendras to support this vision.

Industry Impact Industry experts suggest these measures will significantly improve cash flow for digital-first brands and reduce compliance friction. Sunil Kumar, partner – tax and regulatory services at EY India, described the move as a "strategic realignment" that serves as a "game-changer for the global e-commerce shift". Rajat Mohan, senior partner at AMRG & Associates, noted that the changes bring much-needed certainty and will help exporters better plan their cash flows.

These reforms come at a critical time as Indian exporters navigate heightened global trade uncertainty, including a 50% tariff recently imposed by the US on various Indian goods. By streamlining the postal route, the government aims to enable small and medium-sized consumer brands to tap into overseas markets more cost-effectively.

RJio Infocomm profit up 11.2% y-o-y; ARPU up 5.1%

Our Bureau, Mumbai

Reliance Jio Infocomm reported an 11.2 per cent year-on-year growth in net profit for the quarter ending December 31, 2025, while revenue rose 12.7 per cent. This performance was primarily driven by robust subscriber additions, growth in Average Revenue Per User (ARPU), and the scaling of digital services. The company's EBITDA grew to ₹19,303 crore, a 16.4 per cent yearly increase, supported by higher revenue and margin improvements.

Subscriber and ARPU Trends On a year-on-year basis, Jio's subscriber base grew by 6.9 per cent, reaching a total of approximately 515.3 million. The ARPU increased 5.1 per cent to over ₹213.7 per month per subscriber. During the quarter, the company saw a net subscriber addition of 8.9 million, while maintaining a monthly churn rate of 1.8 per cent. Sequentially, net profit rose 3.3 per cent to ₹7,629 crore.

5G Adoption and Data Consumption A significant highlight of the quarter was the rapid adoption of 5G services, with Jio’s True5G subscribers hitting 253 million. These 5G users now account for approximately half of the network's total data traffic. Total data traffic reached 62.3 billion GB, representing a 34 per cent year-on-year growth. The per capita data consumption stood at 40.7 GB per month, while voice traffic remained relatively flat. Furthermore, JioAirFiber reported reaching 11.5 million subscribers.

AI and Future Vision Akash M. Ambani, Chairman of Reliance Jio Infocomm, stated that the company’s massive subscriber base and distribution network would empower "Reliance Intelligence" to make India "AI-empowered". He emphasized that the goal is to enable every citizen and enterprise to harness AI tools to create, innovate, and grow, which will drive sustained value creation in the coming years.

Analysts noted that the lack of a tariff hike during the quarter meant growth was purely driven by better consumer mix and value-added services. While Jio continues to dominate the Indian telecom market, Reliance has not yet provided a definitive timeline for the much-anticipated IPO of Jio Platforms Limited, which is expected in the first half of 2026.