Newspaper Summary 290126

 The article titled "FTA: India sets up guardrails against EU’s green measures" by Amiti Sen from the provided sources details India's strategy to protect its trade interests against the European Union's sustainability regulations.

FTA: India sets up guardrails against EU’s green measures

SAFETY VALVE. Rapid response mechanism, non-violation complaints provisions to help Delhi address any bloc move that can impair market access, including an expanded CBAM.

By Amiti Sen, New Delhi India has strategically included a rapid response mechanism (RRM) and a non-violation complaints (NVC) provision in the India-EU Free Trade Agreement (FTA). These inclusions are considered extremely significant in the context of regulations such as the EU’s Carbon Border Adjustment Mechanism (CBAM), especially as Brussels has indicated that the CBAM could be expanded beyond its current sectoral scope.

Trade Safeguards and Consultation These provisions establish an early consultation channel for India to flag and negotiate the trade impact of future EU sustainability measures. This includes potential CBAM expansion to downstream products or regulations like the EU Deforestation Regulation, which could erode market access even without a formal breach of the agreement.

According to an official, both the NVC and RRM will help India deal with future EU regulations and protect FTA benefits. Any measure, including those based on environmental sustainability, falls under their purview if it violates commitments or impairs market access.

• Non-Violation Complaints (NVC): This can be invoked to find solutions for new measures that may not expressly breach the terms of the agreement but could nullify or impair benefits, such as market access concessions.
• Rapid Response Mechanism (RRM): This is a dedicated, fast-track mechanism to address concerns from existing and future regulations that create or threaten to create significant trade disruptions between the parties.

Carbon Concerns India remains worried about the economic impact of the CBAM, which entered its "definitive phase" this month, officially imposing a direct carbon tax on imports of iron, steel, aluminium, cement, fertilizers, hydrogen, and electricity. Without flexibilities offered under the FTA, Indian exporters of steel and aluminium are expected to take a substantial hit, estimated at 15-22 per cent.

The situation could worsen if the EU proceeds with its 2028 plan to expand CBAM to 180 downstream products, including:

• Machinery, vehicles, and components.
• Household appliances (such as washing machines and refrigerators).
• Construction equipment.

The EU is also weighing the inclusion of other carbon-intensive sectors like chemicals, refinery products, glass, and ceramics. Sources noted that disruptions caused by these future measures can be taken up for resolution under the RRM and the NVC.

The CBAM Annex As part of the FTA, India secured an annex on CBAM providing for Most Favoured Nation (MFN) treatment. This ensures that if the EU offers flexibilities to any other country under the mechanism, those same flexibilities must be extended to India as well.

Based on the sources provided, here is the reproduction of the article detailing India’s proposal for the automobile sector within the India-EU Free Trade Agreement (FTA).

India proposes opening of automobile market to EU in a phased manner

NEW PASTURES. Constructive approach to trade could support broader ecosystem, industry veterans say.

By S Ronendra Singh, New Delhi India has proposed a tightly controlled opening of its automobile market to the European Union (EU) under ongoing FTA negotiations. The proposal offers quota-based and phased tariff reductions designed to limit exposure for the mass-market auto industry while allowing flexibility for premium vehicles and local assembly.

Calibrated Concessions and CKD Preference Officials describe the offer as calibrated rather than comprehensive. It includes concessions capped by volume and delayed timelines, with a clear preference for completely knocked down (CKD) imports over fully built vehicles.

Under the proposal, India has offered tariff concessions for up to 1.6 lakh internal combustion engine (ICE) cars annually and 90,000 electric vehicles (EVs). A significant portion of this is intended to channel imports into local assembly lines. Within the ICE quota, 75,000 units are reserved for CKD imports, with customs duties proposed to be halved from 16.5 per cent to 8.25 per cent.

Protecting the EV Ecosystem Concessions on EV imports are proposed to begin only from the fifth year of the agreement. This delay reflects New Delhi’s concerns regarding the protection of India’s nascent electric mobility ecosystem.

Phased Implementation and Price Brackets According to officials, the first year will allow only one-lakh units of ICE vehicles to enter India across different categories:

• Cars priced €15,000–35,000: 34,000 units allowed at a 35 per cent import duty.
• Cars priced €35,000–50,000 and above: 33,000 units each allowed at a 30 per cent duty.

Over five years, these 30–35 per cent duties are expected to drop to 10 per cent. Furthermore, the total one-lakh quota is proposed to increase to 1.60 lakh units over 10 years. Similar provisions are included for EVs priced between €20,000 and €60,000.

Industry Impact Analysts suggest that European auto majors—including the Volkswagen Group (Audi, Lamborghini, Skoda), Mercedes-Benz, Stellantis, and Renault—stand to benefit most from this deal.

Balbir Singh Dhillon, Brand Director of Audi India, noted that this constructive approach could support innovation, supply-chain efficiency, and technology collaboration. He stated that the FTA would create a "stable and predictable environment" for European automakers to invest and innovate within India.

Based on the sources provided, here is the reproduction of the article regarding the impact of the India-EU FTA on the aerospace industry.

Aerospace sector to gain competitive edge

BREAKING NEW GROUND. With aircraft demand rising and OEMs ramping up production, engagement with European customers creates meaningful opportunities.

By Aishwarya Kumar, Bengaluru

The India–EU Free Trade Agreement is expected to significantly improve the competitiveness of Indian aerospace manufacturers by reducing tariff-related costs for customers and easing access to European markets. According to industry players, the pact could also benefit domestic-focused players by improving the availability of aerospace-grade raw materials and capital equipment from Europe.

Market Dynamics and Production The European Union accounts for an estimated 20–25 per cent of global aerospace production, dominated by major Original Equipment Manufacturers (OEMs) like Airbus and a deep supplier base. With commercial aircraft demand rising and OEMs ramping up production to address record backlogs, engagement with European customers creates meaningful opportunities for Indian firms.

Industry Perspectives Aravind Melligeri, Chairman & CEO of Aequs Ltd, called the agreement “a win-win for both parties”. With nearly 50 per cent exposure to the EU market, the tariff reductions will make Aequs more competitive, as most contracts are currently on a Delivered Duty Unpaid (DDU) basis. Melligeri noted that the agreement opens doors for Indian companies to increase their aerospace manufacturing capabilities, including full assembly lines.

Rama Kandula, Co-Founder & CEO of Misochain, added that duty reductions can make a meaningful difference in the landed cost for precision-machined and electro-mechanical parts.

Access to Raw Materials Europe is a major producer and exporter of critical aerospace-grade raw materials, including:

• Titanium
• Nickel-based alloys
• Aluminum and Copper
• High-performance specialty steels

Beyond material access, the agreement enhances India’s credibility as a long-term manufacturing partner and opens new opportunities for European companies to collaborate within the Indian ecosystem.

Based on the sources provided, here is the reproduction of the article detailing India’s strategy for the wine sector within the India-EU Free Trade Agreement (F

India walks a fine line on wine

By Meenakshi Verma Ambwani, New Delhi

In a move to protect Indian wine producers and grape farmers, particularly in key production hubs in Maharashtra and Karnataka, India has not offered any tariff concessions on lower-priced European wines costing below €2.5 under the FTA.

Calibrated Tariff Reductions For mid-range and premium EU wines, India has proposed a phased reduction strategy:

• Wines priced between €2.5 and €10: Duties will be phased down to 30 per cent over seven years.
• Wines priced above €10: The final tariff will be capped at 20 per cent.

Sources noted that this extended timeline is intended to provide the domestic industry sufficient time to expand its capacity, innovate, and improve its global competitiveness. Additionally, a dedicated India-EU working group on wines and spirits has been established to facilitate knowledge exchange and regulatory alignment.

Market Impact and Opportunities Currently, wine accounts for less than 1 per cent of the total alcoholic beverages market in India. Experts suggest the agreement will allow Indian consumers to access premium European wines at more affordable prices while simultaneously shielding local makers from low-cost imports.

As part of the reciprocal deal, India will also gain duty-free entry for 85,000 tonnes of table grapes into the European Union.

Industry Reactions Sula Vineyards, India's leading winemaker, stated that the agreement adequately safeguards the interests of the domestic industry. The company noted that the current structure protects over 90 per cent of Indian wines, which retail at prices below ₹1,500 per bottle. Sula expects only a "limited impact" from the deal, likely confined to its most premium product range.

Sharad Negi, CFO of IndoBevs, described the FTA as a "test of Indian alcobev producers' ability to compete on quality, scale, and global positioning". He characterized the calibrated reduction in duties on European beer and wine as a "quality test" for the domestic sector.

Based on the sources provided, here is the reproduction of the article titled "Industrial growth zooms to 7.8% in Dec" by Shishir Sinha.

Industrial growth zooms to 7.8% in Dec

KEY DRIVERS. Mining, manufacturing and power sectors help factory output touch a 25-month high.

By Shishir Sinha, New Delhi Supported by strong performance in the manufacturing and mining sectors, the growth rate of factory output—measured by the Index of Industrial Production (IIP)—strengthened to a 25-month high of 7.8 per cent in December, as reported by the Statistics Ministry on Wednesday. The Ministry noted that this growth was driven by an "across-the-board surge in manufacturing, mining and electricity."

Sectoral Performance Within the manufacturing sector, the highest growth rates were recorded in:

• Computer, electronic and optical products: 34.9 per cent.
• Motor vehicles, trailers and semi-trailers: 33.5 per cent.
• Other transport equipment: 25.1 per cent.

The manufacturing sector’s output overall grew by 8.1 per cent in December 2025, compared to 3.7 per cent in the same month the previous year. Mining production rose to 6.8 per cent (up from 2.7 per cent), and power generation grew by 6.3 per cent. However, despite this December surge, the country’s industrial production growth for the April-December period of FY26 slowed to 3.9 per cent, compared to 4.1 per cent in the year-ago period.

Use-Based Classification Aditi Nayar, Chief Economist with ICRA, highlighted that four out of six use-based segments saw accelerated growth in December. Notably, consumer durables expanded at a 13-month high of 12.3 per cent. While growth in the capital goods and infrastructure/construction goods segments decelerated slightly compared to November, they remained at elevated levels.

Economic Outlook IIP growth accelerated to a six-quarter high of 5.2 per cent in Q3 FY26, up from 4.3 per cent in Q2. Nayar stated that ICRA expects GDP growth to reach a healthy 7.1-7.2 per cent, though a moderation is expected compared to the 8 per cent expansion seen in the first half of the year due to a high base. She also cautioned that IIP growth might decelerate to 6-7 per cent in January 2026.

Rajeev Sharan, Head of Criteria, Model Development and Research at Brickwork Ratings, noted that the rebound in consumer durables and infrastructure goods signals strengthening domestic demand, while capital goods growth reflects an investment revival. He added that this industrial momentum is well-timed with the recently concluded India-EU FTA, which will progressively lower tariffs and provide Indian manufacturers—particularly in engineering, textiles, and autos—access to a 450-million consumer market.

Based on the sources provided, here is the reproduction of the article concerning asset reconstruction companies and tax status for Alternative Investment Funds (AIFs).

ARCs seek ‘pass-through’ tax status for AIFs to enhance investor returns

By K Ram Kumar, Mumbai

In a bid to attract capital into the distressed assets space, asset reconstruction companies (ARCs) have requested a “pass-through” tax status for income earned by Alternative Investment Funds (AIFs) from their investments in such assets. If granted, this status would mean AIFs would not pay tax at the entity level; instead, the tax burden would be shifted to their investors.

The Current Tax Hurdle An AIF is defined by the Securities and Exchange Board of India (SEBI) as a privately pooled investment vehicle established in India that collects funds from sophisticated Indian or foreign investors to invest according to a defined policy.

In a representation to the Finance Ministry, the Association of ARCs in India noted that AIFs pool resources from various investors and any income from security receipts (SRs) should logically be treated as income in the hands of those investors. Currently, such income is taxed as business income of the AIF, which attracts a maximum tax level of 42.74 per cent.

Benefits of Pass-Through Status Granting this status would help investors earn better returns, effectively aligning risk with reward for investing in riskier distressed assets. Industry experts believe this would lead to increased liquidity in the distressed debt market and provide better chances for the revival of sick units.

Hari Hara Mishra, CEO of the Association of ARCs in India, noted that the RBI’s Committee on ARC Sector in 2021 had already recommended a pass-through regime for AIF income from SRs. He stated that the measure would boost investor sentiment and provide much-needed depth to the market.

Role of ARCs and Security Receipts ARCs acquire stressed assets, such as bad loans and written-off accounts, from financial institutions and implement resolution strategies to maximize their recovery and value. A Security Receipt (SR) is issued by an ARC to a qualified buyer as evidence of an undivided right, title, or interest in the financial asset involved in the securitisation.

Seeking Clarity for FPIs ARCs have also highlighted the need for clarity on tax rates for foreign portfolio investors (FPIs) investing in SRs. They noted that current income tax laws do not specify a tax rate for the interest income or upside received by FPIs from these investments.

Based on the sources provided, here is the reproduction of the article concerning Cairn Oil & Gas's recent discovery.

Cairn announces gas discovery in Ambe

By Our Bureau, New Delhi

Cairn Oil & Gas has officially notified the Ministry of Petroleum and Natural Gas (MoPNG) and the Directorate General of Hydrocarbons (DGH) regarding a new hydrocarbon (gas) discovery in its appraisal well, Ambe-2A, located on the West Coast.

Discovery Details The discovery was made within the CB/OSDSF/AMBE/2021 block in reservoirs situated below the main gas field in the Miocene-Tarkeshwar formation. The company is currently conducting evaluations to assess the potential for the field development plan of the block. As part of its ongoing drilling campaign, Cairn plans to drill two additional wells in continuity.

Strategic Significance The field has the potential to significantly enhance domestic gas production and contribute to India’s energy aatmanirbharta (self-reliance). This campaign is aligned with the Prime Minister’s Samudra Manthan Mission, which aims to accelerate production from India’s offshore reserves. The Discovered Small Field (DSF) assets are expected to fast-track the development and monetisation of shallow-water offshore fields.

Technological Milestones Cairn recently achieved a technological leap for marginal field monetisation by installing India’s first-ever sub-sea template (SST) as part of a Conductor Supported Platform (CSP) installation. This pre-engineered steel foundation ensures proper positioning for cluster drilling and provides structural support for wellheads and equipment.

Block History The Ambe block covers an area of 728.19 sq km and was awarded to Cairn under the DSF-III bidding round in September 2022. While the first hydrocarbon discovery in the block occurred during Cairn’s previous tenure in the area, the company now holds 100 per cent participating interest in the block.

Based on the sources provided, the "Plain Facts" feature for January 29, 2026, titled "How does Air India fare against IndiGo?" provides a data-driven comparison of the two airlines four years after the Tata Group’s acquisition of Air India.

Pilot Strength

While IndiGo historically maintained a much larger pilot workforce, both Air India and Air India Express have hired aggressively in recent years.

• Between March 2022 and March 2025, Air India’s pilot strength grew threefold and Air India Express’s grew sixfold.
• As of March 2025, the combined Tata airlines were only 51 pilots short of IndiGo.
• On a per-plane basis, the Tata airlines currently have a higher ratio of pilots (17.3 for Express and 18.6 for Air India) compared to IndiGo (12.5).

Fleet Status

Air India is in the middle of a five-year transformation plan called Vihaan.ai, which includes buying new planes and retrofitting old ones.

• Air India placed a massive order for 470 aircraft in 2023 and another 100 in 2024, but deliveries have trailed IndiGo.
• In 2025, Airbus delivered 49 planes to IndiGo (nearly one a week), while Boeing delivered only 15 to Air India.
• Air India’s fleet remains significantly older; the average age is 8.6–8.8 years, whereas IndiGo’s fleet averages 4.8 years.

Market Share

• Domestic: IndiGo remains the dominant leader with a 64.5 per cent share of domestic passengers as of November 2025. Air India’s share slipped to 15.6 per cent in 2025 (down from 20.2 per cent in 2024) after it cut frequencies following an international flight crash in June 2025.
• International: Air India’s international share fell from 21 per cent in 2022 to 13.9 per cent in 2025. However, because Air India operates more wide-body aircraft for long-haul routes, its share of passenger-revenue is higher than its passenger volume; in 2024, it held a 53.1 per cent share of passenger-kilometres.

Financial Performance

Despite scaling up revenue through the absorption of other Tata brands (Vistara and AirAsia India), profitability remains elusive for the Tata airlines.

• In 2024-25, Air India and Air India Express reported a combined net loss of approximately ₹9,700 crore.
• Projections for 2025-26 suggest a deeper net loss of about ₹15,000 crore.
• By contrast, IndiGo reported a net profit of similar magnitude during the same periods.

Based on the sources provided, here is the reproduction of the article detailing India's ongoing trade negotiations with the United States following the conclusion of talks with the European Union.

India engaged with US for deal as EU talks conclude

By Utpal Bhaskar, New Delhi

India is currently actively engaged with the US to conclude a mutually beneficial bilateral trade agreement, according to people familiar with the matter. These efforts are moving forward even as New Delhi works to operationalize its recently concluded Free Trade Agreement (FTA) with the European Union.

Significant Progress Sources indicates that "very significant progress" has been made and that the two sides are "very close" to seeing the deal come to fruition. Negotiators reportedly remained in touch with their US counterparts even during the "final throes" of the India-EU FTA negotiations. One official noted that the US market is "as important, if not more important" than the EU market, and emphasized the need to keep "eyes on the ball" to bring that agreement across the finish line.

Diplomatic Engagement The new US ambassador to India, Sergio Gor, stated on 12 January that both sides continue to engage on the trade deal. Officials clarify that these concurrent negotiations are not being conducted in a spirit of "one-upmanship," noting that the US is also pursuing deals with multiple other partner countries.

The EU Pact Context India and the EU announced the successful conclusion of their historic pact on Tuesday, which is expected to level the playing field for Indian manufacturers in a key developed market through significant tariff cuts. The EU has agreed to eliminate tariffs on over 90 per cent of tariff lines, covering 91 per cent of trade value. In FY25, bilateral trade in goods between India and the EU stood at $136.54 billion.

Carbon and Non-Tariff Barriers Despite the breakthrough, the EU has kept its Carbon Border Adjustment Mechanism (CBAM) outside the scope of the trade deal. Consequently, Indian exports of steel and aluminium will continue to face Europe’s carbon tax. The EU maintains that CBAM is a horizontal regulation applicable to all partner countries. To address this, both sides have agreed to a technical dialogue to ensure Indian CBAM verifiers are accredited by EU agencies.

Strategic Outlook The India-EU FTA follows recent agreements with the UK and the EFTA nations (Switzerland, Norway, Iceland, and Liechtenstein). Together, these agreements are intended to create an integrated supply chain and enable a $30 billion common market. The government intends to implement the EU agreement as quickly as possible, as it is not expected to require the individual approval of all 27 member states' Parliaments.

The article titled "The deflation doom loop that’s trapping China’s economy" by Hannah Miao from the provided sources explores the vicious cycle of overproduction and low consumer spending currently affecting China.

The deflation doom loop that’s trapping China’s economy

Exports drive growth while race-to-the-bottom competition from overproduction hits prices, profits, wages and sales.

By Hannah Miao, Shanghai Across China’s economy, a dangerous imbalance has taken hold: consumers are not spending enough, while producers are making too much. This has left companies across the supply chain with little choice but to lower prices to unload inventory, which in turn eats into profits and forces businesses to limit wage growth, pause hiring, or shed employees. This creates a vicious cycle where workers have even less to spend.

A Lopsided Recovery While China managed to maintain an overall economic growth of 5 per cent last year thanks to robust exports and leaps in cutting-edge technology like AI and robotics, much of its domestic economy remains stuck in a deflationary spiral. China’s GDP deflator has been negative since 2023, signaling inadequate domestic demand.

Corporate filings show shrinking profits across various industries, including steel, concrete, electric vehicles (EVs), robotics, and cosmetics. Profit margins for publicly traded companies are at their lowest levels since 2009, and fixed-asset investment fell in 2025 for the first time on record.

Incentivizing Overproduction The auto sector is a prime example of this "involution"—a buzzword for excessive competition and price wars. China has more than 100 EV makers fighting for survival. Local governments, having invested heavily in EVs as a strategic sector, are reluctant to let companies fail, choosing instead to keep production going to avoid layoffs and maintain tax revenue.

The result is that approximately three-quarters of car dealers sold vehicles below cost in the first half of 2025. With domestic demand weak, many dealers have shifted their focus to exports to the Middle East, Central Asia, and Africa.

The Real Estate Burden The multiyear property-market slump continues to weigh heavily on consumer net worth and spending. Jewelry wholesalers in Shanghai report that customers are buying significantly less, and some have had to cut prices by 60 per cent just to maintain sales.

A Nation of Savers China’s industrial strategy has historically prioritized technology and manufacturing over supporting consumers. Consequently, many citizens lack a robust social safety net, with bare-bones health insurance and small pensions. This encourages a culture of high saving for emergencies rather than spending; the average Chinese household saves about one-third of its income, compared to less than 5 per cent in the U.S.. Household spending accounts for only 40 per cent of China's GDP, well below the world average of 55 per cent.

Stalled Wages and Job Anxiety With businesses struggling to remain profitable, employees are often required to do more work for the same pay. The unemployment rate for those aged 16–24 reached approximately 17 per cent in November. Even well-paid workers in sectors like semiconductors feel pressured to save for retirement as they hear reports of salary decreases among their peers.

Government Response Beijing has launched an "anti-involution" campaign to address overproduction and below-cost pricing. However, economists like Fred Neumann of HSBC argue that while these measures may treat the symptoms, they do not cure the underlying disease created by the relentless pursuit of investment. Experts suggest China risks a prolonged period of stagnation similar to what Japan experienced in the 1990s.

The article titled "Does the budget have room for greater spending and tax relief?" by Devina Mehra, founder of First Global, analyzes the fiscal challenges facing the Indian government despite strong headline economic figures.

Does the budget have room for greater spending and tax relief?

By Devina Mehra

On the surface, India appears to have the ultimate Goldilocks economy, characterized by one of the world's highest GDP growth rates and historically low inflation. However, a closer look reveals significant gaps that may cause concern for policymakers ahead of the upcoming budget.

The Nominal Growth Problem While the government’s first advance estimates for 2025-26 peg real GDP growth at a healthy 7.4 per cent, the nominal GDP growth is projected at only 8 per cent. This is significantly lower than the two-decade average of approximately 12 per cent. Most concrete economic measures, including corporate profits and tax collections, are tied to nominal rather than real growth.

When the budget was presented last year, it assumed a nominal growth rate of over 10 per cent, leading to budgeted growth of 10.7 per cent for corporate tax and 10.9 per cent for GST. Currently, tax collections are running well below these estimates; even with lower refunds, total net tax collections have grown only 8 per cent against the 11 per cent budgeted. If this trend continues, the government faces a shortfall of over ₹1.3 trillion in tax collections.

Limited Room for Concessions Despite widespread requests for tax concessions or increased spending, the government has very little leeway. Given the sluggish tax collections, there is no room for major concessions unless the government is willing to let the fiscal deficit balloon, which is an unpalatable option.

For the past several years, Indian GDP growth has been heavily dependent on government spending, with capital expenditure increasing nearly fivefold over the past decade. However, not all of this spending has been productive; for example, while a new airport has been built every 50 days, 15 of these remain unutilized and nearly 50 have fewer than five flights a day.

Priority Building Blocks Mehra argues that the government should shift its focus toward long-term building blocks rather than corporate or capital market interests:

• Education: India spends only 3–4 per cent of its GDP on education, far below the 6 per cent target. In contrast, China spends over 6 per cent of a GDP that is five times larger than India's.
• Health: India has the highest number of undernourished and anaemic children globally. These are essential building blocks for an employable workforce.
• Research and Development: India currently spends only 0.6 per cent of GDP on R&D, while China spends 25 times that amount.

The Demographic Window The article concludes by noting that India's "demographic dividend"—the bulge of working-age citizens—is only available for a limited period before the population plateaus and begins to decline. This dividend can only be realized if the youth are educated, skilled, and employed.