Newspaper Summary - 130226

 

DAC clears ₹3.25 lakh crore deal for 114 Rafale fighter jets

The Defence Acquisition Council (DAC), headed by Defence Minister Rajnath Singh, has cleared a ₹3.25 lakh crore deal to acquire 114 Rafale fighter aircraft from France’s Dassault Aviation. Set to be India’s biggest-ever defence purchase, the proposal advanced to its next stage on Thursday, just ahead of French President Emmanuel Macron’s visit to India scheduled for February 17.

Manufacturing and Technology Transfer

In this government-to-government deal, a majority of the multi-role fighter aircraft (MRFA) Rafale will be “manufactured in India,” according to the Defence Ministry. Under the MRFA project, 18 aircraft are expected to be delivered by Dassault Aviation in flyaway condition, while the remaining jets will be produced domestically with over 50% indigenous content to be met in phases.

Following the DAC’s grant of acceptance of necessity (AoN), the project will move into the formal contract negotiation stage. This will lead to the issuance of a request for proposal (RFP) to firm up the overall cost, the scope of technology transfer, and specific manufacturing terms. Dassault Aviation is currently scouting for an Indian partner for local manufacture, and the fighter jets are expected to be integrated with indigenous radar technologies and weapon systems.

Strategic Significance

If this deal is finalized, the Indian Air Force (IAF) will become the second largest operator of Rafale jets after France, which has 225 aircraft. The IAF already operates a fleet of 36 Rafales, and the Navy signed a contract last year for 26 marine versions of the aircraft at a cost of ₹63,000 crore.

Next Steps and Additional Approvals

While an announcement relating to the deal may occur during President Macron’s visit, the final IAF proposal still requires approval from the Cabinet Committee on Security, headed by Prime Minister Narendra Modi. Sources indicate that the wrapping up of the formal contractual process may stretch into the latter half of this year. Although the official cost was not provided by the ministry, it is anticipated to range between ₹2.9 trillion and ₹3.15 trillion.

Other Defence Clearances

The Rafale deal was part of a larger set of approvals by the DAC valued at ₹3.60 lakh crore. Other greenlighted procurements include:

• Scalp combat cruise missiles from France to replenish the existing Rafale inventory.
• Six P8I long-range maritime reconnaissance aircraft from the US, which will bring the Navy's fleet strength to 18 and boost anti-submarine warfare and surveillance capabilities.
• Airship-based high altitude pseudo satellites (AS-HAPS) for the IAF to conduct intelligence, surveillance, and reconnaissance (ISR) missions.
• Four MW marine gas turbine-based electric power generators to enhance the Navy's self-reliance in power generation.

States’ devolution at 39% lags 41% recommendation of finance panel

By Sourashis Banerjee, Chennai

The recently tabled Sixteenth Finance Commission (FC-16) report has renewed focus on the sharing of tax revenues between the Centre and the States. Data compiled from the report and Union Budget trends indicate that while States’ devolution is gradually increasing in absolute terms, it remains below the recommended levels.

The Gap in Divisible Pool Share

Between 2021-22 and 2026-27 (BE), the States’ share from the divisible pool of gross tax revenue (GTR) rose from approximately ₹8.83 lakh crore to ₹15.26 lakh crore. However, an analysis by businessline shows that the actual ratio of this share fell from 39.8% in 2021-22 to 38.7% in 2026-27, which is lower than the recommended 41%.

The divisible pool is calculated by subtracting cess, surcharges, and taxes accruing to Union Territories from the Centre's GTR. When including cesses and surcharges, the States’ devolution as a share of total GTR increased slightly from 32.6% in 2021-22 to 34.7% in 2026-27 (BE). Historically, this share has climbed from roughly 25% in 1991-92.

Competing Fiscal Arguments

The FC-16 records conflicting views from the Union and the States regarding fiscal autonomy and responsibility:

• The Centre's Position: The Union government argued that previous significant increases in vertical devolution were intended to provide States with more "untied resources" to boost fiscal autonomy. However, the Centre claims this has not always resulted in sustained fiscal prudence by the States. Furthermore, the Centre has called for moderation in tax devolution, citing its own need for resources for defence modernisation and prudent macroeconomic management.
• The States' Position: A majority of States argued that the Constitution assigns them a proportionately larger expenditure responsibility, requiring more resources. They highlighted the declining share of the divisible pool in the Union’s gross tax revenues and proposed countermeasures, such as:
  1. Including cesses and surcharges in the divisible pool.
  2. Capping cess/surcharge shares as a percentage of GTR.
  3. Providing compensatory enhancements to the States' share if these levies remain excluded.

The Union responded that the exclusion of cesses and surcharges is a matter of Constitutional design, though these funds often finance welfare and infrastructure schemes that directly benefit the States.

GST Compensation and Horizontal Allocation

The total of cess and surcharges saw a reduction in recent years due to rate rationalisations. Notably, the GST compensation cess was reduced from ₹1.5 lakh crore in 2024-25 to ₹88,000 crore in 2025-26, before being completely removed in Budget 2026-27.

Regarding horizontal allocation—how funds are divided among States—the criteria continue to prioritise equity and population. Significant weights are assigned to demographic size and income distance to equalise public service access. This continues to benefit more populous states such as Uttar Pradesh, Bihar, and Madhya Pradesh, which command the largest shares of the distributed revenue.

Trump trade truce won’t restore bilateral ties

By Brahma Chellaney

By framing Indian energy imports as a US national-security issue, the administration has turned economic engagement into a compliance test.

For over two decades, the US has regarded India as a “natural partner” — a rising power whose geography, military capabilities, and democratic credentials made it indispensable to America’s strategy in the Indo-Pacific. Five successive US administrations, Republican and Democratic alike, invested heavily in strengthening that partnership, treating India not just as a market, but as a long-term strategic bet.

But the goodwill that the US built up with India over that period has been rapidly eroded since Donald Trump’s return to the presidency last year. Trump’s second presidency has brought repeated public insults and a bruising trade war, with the US using tariffs as tools of geopolitical coercion. The interim trade deal announced on February 2 may have halted the economic confrontation, but trust — the essential currency of any strategic partnership — is unlikely to be restored any time soon.

By reducing the effective US tariff burden on Indian goods from 50 per cent to 18 per cent, the newly announced deal will deliver short-term relief for India. But it comes with plenty of strings attached, including the requirement that India move towards near-zero tariffs on US industrial products and a wide range of agricultural goods. India’s decision to open its sensitive agricultural sector — the country’s largest employer — to a flood of imports from the US is already sparking a domestic backlash.

But that is not all. India has also agreed to purchase a whopping $500 billion worth of American goods over the next five years, and to replace discounted Russian oil with US energy at market prices, which also implies additional transport costs. Meanwhile, the US offered no binding commitments to India. This lopsided bargain looks nothing like a stable, reciprocal, rules-based trade partnership, and underscores how far US trade policy has drifted from World Trade Organization norms. It is probably best understood as a tactical de-escalation, not a strategic reconciliation.

The way the deal was announced reinforces this interpretation. Typically, bilateral agreements or joint statements are announced simultaneously in both capitals to signal equal partnership. The free-trade agreement India recently concluded with the European Union, which created a trade corridor encompassing roughly 25 per cent of global GDP and one-third of world trade, was touted by both sides as the “mother of all deals.”

The US-India agreement, by contrast, was announced first by Trump, who portrayed it on his social-media platform as a favour to Prime Minister Narendra Modi, whose “request” for an agreement Trump had granted “out of friendship and respect”. Days later, the White House released a “joint statement” outlining the terms of the agreement at 5:00 a.m. Indian Standard Time.

The Trump administration then added injury to insult, announcing a presidential executive order authorising reimposition of punitive tariffs if the US deems India to have violated its commitment to halt all direct and indirect imports of Russian oil. By framing Indian energy imports as a US national-security issue, the administration has turned economic engagement into a compliance test. The message to India is unmistakable: autonomy will be tolerated only within US-approved limits.

India’s leaders have framed the agreement as a win, noting that India now faces lower tariffs than China or Vietnam. But this is a low bar for a relationship that successive US administrations described as “defining”. And they are probably well aware that Trump could still pull the rug out from under them. The arrangement’s details have not yet been finalised, and Trump has a long history of changing his mind, scrapping deals, and layering on new demands.

Whatever happens next, India will not quickly forget Trump’s past betrayals. Nor will it overlook his slights, such as branding India, whose GDP growth outpaces that of all other major economies, as a “dead economy” last July.

In a sense, Trump might have done India a favour. By exposing the raw transactionalism at the core of his foreign policy, he has left no doubt that, under his leadership, the US is not a reliable strategic partner. As a result, India’s government is committed to diversifying the country’s economic relationships away from the US, as underscored by its FTAs with the EU and the UK — an effort that will likely continue, regardless of the new trade agreement with the US.

Markets are similarly unlikely to put too much faith in the US. News of the trade deal did trigger a stock-market rally in India, but the gains are likely to be short-lived.

Strategic partnerships are sustained not by tariffs and threats, but by predictability, mutual respect, and restraint — qualities that have been conspicuously absent from Trump’s presidency. The US should beware. Whatever short-term concessions Trump secures through bullying and coercion will be dwarfed by the long-term costs of destabilising a partnership that, as previous administrations recognised, is vital to American interests in the Indo-Pacific and beyond.

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The writer is Professor Emeritus of Strategic Studies at the New Delhi-based Center for Policy Research, Fellow at the Robert Bosch Academy in Berlin and the author of ‘Water, Peace, and War: Confronting the Global Water Crisis’ (Rowman & Littlefield, 2013).

Digital divide not the real problem in schools

By R Sundaram

Walk into any affluent home today, and you'll likely find children as young as four or five swiping through tablets, playing educational apps on smartphones, or watching videos on laptops. Now step into a government primary school in Tamil Nadu. The contrast is stark. Most children here have never touched a computer before entering the classroom, let alone owned one.

This digital divide is real and troubling. Recognising this gap, philanthropists and corporate donors have stepped in with a well-intentioned solution: donate used laptops to non-profit organisations, which then hire computer teachers — many of them graduates with degrees in Computer Applications — and place them in government schools. It’s a practical response to a pressing problem, especially since the government finds it nearly impossible to hire these teachers directly. Years of capitulating to teachers’ union demands have created a situation where regular government teachers enjoy such high salaries and benefits that appointing new staff for specialised subjects has become financially unviable.

But here’s the uncomfortable question we need to ask: in our rush to bridge the digital divide, are we inadvertently widening a more fundamental gap?

Government schools have been criticised for decades for one persistent failing: they promote rote learning instead of developing analytical skills and critical thinking in students. It’s a valid criticism that deserves serious attention. Yet the current push toward digital literacy does nothing to address this core problem. In fact, it may even reinforce it.

Consider what actually happens in a typical digital literacy class. Children learn to open files, save documents, perform basic operations in spreadsheets, and format text in word processors. These are useful skills, certainly, but let’s be honest about what they are: a series of mechanical steps to achieve predetermined outcomes. Click here, type there, save like this. There’s no questioning involved, no problem-solving required, no analytical thinking at play. It’s rote learning dressed up in modern clothes.

And here’s the twist that makes this even more problematic: these very skills that we’re so eager to teach are rapidly becoming obsolete. With AI tools like Claude and ChatGPT now capable of handling complex document formatting, data analysis, and digital tasks instantly, how relevant will these step-by-step procedures be in five or ten years?

None of this means that computer skills are unimportant or that children shouldn’t learn them. Technology is undeniably part of their future. But we’re approaching this backwards, putting the cart firmly before the horse.

Back to Basics

What government school children urgently need is something far more fundamental: a strong foundation in core subjects taught through robust pedagogy.

• Real mathematics that develops problem-solving abilities, not just memorisation of formulas.
• Science that encourages observation, experimentation, and questioning, not just reproduction of textbook answers.
• Languages that build genuine communication skills and comprehension.
• Social studies that help children understand their society and their place in it.

These subjects, when taught well, naturally cultivate the analytical thinking and questioning mindset that we claim to value. A child who learns to work through a challenging math problem, who designs and conducts a simple science experiment, who analyses why historical events unfolded as they did — that child is learning to think. And a child who knows how to think will pick up digital skills quickly and, more importantly, use them effectively.

This brings us to a proposal for those who genuinely want to improve education in government schools. If philanthropists and companies serious about their Corporate Social Responsibility programmes truly want to make a difference, they should incorporate in their schemes of assistance quality teaching of core subjects.

In addition to funding computer labs and digital literacy programmes, imagine if they partnered with NGOs that excel at identifying outstanding teachers in mathematics, science, languages, and social studies. Imagine if they seconded these excellent teachers to government primary schools where quality instruction is desperately needed. Imagine if they invested in improving how core subjects are taught rather than adding more peripheral programmes.

This approach would address the real crisis in government school education: not the lack of computers, but the quality of teaching and learning in fundamental subjects.

Once children have learned to think critically, to question, to analyse — once they’ve developed strong foundations in core subjects — the digital skills will follow naturally. They’ll not only learn them faster but use them more intelligently.

The digital divide is real, but we may be measuring the wrong gap. Government school children don’t need to master Word formatting or Excel formulas as much as they need teachers who can transform rote learning into genuine understanding. They need classrooms where questions are encouraged, where thinking is valued over memorisation, where core subjects are taught with depth and engagement.

That’s the divide that truly matters. That’s the gap we should be racing to bridge.

Integrate Life Skills

While digital literacy empowers students with technical capabilities it is equally crucial to learn to navigate life’s unpredictable nature. Unlike computers that produce consistent programmable outputs, human existence is marked by the vicissitudes of fortune — unexpected health crisis, shifting family dynamics and relationships that defy algorithmic logic. There is a risk that excessive exposure to technology’s deterministic world may foster an illusion among children that life itself follows predictable patterns with controllable outcomes.

To counter this, education must consciously integrate life skills that prepares students for ambiguity, loss and change. Teaching emotional intelligence, conflict resolution, financial literacy during hardship, and coping mechanisms for grief and disappointment becomes as essential as coding or digital communication. Students need spaces to understand that failure is not a bug to be fixed but often a natural part of growth, that human relationships require patience and forgiveness rather than inputs and outputs, and that uncertainty, while uncomfortable, can be a catalyst for creativity and personal development.

By balancing technical education with humanistic wisdom we ensure that bridging the digital divide does not inadvertently widen an emotional psychological gap, leaving young people competent in technology yet unprepared for the messy complexity of life itself.

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The writer retired as Member, Ordnance Factories, Ministry of Defence.

RBI’s proposed norm on sale of financial products may dent banks’ ‘other’ income

By Piyush Shukla & K Ram Kumar, Mumbai

Banks may turn more circumspect in selling third-party products if the draft instructions on advertising, marketing, and sale of financial products and services issued by the RBI become a reality. The fear of mis-selling under these new norms would entail not just refunding amounts taken from customers but also shelling out compensation, which could significantly dampen the enthusiasm of banks to push third-party products like insurance, mutual funds, and pensions. This shift is expected to dent their ‘other’ (fee) income.

Branch-Level Pressure and Mis-selling

A senior public sector bank official noted that targets for selling third-party products at branches increase every year. Officials often sell inappropriate products out of desperation to meet quarterly or yearly targets and avoid penalties such as lost incentives or transfers to remote locations. If the RBI's instructions are implemented in full, this pressure at the branch level could ease, though it would lead to a decline in fee income.

Rule for Caution

Karthik Srinivasan, Senior Vice-President at ICRA, observed that the RBI and other financial regulators are generally pro-consumer. He stated that if it is established that a product has been mis-sold, banks will have to repay all funds collected and compensate the customer, forcing them to be much more cautious. This increased caution is expected to reduce instances of mis-selling but will also have an impact on distribution fees.

Significance of Fee Income

Banks currently earn substantial fee income from these sales. For example, customer value enhancement income accounted for approximately 18 per cent of State Bank of India’s ₹8,404 crore fee income in Q3.

The proposal is expected to have the largest impact on bigger banks that have a large CASA (current account, savings account) base and have built the capacity to cross-sell third-party products aggressively.

Scope of Cross-selling

The banking sector has seen a surge in cross-selling activities following various regulatory changes:

• Bancassurance: Following guidelines issued last year, banks acting as corporate agents or brokers have been cross-selling general and life insurance policies, sometimes gaining commissions as high as 30 per cent.
• Mutual Funds: Banks aggressively cross-sell mutual fund schemes and three-in-one accounts that bundle savings, trading, and demat accounts into a single product.
• Credit Cards: Co-branded credit cards are also pushed aggressively, despite relatively lower commissions.

The RBI’s comprehensive draft instructions, issued on Wednesday, aim to provide consumer protection and rationalise business activities across banks that are currently prioritizing high returns from third-party service commissions. The norms specifically seek to prevent mis-selling and the compulsory bundling of financial products.

Import of US crude in 2025 may be 2nd highest on record

By Rishi Ranjan Kala, New Delhi

Amid pressure from the US on India to stop Russian crude oil imports, Washington’s exports of the geopolitically-sensitive commodity to New Delhi are already set to hit the second-highest on record in CY2025.

The Numbers

According to the latest data from the US Energy Information Administration (EIA), cumulative US crude oil exports to India stood at approximately 3,603 thousand barrels per day (kb/d) during the January-November 2025 period, averaging roughly 327.55 kb/d per month. While the export numbers for December 2025 are still pending, the current volume for the year ranks as the third-highest on record, following CY2021 (5,046 kb/d) and CY2022 (3,745 kb/d). However, refiners and analysts anticipate that once the full year is accounted for, 2025 will surpass the 2022 figures.

Strategic Significance

The rising share of US oil carries significant strategic value for New Delhi:

• Trade Balance: Higher energy imports will help narrow India’s trade deficit with the US.
• Diversification: It supports India's broader strategy of diversifying its energy supply chains to balance security, economics, and geopolitics.
• Cooperation: The increase in trade reinforces ongoing energy cooperation between the two nations.

Refining and Logistics Challenges

Despite the volume increase, there are limitations to the upside of purchasing US crude, specifically grades like WTI Midland and Eagle Ford:

• Refinery Optimization: WTI Midland is a light, naphtha-rich crude that yields fewer middle distillates, such as diesel, than the medium and heavy sour crudes that Indian refineries are traditionally optimized for.
• Replacement: US crude grades are more likely to replace volumes from West Africa, such as light sweet crudes from Nigeria (e.g., Bonny Light).
• Freight and Time: The competitiveness of US crude is curbed by higher freight costs and a significantly longer voyage time—45 to 55 days—compared with grades from the Middle East and Africa.

The elevated US presence in India’s crude basket underscores a deepening strategic energy alignment between the two countries.

‘India a cost-effective destination to build data centres’

Our Bureau, Chennai

India possesses significant power headroom to support the explosive growth of the data centre (DC) business, and the recent Budget decision to offer a tax holiday is expected to increase demand from hyperscalers, according to Raju Vegesna, Chairman and Managing Director of Sify Technologies Ltd. Speaking at ‘The Hindu Tech Summit 2026’ in Chennai, Vegesna highlighted that India is also investing in renewable energy to ensure the sustainability of the sector. He noted that while DCs require 24/7 power, technology such as battery energy storage systems is rapidly evolving to meet this need.

Economic Advantages

Vegesna provided a stark comparison of the economics of building data centres, stating that it costs 2.5 times more to build a DC in the US than in India. He attributed this to several factors:

• Input Costs: Labour, cement, and steel are significantly cheaper in India.
• Power Costs: Electricity in India is approximately 40 per cent cheaper than in the US.
• Talent: A rich talent ecosystem continues to attract hyperscalers to the country.

Regarding Sify’s own strategy, Vegesna mentioned a focus on building Edge DCs across various tier-2 cities in India, alongside large-scale data centres in metropolitan areas.

AI and the IT Industry

On the subject of Artificial Intelligence, Vegesna observed that India cannot compete in the "high capex game" played by American Big Tech companies. Instead, he described AI as the greatest opportunity for India’s IT industry since Y2K to offer specialized AI services, emphasizing that "how fast we move matters".

Focus on Education and R&D

The summit, themed “Continuity Unbroken: Building the Architecture of Resilience in a Connected World,” also featured insights on human capital. G. Viswanathan, Founder and Chancellor of the Vellore Institute of Technology (VIT), called for increased investment and enrolment in higher education to address inequality.

He pointed out that reduced government spending has placed the burden of education primarily on learners and argued that India must manifoldly increase its research and development (R&D) spending from the current 0.7 per cent to compete with developed nations. Additionally, Sekar Viswanathan, Vice-President of VIT, noted that the institution is actively working to integrate AI into the education sector, specifically for personalised learning.

The inaugural session was attended by prominent figures including N. Ram, Director of The Hindu Group; Suresh Nambath, Editor of The Hindu; and LV Navaneeth, CEO of The Hindu Group.

Labour law dent at top 25: ₹12,000 cr

Of India’s top 30 companies, 25 reported impact.

By Dipali Banka & Devina Sengupta, Mumbai

When Tata Consultancy Services Ltd (TCS) disclosed a ₹2,100 crore-plus profit hit from new labor codes last month, it was only the beginning. A Mint analysis shows that 25 of India’s top 30 companies that have reported the impact of the amended labor regime suffered a nearly ₹12,000-crore blow to their December quarter profits. These new rules mandate higher social security contributions from both employers and employees and increase retirement benefits.

The Wage Definition Shift

While these provisions accounted for roughly 7.70% of the aggregate Q3 profit for these 25 companies, the impact is not expected to be a one-time event. Consulting firms warn that wage bills are set to increase even as corporate margins remain under pressure from global uncertainties. Under the new codes, wages must account for at least 50% of total remuneration.

In high-paying sectors like IT and IT-enabled services, basic salary components often account for less than half of total remuneration, making these industries more susceptible to the changes compared to sectors with a higher proportion of blue-collar workers. Consequently, employees may even see a slight reduction in take-home pay if the overall cost-to-company remains unchanged.

Sectoral and Company Impact

The burden was heavily concentrated in specific sectors:

• Information Technology: Four IT majors—TCS, Infosys, HCL Technologies, and Tech Mahindra—accounted for approximately 39% of the total hit.
• BFSI: Banking, financial services, and insurance firms contributed 19% to the overall impact.
• PSUs: Notably, three of the four public sector undertakings in the index saw no impact from the new laws.

Top 10 Sensex Companies by Net Profit Impact (₹ Crore):

1. TCS: 2,128
2. Infosys: 1,344
3. L&T: 1,289
4. HDFC Bank: 1,037
5. InterGlobe Aviation: 969
6. HCL Technologies: 956
7. Maruti Suzuki India: 594
8. Sun Pharma: 507
9. Axis Bank: 460
10. Bajaj Finserv: 379

Outlook for Employees

The immediate "collateral damage" of this fiscal dent could be lower salary hikes in the upcoming appraisal season. Recruitment consultants expect these increased payouts to shrink increments in the short term, with India Inc. planning modest raises of 8.5-9.5% as they factor in the labor code impact alongside stagnant inflation. While companies like TCS expect the ongoing impact to be minimal (around 10 to 15 basis points), the recurring increase in gratuity will continue to play out in wage bills in the coming quarters.

Venezuela's reopening could mean an oil windfall for India

Caracas may dispatch to India and the US 400,000 barrels per day that it now sends to Beijing.

By Rituraj Baruah & Dhirendra Kumar, New Delhi

New Delhi is positioning for an oil windfall from Venezuela, as the South American nation prepares to re-route hundreds of thousands of crude oil barrels currently shipped to China. As American sanctions on Venezuela end, Caracas may dispatch to India and the US 400,000 barrels per day (bpd) that it now sends to Beijing, according to people aware of the matter.

Strategic Re-routing New Delhi, the world’s third-largest oil buyer, used to purchase 400,000 bpd from Venezuela until the US imposed sanctions in 2020. "China was importing about 400,000 bpd of crude from Venezuela earlier. Part of this may be diverted to India now, and the US would obviously be among the key buyers," one source stated on the condition of anonymity.

This development occurs as India has reiterated its commitment to maintain diverse sources of crude oil. While Indian public sector refiners primarily handle light crude, Reliance’s Jamnagar refinery and Indian Oil Corp.’s Panipat refinery are complex units capable of refining the coarse, heavy crude pumped by Venezuela. Reliance has reportedly already booked cargoes from the South American nation.

Significance for India's Energy Basket The development is significant because India imports nearly 90% of its oil requirements and sourced oil worth $161 billion last fiscal year. India's petroleum product consumption is projected to reach a record 252.9 million metric tonnes in FY26, a 4.65% increase. India is also the world’s fourth-largest refiner, with a capacity of 258.1 million tonnes per annum (mtpa) expected to reach 309.5 mtpa by 2030.

The US-India Trade Link The US has withdrawn a 25% punitive tariff on India, on the condition that India stop buying Russian oil. While the Indian government has not announced a formal plan to halt Russian oil purchases, supplies are expected to fall. A US embassy spokesperson noted that President Trump signed an executive order removing the tariff in recognition of India's commitment to stop purchasing Russian oil.

Expert Analysis Gaurav Moda, leader for energy at EY-Parthenon India, noted that the complexity of Indian refineries, combined with India's rapid growth and energy requirements, makes the diversification of the energy feedstock portfolio essential.

Kirit Parikh, former member of the Planning Commission, added that India should be able to secure better pricing for Venezuelan crude now that China is not buying, although Venezuelan crude leads to higher refinery costs due to its dense and viscous character.

However, the shift comes with a cost, as Russian suppliers offer discounts of $8-12 per barrel. An SBICAPS report raised concerns over the impact of the India-US trade deal on the overall cost of India's energy basket, noting that a shift in trade routes is already underway.

Eight Roads steps up India focus, to target 5-6 startups

Cheque sizes will range from $5-40 million, Eight Roads president Alex Emery said.

By Sneha Shah & Priyamvada C, Mumbai

The Fidelity International-backed Eight Roads Ventures, which has invested in startups such as Icertis, Fibe and Shadowfax, expects to accelerate its funding in India this year, according to top executives at the firm.

“We see this year as a good time to be accelerating our investments in the country. I’m anticipating five to six deals we’d like to back in India, and we’re seeing the deal flow in the market. So, we are keen to deploy more,” Alex Emery, president at the firm, told Mint in an interview. He noted that businesses in the country will continue to grow rapidly in line with the Indian economy.

India Overtaking China

Emery emphasized that India is currently the single biggest opportunity within Asia for the firm. “Historically, China has been pretty big. But we’re seeing India really overtake China in terms of opportunity set, at least for the kinds of investments that we’re doing and backing,” he stated.

Since it began investing in India in 2007, the firm has committed approximately $1.6 billion and backed 80 businesses. Of these:

• 38 investments have been exited either fully or partially.
• 11 companies have reached a value of over $500 million, with some exceeding $1 billion.
• 5 portfolio companies have pursued public market listings, including two on the Nasdaq.

Investment Strategy and Sectors

Eight Roads typically targets early growth and growth-stage businesses across technology and healthcare.

• Technology: The firm has backed sub-segments including fintech, enterprise, and consumer. It is now increasingly focused on artificial intelligence-driven themes, such as agentic solutions.
• Healthcare: Investments include life sciences, digital health, medtech, and healthcare services. Prem Pavoor, managing partner and head of India Ventures, noted that healthcare has risen to become the largest sector for private investments in India over the last few years. He highlighted that pharma and medtech are moving up the innovation curve, with many novel formats emerging.

The firm’s cheque sizes typically range from $5-10 million on the lower end to $25-30 million, reaching $40 million in specific situations.

Newspaper Summary 120226

 

India’s first LLM takes shape as Sarvam expands AI stack

Sanjana B | Bengaluru

India’s effort to build a sovereign Large Language Model (LLM) has moved from promise to platform as Bengaluru-based Sarvam AI unveiled the country’s most ambitious push yet to create an indigenous AI stack. Ahead of the India AI Impact Summit 2026, the company expanded its stack across translation, speech, and vision capabilities.

Multilingual Translation and Speech

Sarvam-Translate now supports 22 Indian languages, including Bengali, Marathi, Telugu, Maithili, Santali, Kashmiri, Nepali, Sindhi, Dogri, and Sanskrit. It offers paragraph-level translation and, according to company evaluations, performs significantly better than larger models.

In the speech domain, Sarvam launched Bulbul v3, a code-mixed multilingual text-to-speech model designed for natural, production-ready voices in 11 Indian languages. Complementing this is Saaras v3, a speech-to-text model that auto-detects spoken language and provides transcription across all 22 supported Indian languages, handling code-mixed audio for both real-time and batch processing.

Vision and Sovereign Variants

The company also recently launched Sarvam Vision, a 3-billion-parameter vision-language model built for image captioning, scene text recognition, and complex table parsing.

Under its sovereign LLM proposal, Sarvam is developing three specific variants:

• Sarvam-Large: For advanced reasoning and generation.
• Sarvam-Small: For real-time interactive applications.
• Sarvam-Edge: For compact, on-device tasks.

Government Backing and Training Strategy

Founded by Vivek Raghavan and Pratyush Kumar in August 2023, Sarvam introduced its first 2-billion-parameter model in 2024. In April 2025, the government selected Sarvam AI under the IndiaAI Mission to build the nation’s first sovereign LLM, providing dedicated compute resources to create a foundational model from scratch for population-scale deployment.

Industry experts, such as Jaspreet Bindra, CEO of AI&Beyond, note that Sarvam is building with an "India-first lens". Its training strategy is curated toward Indian languages, governance documents, and local enterprise needs, prioritizing contextual depth and linguistic nuance over pure model scale.

Three-hour content takedown mandate termed regulatory over-reach, but many back the action

S Ronendra Singh | New Delhi

The Centre’s decision to slash the takedown timeline for unlawful AI-generated content to three hours has sparked a sharp debate among legal and digital policy experts. While some term the mandate a regulatory overreach that risks undermining constitutional protections, others support the swift action against violative material.

Significant Tightening of Rules

The amendments were notified under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2026. They require online intermediaries to remove unlawful synthetic content within just three hours of being notified, representing a drastic tightening from the previous 36-hour window.

The Internet Freedom Foundation (IFF) described the new rules as a “regression” from earlier drafts. While acknowledging that AI requires regulation, the IFF argued that this approach expands censorship powers in a manner inconsistent with constitutional safeguards.

Experts Divided on Impact

Several experts have raised concerns regarding the "take down first, ask later" framework:

• Mishi Choudhary (Software Freedom Law Center India): Warned that shortened timelines could trigger excessive content removal, especially since multiple authorities are empowered to order takedowns.
• Vikram Jeet Singh (BTG Advaya): Flagged practical challenges, noting that a three-hour deadline may be insufficient for platforms to seek clarification if orders are vaguely worded.
• Risk of Over-deletion: The provision allowing "one or more authorised officers" to issue directions could lead to contradictory orders, causing platforms to err on the side of caution and delete content broadly.

Defense of the Policy

Conversely, some experts defended the move as a necessary protection against harmful content. NS Nappinai, Supreme Court advocate and Founder of Cyber Saathi, stated that expedited takedowns are reasonable and warranted for violative material such as child sexual abuse material or sexually explicit synthetic content. She argued that such measures should not be considered a restraint on free speech, provided they are utilized according to the letter and spirit of the law.

Direct tax kitty rises 9% to ₹19.44 lakh cr in April-Feb

Our Bureau | New Delhi

With good growth in corporate earnings, net direct tax collection rose over 9 per cent during the April 1 to February 10 period, according to data released by the Central Board of Direct Taxes (CBDT) on Wednesday. Net collections reached ₹19.44 lakh crore, compared to ₹17.77 lakh crore during the same period last fiscal, representing a growth of 9.4 per cent.

Challenging Targets

Despite the growth, achieving the Revised Estimates (RE) for the current fiscal appears to be very challenging based on this trend. The RE has already been lowered from the initial Budget Estimate by approximately ₹1 lakh crore to ₹24.21 lakh crore. To meet this revised target, the tax department must collect around ₹4.77 lakh crore in the remaining weeks of the fiscal year.

Sectoral Breakdown

• Corporate Tax: Grew by more than 14.5 per cent.
• Non-Corporate Tax: Increased by approximately 6 per cent.
• Securities Transaction Tax: Collections remained nearly flat at around ₹50,000 crore.
• Refunds: These continued to show a de-growth.

Expert Insight

Rohinton Sidhwa, Partner at Deloitte India, observed that both corporate and non-corporate taxes are showing flat growth compared to the previous year. He pointed out that while the RE for corporate tax was increased marginally, the estimate for non-corporate taxes fell by 8 per cent.

Legacy created over last six years will be carried forward by successor: Yes Bank CEO

Piyush Shukla | Mumbai

The six years of legacy created after the reconstruction of Yes Bank in 2020 will be carried forward by Vinay Tonse, who is set to take over as the private lender’s MD and CEO in April. The bank’s current chief, Prashant Kumar, shares how the bank was brought back from the brink in 2020, his guidance for his successor, and the retail segment’s profitability.

Interview Excerpts:

What are your plans after the tenure ends as Yes Bank’s chief in April? Change is the only constant. I never plan for the future. If anything comes at a later point, we will see it then. I have completed 42 years as a banker with SBI and Yes Bank. I would live a happy retired life.

What would be your guidance to your successor? I feel very happy that I am passing on the baton to a very competent person who has vast experience at SBI. It gives me a lot of comfort that the legacy, created over the last six years, will be carried forward.

No one should give strategic business guidance to anyone; every leader needs the freedom to chart the bank’s future trajectory. From a risk-taking perspective, the banking sector has shown that organizations that have patience and don't take aggressive bets move in a positive direction. You are dealing with public money and must not take undue, aggressive risks.

You led Yes Bank after the RBI notified the bank’s reconstruction scheme in 2020. How have things changed since then when depositors were panicking and withdrawing funds en masse? When I joined, we declared a loss of over ₹18,000 crore for the December 2019 quarter—the highest for any bank. In the December 2025 quarter, exactly six years later, the bank showed a profit of almost ₹1,000 crore, which is very near to 1 per cent RoA.

Other key improvements include:

• Deposits: Grown from around ₹1 lakh crore to a base of ₹3 lakh crore.
• Gross NPA Ratio: Reduced from 18 per cent to 1.5 per cent.
• Capital Adequacy Ratio: Increased from less than 1 per cent to around 13 per cent.
• Independence: We revived the bank as an independent entity without merging it with another lender.

Retail segment profitability has been a pain point though... When we started after reconstruction, the retail segment contributed very little to overall profitability. We had to make substantial investments—branches, hiring, and tech—to build the retail book before returns could follow.

In FY24, the entire industry suffered an adverse credit cycle with higher slippages in unsecured loans. This came early in our investment phase, which is the only reason retail wasn't showing profits. Today, excluding credit costs, the retail book has broken even and has always been profitable from an operating standpoint.

What the PFC-REC merger means for investors

Nishanth Gopalakrishnan

The merger of power finance PSUs, PFC and REC, could create a power financing behemoth with a combined loan book of ₹11.5 lakh crore. Following a restructuring proposal by the Finance Minister in the Budget speech, the boards of both companies granted in-principle approval for the merger on February 6, which will eventually lead to the liquidation of REC.

Rationale and Synergies

The Centre is pursuing this merger because both Maharatna PSUs are identical in most respects. Each manages a loan book of approximately ₹6 lakh crore, with about 40 per cent of those loans directed to the distribution segment. Both entities have also expanded into non-power infrastructure financing, such as ports and roads.

Their operating and borrowing models are also nearly identical, raising funds through domestic bonds, bank loans, and external commercial borrowings to lend to the power ecosystem. By combining, the entities are expected to command higher bargaining power.

Impact on Business Operations

The combined entity’s portfolio would be broken down as follows:

• Distribution: 40%
• Conventional Generation: 29%
• Renewables: 14%
• Transmission: 8%
• Infrastructure & Logistics: 6%
• Miscellaneous: 3%

Approximately 80 per cent of the portfolio would consist of loans to state-owned entities. Based on Q3 FY26 financials, the combined entity would have a gross non-performing asset (GNPA) ratio of 1.3 per cent and a trailing 12-month Return on Assets (RoA) of about 3 per cent.

Implications for Shareholders

Currently, the government holds a controlling 56 per cent stake in PFC, which in turn holds a controlling stake in REC. Post-merger, PFC must remain a government company with at least a 51 per cent stake.

However, based on a swap ratio of 6 shares of PFC for every 7 shares of REC (calculated from February 10 prices), the government’s stake in the merged PFC would drop to approximately 42 per cent. To maintain its 51 per cent stake, the government has two primary options:

1. Buyback: Directing PFC to conduct a buyback in which the government does not participate.
2. Capital Infusion: Infusing at least ₹32,000 crore into PFC post-transaction.

Without capital infusion, PFC's outstanding shares would rise by about 33 per cent; with infusion, they would rise by approximately 56 per cent.

Valuation and Stock Attractiveness

As of February 10, both PFC and REC stocks trade at relatively low price-to-book value multiples of 1.1x. While investors must consider the high concentration of loans to state discoms and lower loan growth in 9M FY26, the stocks remain attractive given their profitability.

PFC and REC delivered RoAs of 3 per cent and 2.8 per cent respectively for the 12-month period ending September 2026, with net NPAs contained at approximately 0.2 per cent. For comparison, SBI trades at 1.8x trailing book value for a lower RoA of 1.1 per cent.

How to move up the value chain

By Vishnu Venugopalan

In the seminal essay, I, Pencil, an ordinary pencil is used to reveal an extraordinary fact that no single person on earth knows how to make a pencil entirely on their own. From wood and graphite to machines and transport, its creation relies on the skills and decisions of countless people spread across countries.

Shifting Growth Strategies

Over the modern industrial era, ideas about how emerging economies should grow have shifted. Import-substituting industrialisation dominated the post-war decades in countries like Brazil, India, and Mexico before hitting constraints in scale and efficiency. From the late twentieth century, a new consensus emerged focused on attracting foreign investment and integrating into global value chains (GVCs) to drive scale and productivity.

As economist Richard Baldwin argues, globalisation has unfolded in waves of unbundling: first separating production from consumption, then unbundling stages of production across borders, and currently unbundling tasks rather than industries.

India's Role in Global Networks

The distinction that now matters is not just participation in supply chains, but which specific tasks a country performs. For example, Apple’s supply chain included no Indian facilities in 2013, but by 2023, it included more than 10 facilities with over 20 more in the pipeline. While India has entered this network, most of the value still lies beyond mere assembly, highlighting the need for upgrading.

The Economic Survey of India 2025-26 suggests that the way forward is strategic indispensability—occupying positions in global production networks that are difficult to bypass or substitute.

Five Pillars for Moving Up the Value Chain

1. Task-Focused Industrial Policy: Policy must adjust to a world where production is fragmented into specific tasks. Support and incentives should be conditional on firms internalising more complex tasks over time, not just expanding output.
2. Deepening Backward GVC Participation: India's limited share in manufacturing stems from weak backward linkages, particularly in importing intermediates for export-oriented production. Integration, not insulation, is the pathway to upgrading.
3. Cluster-Led Scale: Industrial clusters require deliberate regional planning that integrates social infrastructure like housing, transport, healthcare, and education. Success depends on concentration, connectivity, and dense ecosystems rather than standalone estates.
4. AI-Services-Manufacturing Convergence: Modern manufacturing is inseparable from services like design, logistics, and software. Services must be treated as a core pillar of industrial strategy. For instance, nearly 41 per cent of India’s logistics cost is driven by activities highly susceptible to AI adoption and automation.
5. Economic Statecraft with Institutional Capacity: Industrial policy must be a continuous problem-solving function anchored in adaptive state capacity. Reducing the cost of capital depends as much on productivity, exports, and R&D investment as it does on finance.

Moving up the value chain is neither automatic nor assured. For India, the real test is whether it can build capabilities to move from mere participation toward indispensability in global supply chains.

Kerala farm varsity launches rejuvenated varieties of Cochin ginger, Alleppey finger turmeric

Our Bureau | Kochi

The Kerala Agricultural University (KAU) has launched selected varieties of Cochin ginger and Alleppey finger turmeric, two iconic spices that have been traded from the state for centuries. These trade names were formally documented as early as the 19th century with clearly defined quality parameters that distinguished them in global markets. However, the availability of these traditional varieties has declined sharply in recent years, hurting their niche export segments.

Reasons for Decline

The fall in production is attributed to a shift towards high-yielding varieties favored in the domestic market for size and productivity. Additionally, indiscriminate cultivation and varietal mixing further eroded the distinct quality traits of the traditional strains.

Boosting Exports

A seminar was held under the MIDH project, “Rejuvenation of Cochin Ginger and Alleppey Finger Turmeric for export promotion,” implemented by the Department of Plantation, Spices, Medicinal and Aromatic Crops at the College of Agriculture, Vellanikkara (2022-26). Sunil Appukuttan Nair, Principal Investigator, stated that reviving these varieties could provide a significant export boost to markets in the Middle East, Europe, and the US. The initiative will identify potential Farmer Producer Organisations (FPOs) and spice exporters for large-scale cultivation and distribute token seed kits.

Industry Demand

Ramkumar Menon, Chairman of the World Spice Organisation (WSO), noted that annual industry demand is estimated at about 20,000 tonnes of dry Cochin ginger (around one lakh tonnes of fresh ginger) and nearly 50,000 tonnes of high-curcumin turmeric comparable to the Alleppey variety. Demand is rising, driven by growing interest from the nutraceutical and pharmaceutical sectors for immunity-boosting properties, but supplies meeting quality specifications remain limited.

The All India Spices Exporters Forum and WSO flagged the issue to the Agriculture Ministry and the Spices Board, prompting this targeted project to identify, purify, and multiply authentic planting material for commercial use. The initiative is expected to enable better price realization while ensuring compliance with international quality standards.

BUDGET SPEND CHECK: MORE UNDERSHOOTING

By Nandita Venkatesan

On the first day of February, the nation tunes in for the Union budget, parsing how the finance minister allocates limited resources to meet huge public expectations. However, a Mint analysis comparing budgeted outlays with actual expenditure between FY10 and FY26 (excluding the pandemic years) shows that results are mostly underwhelming. Several ministries and flagship schemes have faced sharp spending compression toward the end of fiscal years as the government walks a narrow fiscal tightrope.

Scheme Stagnation

The Modi government has opted to support growth by backing infrastructure-heavy schemes and making welfare programs more "targeted" through public delivery and cash transfers. Despite this focus, an analysis of 11 flagship schemes reveals that six have used sub-90% of their funds on average over the last four fiscal years.

Average spending as a percentage of budget outlay (FY23-FY26) for key schemes include:

• Mission Shakti: 61%.
• Jal Jeevan Mission: 62%.
• Swachh Bharat: 63%.
• UDAN: 60.9%.
• PM Kisan: 76.7%.
• Pradhan Mantri Awas Yojana: 78%.

A shortfall in spending can indicate multiple issues, such as scheme saturation, poor demand, or over-optimistic budgeting.

Performance of Social Sector Ministries

The performance of social sector ministries offers clues to the government’s welfare priorities. While rural development (driven by the rural jobs scheme) and culture performed best—spending 107.4% and 103.4% of their budgets respectively—others have lagged. The skilling ministry saw the lowest fund utilization in this category, averaging just 59.1% during FY23-FY26. Core pillars like health and education fared better, using over 90% of their funds, though spending remains below desired levels.

Divided Dividend: Widening Spending Cuts

Ministry spending cuts have grown more severe and widespread in recent years. Between FY23 and FY25, 12-13% of ministries spent less than 50% of their funds, compared with only 2-3% in the decade preceding the pandemic. By FY25, nearly half of the 53 ministries listed by the government used less than 80% of their budgeted amount. The government showed much stronger utilization ratios prior to the pandemic, when only 10-16% of ministries undershot allocations by over 20%.

The Usual Suspects

While spending cuts vary each year, certain "usual suspects" consistently miss their targets, spending less than 60% of their outlay in at least two of the last four fiscal years. These include:

• Minority Affairs and Tourism: Consistently undershooting targets due to systemic bottlenecks in fund absorption or execution constraints.
• Labour and Employment and MSMEs: Frequently missing spending targets by wide margins.
• Jal Shakti and Skill Development: Showing erratic fund utilization despite being key to infrastructure and human capital.

Fiscal Squeeze

The government has received praise for rapid fiscal consolidation, reducing the deficit from a pandemic high of 9.16% of GDP in FY21 to a projected 4.31% by FY27. However, data shows that a major chunk of this consolidation occurred through spending cuts rather than a rise in revenue. While fiscal discipline earned praise through FY26, cuts in income tax and GST rates further dried revenue in FY27, leading to a sharp spending cut of 30 basis points as a percentage of GDP. This execution gap suggests that while development priorities are ambitious, implementation struggles to keep pace.

Fundamentum to sharpen fintech bets with third fund

The VC’s move is driven by India’s digital public infrastructure and financial inclusion gaps

Rwit Ghosh | Bengaluru

Fundamentum, the venture capital firm co-founded by Nandan Nilekani, is preparing to sharpen its fintech focus in its upcoming third fund. The firm is banking on India’s robust digital public infrastructure and a widening financial inclusion gap to drive the next wave of growth.

A Wide-Open Market

Mayank Kachhwaha, who leads fintech investments at Fundamentum, believes the market remains completely open from a financial inclusion standpoint. The firm recently led a $23 million Series C round in Olyv, a personal loan provider. This marked its fourth fintech investment, bringing the sector to nearly half of the 11 total investments made through its $227-million second fund.

Other recent participations by Nilekani’s fund include:

• Flexiloans: $44 million Series C (June 2025).
• Stable Money: Led a $20 million Series B (June 2025).
• TransBnk: $25 million Series B (August 2025).

Investment Strategy

Fundamentum is selective, evaluating 5 to 10 startups weekly. Kachhwaha noted that the firm often builds relationships with companies for years before investing. Typically, the firm enters post-product-market fit as companies transition into building institutions, writing first cheques of $10–15 million.

While no specific target for the number of fintech companies in the third fund has been set, the core thesis remains "India-first", focusing on tech-first companies building primarily for the domestic market.

Four Key Segments

The firm is broadly looking to back companies across four segments:

1. MSME Credit: A massive opportunity, with an addressable credit gap of approximately ₹30 trillion ($300 billion).
2. Consumer Credit: Tapping into the growing demand for individual loans.
3. Wealthtech: Managing the increasing savings and investment needs of Indians.
4. Banking Infrastructure: Supporting the underlying tech that powers financial services.

The push into MSME credit is particularly timely. Registrations in this sector surged from 2.5 crore in March 2024 to over 6.2 crore in March 2025. Furthermore, digital lending for MSMEs is seen as a large emerging opportunity, given that 90 per cent of surveyed businesses in the sector now accept digital payments.

How Waaree overcame US tariffs while Adani faltered

Sourcing of cells from South East Asia, manufacturing capacity in US help sustain sales

Nehal Chaliawala | Mumbai

Smart supply-chain manoeuvres and assembling in the US helped India’s top solar panel exporter Waaree Energies maintain its lucrative trade with the country in the face of steep tariffs, even as the exports of its main domestic rival Adani New Industries Ltd (ANIL) faltered.

Strategic Sourcing and Assembly

Waaree escaped crippling tariffs on India by sourcing solar cells—the building blocks of solar panels—from suppliers in Southeast Asia. The US levies tariffs based on the country of origin of the solar cells rather than where the panels are assembled. By procuring cells from countries like Cambodia, Thailand, and Vietnam (where tariffs are 19-20%) instead of India, Waaree minimized its tax burden.

In addition, Waaree operates a panel manufacturing line in the US with a 1.6 GW capacity. During the December quarter, the company sold 275 MW of locally produced modules and 300 MW of imported modules in the US. These exports are highly profitable; while modules sell for ₹18-24 per watt in India, they fetch approximately ₹25-27 (28-30 cents) per watt in the US.

The Contrast with Adani

While Waaree’s trade flourished, ANIL’s exports dropped to zero in the December quarter. This divergence is largely due to different manufacturing models:

• ANIL relies on a backward-integrated model, using cells made in-house at its facilities in Mundra, Gujarat. While this offers a cost edge, it provides less flexibility to sidestep origin-based tariffs.
• Waaree has 21.2 GW of module capacity but only 5.4 GW of cell capacity, compelling it to import cells. The company turned this "shortcoming" into a strategic advantage to mitigate US tariffs.

Outlook

Industry experts note that Waaree benefited significantly from its US assembly plant and Southeast Asian cell sourcing. While Adani’s pause in exports is considered temporary, analysts at ICRA noted that US tariffs and increased competition affected ANIL’s revenue and profitability in H1 FY2026. However, with the India-US trade framework expected to lower tariffs to 18%, business is likely to normalize for both companies soon.

Faster takedowns: Big Tech wary of India’s new AI law

Shouvik Das | New Delhi

India’s maiden rules governing the use of artificial intelligence (AI) in social media may set Big Tech scrambling for adequate content moderation teams, after New Delhi crunched timelines for taking down deepfake posts with nudity, defamatory, and other illicit content.

Drastic Timeline Compression

Under the new mandate, non-consensual sexual imagery—including deepfakes—must be removed within two hours instead of the previous 24-hour window. Any other unlawful content is to be removed within three hours, representing a sharp reduction from the earlier 36-hour requirement.

While the Centre maintains that technology firms are well-equipped to automate scanning and curb harmful online material, lawyers and policy executives warn that such sweeping automation could lead to the removal of legitimate posts, disrupting content creators and advertisers.

Compliance Challenges

Rohit Kumar, co-founder of The Quantum Hub, noted that while removing the watermark requirement for AI content was progressive, the new timelines will be significantly difficult to match. He emphasized that while most monitoring is automated, taking down specific content based on reports inevitably requires human oversight, adding massive costs for large tech firms and presenting a nearly impossible task for smaller ones.

A senior executive at a top Big Tech firm characterized the policy as "taking one step forward, but two steps backward," noting that even progressive economies like Japan and Singapore backed down from hard-touch AI regulation because it is a nascent, evolving field.

Global Comparison

India’s new timelines are notably stricter than those in other major jurisdictions:

• United States: The Take It Down Act mandates removal of non-consensual sexual imagery within 48 hours.
• European Union: The AI Act urges proactive removal but does not specify a clock countdown.
• China: Laws mandate "high pressure" for removal but lack specific timelines.

Impact on Smaller Platforms

The financial and operational burden of these rules has raised concerns about market sustainability. Rutuja Pol, a partner at law firm Ikigai, pointed out that the 10-day window given to firms to comply with the rules is itself difficult. For smaller social media platforms, the cost of compliance may become so high that it becomes infeasible to continue operating in India.

How fake invoices duped BlackRock unit into a $400 million loan

By Jack Pitcher & Juliet Chung

BlackRock entered the booming private-lending business last July by acquiring HPS Investment Partners, a firm founded by Goldman Sachs alumni. Days after the deal closed, an analyst discovered a massive problem with a $400 million credit agreement led by HPS for telecom entrepreneur Bankim Brahmbhatt. The loan used accounts receivable—invoices acquired from other businesses—as collateral, but HPS soon alleged that the emails, invoices, and collateral were worthless and fake.

The Unraveling of a "Breathtaking" Fraud

The discrepancy was first spotted when an analyst noticed that an email domain on an invoice did not match the actual website of the company purportedly sending it. HPS contacted the firms in question, such as the Belgian telecom BICS, which confirmed the fraud, noting they had nothing to do with the "belgacomics.com" domain used in the emails. Further review of contracts revealed what appeared to be forged customer signatures.

When HPS portfolio manager Jon Ashley sought answers, Brahmbhatt—who had been in India since June—eventually stopped answering his phone. Lenders found his corporate offices in Garden City, N.Y., locked and empty in early August.

Missed Red Flags and Due Diligence

Brahmbhatt’s companies, which focused on wholesale VoIP termination, had a history that diligence experts say should have signaled alarm. He had been previously sued by three telecom companies for refusing to pay for services, and regulators in Massachusetts and California had taken action against his firms for failing to file necessary paperwork. One of his companies, Broadband Telecom, had its utility status suspended in Pennsylvania in 2017 for an "unacceptable history of compliance".

Despite this, HPS provided a large credit facility to Brahmbhatt at the end of 2020, relying on its own comprehensive due diligence and third-party experts, including Deloitte. HPS also hired the accounting firm CBIZ to perform annual audits of the collateral.

Impact and the Private Credit "Frenzy"

In August, Brahmbhatt, his telecom firms, and his factoring company Carriox all filed for bankruptcy. Brahmbhatt cited "financial distress" from lawsuits, though he noted he had recently repaid a $4 million debt to a relative. The FBI is now investigating the matter.

While the loss is a small portion of HPS’s $179 billion in assets, it has significantly impacted the two main funds that held the loan, with expected returns dropping from roughly 11–12% down to 8–9%. HPS has written the entire investment down to zero.

Industry experts suggest this wipeout highlights the risks of the $3 trillion private-credit industry, where intense competition for deals can lead to lower standards. JPMorgan Chase CEO Jamie Dimon warned that more defaults may emerge, stating, “When you see one cockroach, there are probably more”.

Getting a job is harder than toppling a government for Bangladesh’s Gen Z

Shan Li | Rangpur, Bangladesh

In July 2024, 25-year-old Faruk Ahmed Shipon joined daily street demonstrations fueled by frustration over job prospects. To his amazement, these protests evolved into a revolution that toppled the country’s long-term authoritarian leader, Sheikh Hasina. However, as Bangladesh prepares for its first national elections since that uprising, Shipon and many of his peers are losing hope that new leadership can solve the economic crisis plaguing their generation.

A Bleak Job Market

Despite the political shift, young graduates are entering the toughest labor market in years. While the interim government led by Nobel laureate Muhammad Yunus promised democratic and economic reform, critics argue it has delivered few tangible results. Total employment in the country fell by nearly two million in 2024 compared to the previous year.

The economic situation was deteriorating even before the regime change, with foreign direct investment falling for four consecutive years and domestic investment remaining stagnant for a decade. The garment sector, a cornerstone of the economy, has shed jobs, with employment dropping from 4.1 million in 2019 to 3.7 million last year. Automation is a major factor; some factory owners have cut their workforces by a third after installing machines to handle tasks like thread trimming.

The Graduate Mismatch

Bangladesh faces a growing mismatch in its labor market where higher education often correlates with higher unemployment.

• Graduate Unemployment: The rate for college graduates rose to nearly 14% in 2024, up from 5% in 2010.
• No Formal Education: Conversely, those with no formal education had a jobless rate of just 1.3%.

Business leaders note that while at least 700,000 graduates enter the force annually, many lack practical skills. Manufacturers argue the country produces too many history students and not enough workers with vocational training in trades like plumbing or carpentry.

Personal Toll and Emigration

For Shipon, who holds a master’s degree in English, the reality is a struggle to survive on approximately $290 a month earned through private tutoring. Half of his income goes toward caring for his mother, including rent for a two-room tin shed and medicine.

The revolution was galvanized by the death of his classmate, Abu Sayed, who was shot by police during the protests. Now, Siphon and Sayed’s family fear those sacrifices were in vain. Many of Sayed's peers remain without stable work, as the few available government positions—highly prized for their perks and prestige—are nearly impossible to secure.

Disappointed by the lack of change, Shipon’s new dream is to emigrate permanently to Sweden or Switzerland. “When I look back at what we did, I feel disappointed,” he said. “Only Sheikh Hasina has left. Everything else is the same”.

HOUSING, RETIREMENT FINANCE ARE LETTING FAMILIES DOWN

By Tarun Ramadorai

India’s personal finance markets have made major strides, with mass bank account ownership, world-class digital payments, and rising participation in formal finance. Yet two linked failures persist: a weak home loan market and a fragile retirement savings system. Household balance sheets show wealth overly concentrated in real estate, heavy reliance on unsecured debt, and thin retirement savings, forcing dependence on family in old age.

Property-Heavy Portfolios

Indian households hold an unusually high share of wealth in real estate—far more than in comparable economies—yet home loan participation remains low. This excess home equity crowds out other long-term investments, including retirement savings, tightly linking the two problems.

Why Mortgages Fail

The causes are both structural and practical.

• Structural issues: Long-term, high-value lending is weakened by slow legal enforcement, unclear land titles, and uncertain property rights.
• Practical barriers: Home loans are burdened by "punishing frictions," including onerous documentation, endless wet signatures, hard-sold insurance, opaque pricing, and costly refinancing.

The result is that many households shun mortgages or take ill-suited loans, locking wealth into a single risky asset while remaining poorly prepared for retirement.

An Ageing Reality

India is ageing, and joint families are giving way to nuclear households. While life expectancy is rising, pension wealth remains negligible. Formal account participation is low, and balances fall short of sustaining working-life living standards. Many still rely on children or property for security—an increasingly fragile bet in a mobile, urban economy where younger generations face growing pressures.

Proposed Solutions

1. Fixing Mortgages: The aim should be standardized, "boring" mortgages—simple fixed-rate or transparently benchmarked floating-rate loans that automatically refinance when rates fall. Disbursement should be fast and frictionless using digital infrastructure, and a regulator-mandated "default" mortgage should be offered by all lenders for easy comparison.
2. Fixing Retirement: The goal is a single, portable pension account that follows workers across jobs, with automatic enrollment and sensible life-cycle investment defaults. This requires lower costs, stripped-down complexity, and active choice only where it adds value.
3. Confronting Conflicts of Interest: Advice and distribution should be separated, commissions plainly disclosed, and mis-selling punished visibly.

India has built world-class financial infrastructure; the harder task is now fixing the products that matter most for household welfare.

Newspaper Summary 110226

 

Will India’s New Startup Rules Really Help Firms?

India has recently tweaked its rules for startup recognition to better reflect the realities of businesses that require long gestation periods or are in the process of scaling. By expanding eligibility timelines and easing various thresholds, the government aims to help a larger number of startups access tax breaks and other support for longer periods.

Changes to Startup Recognition Rules

The government recently revised the Startup Recognition Framework under the Startup India Action Plan to be more inclusive of innovation-led and scaling businesses. Key changes include:

• Increased Turnover Limit: The turnover limit for a firm to be recognized as a startup has been raised from ₹100 crore to ₹200 crore. This allows growing firms to retain their official recognition and the associated benefits for a longer duration.
• Deep-Tech Sub-category: A new sub-category has been introduced specifically for deep-tech startups. These firms can now be recognized for up to 20 years from their date of incorporation, a significant increase from the previous 10-year timeline. Additionally, their turnover limit for recognition has been set higher at ₹300 crore, acknowledging their inherently longer product development cycles and higher capital requirements.

Expansion Beyond Traditional Startups

The new rules have expanded eligibility to include cooperative societies and voluntary, member-owned associations, whether they operate at the state or multi-state level. By allowing these community-led enterprises to tap into startup incentives, the government hopes to promote innovation-driven growth at the grassroots level in sectors like farming, rural industries, and other allied fields.

Benefits for Recognized Startups

Official recognition provides startups with several critical advantages, including:

• Financial and Regulatory Support: Eligibility for tax exemptions, faster regulatory approvals, and preferential access to various government schemes.
• Access to Schemes: Recognized firms can participate in programs such as the Technology Incubation and Development of Entrepreneurs, the Credit Guarantee Scheme for Startups, and the Technology Development Fund.
• Public Procurement: Greater visibility and access within public procurement channels.
• Policy Continuity: For firms approaching or crossing the previous ₹100 crore revenue mark, these rules provide the necessary policy continuity as they transition from early-stage growth to commercial scale.

Impact on Fundraising

These changes are expected to provide founders with a longer runway to demonstrate progress without the fear of losing access to government incentives. Investors suggest this will make it easier for startups to attract "patient capital," such as long-term venture funds, strategic corporate investors, and government-backed R&D grants. For deep-tech firms, the alignment of policy support with their longer business timelines reduces regulatory uncertainty, creating a more credible environment that could lead to larger cheque sizes and increased participation from global funds.

Reasons for the Policy Shift

The Centre made these changes to reflect the evolution of the Indian startup ecosystem. While startups were previously seen as primarily internet and consumer-technology focused with short product cycles, the landscape now includes more research-intensive and capital-heavy ventures. Sectors such as artificial intelligence (AI), biotech, space, robotics, and advanced materials require more time, significant investment, and sustained regulatory support, which the new deep-tech category specifically acknowledges.

GDP to Vibes: India’s New Growth Game

The economic survey and the budget have underscored the importance of India’s “orange economy,” explicitly acknowledging its potential as an engine of growth. According to the economic survey, orange economy activities are driven by creativity, culture, and intellectual property, where value addition comes from the overall consumption experience rather than just the actual good or service purchased. Key sectors in this economy include media, entertainment, and experiential tourism.

Strategic Outlays and Job Creation

To support this vision, Budget 2026 proposed an outlay of ₹250 crore for talent development in the animation, visual effects, gaming, and comics (AVGC) sector. The government estimates that this sector will create 2 million jobs by 2030. Within this space, fast-growing segments like gaming and live entertainment are expected to be major future job creators with significant spillovers into the tourism, transport, and hospitality sectors.

The Numbers Game of Live Entertainment

Live entertainment in India is driven by the world’s largest cohort of millennials and Gen Zs, many of whom are willing to spend significantly on live shows. For instance, Coldplay’s 2025 concerts in Mumbai and Ahmedabad attracted over 400,000 fans, generating an estimated economic impact of ₹641 crore through ticket sales, travel, and logistics. While these events can re-brand cities, India requires world-class facilities and better urban infrastructure—modeled after hubs like Singapore—to fully benefit from the multiplier effects of the concert economy.

Online Gaming Potential

India is one of the largest mobile gaming markets globally, with 400-500 million gamers. The profile of Indian gamers shows that 43% are Gen Z, 72% prefer vernacular content, and 66% reside in non-metro cities. Unlocking the economic potential of this sector involves:

• Cultural Content: Publishing high-quality games based on India’s rich heritage of legends and stories.
• Non-metro Talent: Tapping into the growing gamer base in smaller cities.
• Influencer Ecosystem: Leveraging India's nearly half a million gaming influencers.
• Education: The budget proposed setting up content creator labs in 15,000 secondary schools and 500 colleges to cultivate fresh talent.

The Rise of Experiential Tourism

Experiential tourism goes beyond passive sightseeing to offer immersive and emotionally satisfying experiences. This trend is often driven by media; for example, fans visiting filming locations of popular shows or movies. India has massive potential here due to its wealth of ancient structures, water bodies, and ecological features. Budget initiatives aimed at developing wildlife trails, Buddhist circuits, and archaeological walkways, alongside standardized training for tourist guides, are intended to facilitate this experience-led growth.

India’s bet on the orange economy is essential as consumers increasingly prioritize experiences over purchases. By converting intellectual property into immersive travel and entertainment, India aims to turn "vibes" into a sustainable driver of GDP growth.

Laptops Fly Off Shelves as Smartphone Sales Stagnate

The two pillars of India’s electronics market are currently experiencing diverging fortunes. Personal computer (PC) sales surpassed pandemic-era highs last year as consumers upgraded their devices, while smartphone demand has stagnated.

Record PC and Laptop Sales

In 2025, companies sold a record 15.9 million personal computers in India, including 11.4 million laptops. This is a significant increase from 2024, when 14.4 million PCs were sold, 10.1 million of which were laptops. Laptops now account for approximately 75% of all PC sales in the country. The average price of a laptop sold in India in 2025 was roughly ₹43,000, and the segment generated an estimated $5-6 billion in revenue.

Stagnation in the Smartphone Market

By contrast, the smartphone market saw 154 million units sold in 2025, marking another flat year. Sales remain below the 2021 peak of over 160 million units. Stakeholders attribute this stagnation to several factors:

• Lack of new features and longer usage spans.
• A saturated market.
• Slow upgrades, with a base of over 250 million feature phone users not yet transitioning to smartphones.

Drivers of the PC Resurgence

The growth in the PC market is largely driven by replacement demand. Five years ago, during the pandemic, market shortages forced many consumers to buy whatever laptops were available within tight budgets. Today, these buyers are seeking to upgrade to better laptops at higher price points. Analysts also believe there is significant room for organic growth, given India’s low PC penetration and large user base.

Market Leadership and Industry Impact

HP remains India’s leading laptop seller, holding a market share of 27-29%. Lenovo follows in second place with an 18% share (as of September 2025), with Dell, Acer, and Asus also maintaining significant presences.

The impact of this market divergence is evident in corporate earnings. Firms focused on PC components or assembly have seen growth, while others, such as Dixon—which derives nearly 70% of its revenue from mobile phone assembly—reported a 28% decline in its topline.

Potential Headwinds and the "AI PC" Trend

Experts warn that rising costs for memory chips have already pushed laptop prices up by 10-20%, which could eventually dampen demand among price-sensitive consumers. However, premium segments, including gamers, creators, and enterprise users, are expected to remain less sensitive to these price changes.

Additionally, analysts caution against overhyping the “AI PC boom.” While AI-enabled laptop sales are rising, this is largely because AI chips have become standard hardware in mid-to-high-end models. Customers are not necessarily walking into stores asking for AI features; rather, their standard upgrades are simply being categorized as AI PCs by default.

US Says India Committed to Digital Trade Negotiations

Talks to cover rules prohibiting customs duties on cross-border electronic transactions

In the latest update to the US-India trade pact, Washington has stated that India has committed to removing its digital services taxes and to negotiating trade rules that address "discriminatory or burdensome practices and other barriers to digital trade". This announcement was made in a White House factsheet released on Monday, which also clarified that the current framework does not mandate immediate changes to India’s domestic e-commerce policies.

Scope of Negotiations

A central focus of these negotiations will be rules prohibiting customs duties on electronic transmissions, which has been a long-standing priority for the US in global digital trade discussions. If these rules are established, India would be prevented from imposing import duties or similar charges on:

• Software downloads and apps.
• Cloud services.
• Digital media and e-books.
• Online subscriptions and any data transmitted electronically over the internet.

Industry Perspectives and Contentious Issues

The moratorium on customs duties for digital trade remains a contentious issue at the WTO, where India and the US have historically held divergent positions. Tax experts note that while the removal of GST challenges on digital products could resolve ongoing disputes, India has recently resisted the WTO moratorium, seeking the ability to impose duties on digital products like video games and audio-visual content.

For India, this remains a sensitive area because it limits future policy space to tax or regulate digital flows. Industry representatives suggest the issue is being framed as something "to be negotiated" rather than a settled agreement.

Background: Removing Digital Levies

This push for digital trade follows India's earlier moves to address US concerns regarding discriminatory taxes. In August 2024, India scrapped a 2% equalisation levy on e-commerce supplies and abolished a 6% levy on online advertising, often referred to as the "Google tax".

Part of a Broader Trade Framework

The digital trade negotiations are part of a larger interim trade agreement. Key components of this broader deal include:

• Zero-Duty Access: India is set to gain zero-duty access for goods worth approximately $44 billion, covering nearly half of its merchandise exports to the US.
• Tariff Reductions: The US has agreed to reduce tariffs on Indian produce to 18%.
• Policy Links: Washington stated these concessions followed New Delhi’s commitment to stop purchasing Russian oil.

Both nations have reaffirmed their long-term commitment to negotiating a wider US-India Bilateral Trade Agreement.

New IT Rules Mandate Labels for AI, Deepfake Takedowns

The Indian government has formally notified the amended Information Technology (IT) Rules, 2026, bringing in a stricter compliance regime for social media companies such as X, Facebook, Instagram, and Telegram. The new regulations are specifically aimed at combating the misuse of artificial intelligence (AI), with a focus on deepfakes and other sensitive "synthetic" content.

AI Content Labeling Rules

Under the new framework, social media intermediaries are required to label AI-generated and modified content in specific circumstances. Labeling is mandatory when the information:

• Appears to be "real, authentic or true".
• Depicts an individual or event in a manner that is likely to be perceived as indistinguishable from a natural person or real-world event.

This requirement follows the government's decision to drop a contentious proposal that would have required platforms to watermark 10% of all online content, a move hailed as a victory by industry stakeholders.

Tightened Takedown Timelines

The government has sharply shortened the windows for platforms to remove prohibited or reported content:

• Deepfakes and Non-consensual Sexual Imagery: Removal is now required within two hours, a major reduction from the previous 24-hour limit.
• Other Unlawful Content: Intermediaries must act within three hours of receiving a user report or a government/court order, down from 36 hours.
• Defamation and Harassment: Action on content linked to defamation, harassment, or privacy invasion must be taken within 36 hours, compared to 72 hours previously.

Faster Grievance Redressal and User Notifications

The rules also expedite the internal processes of digital platforms. Grievance resolution officers are now required to produce a final verdict on user reports within seven days, down from 15 days. Additionally, platforms must notify their users of rules and policies at least once every three months, rather than once a year.

Compliance and Enforcement

Failure to comply with these tighter timelines will attract criminal litigation under India's existing social media intermediary laws. Companies have been granted a 10-day window to align with the new rules, which will take effect starting February 20. While some analysts flagged the potential for industry pushback, government officials maintain that platforms have already demonstrated the capacity to act within minutes when necessary. Industry bodies like Nasscom have described the final set of rules as "fairly balanced" following the removal of the broad watermarking mandate.

IPOs lose shine as venture fund exits pivot to block deals

Mansi Verma, Abhinaba Saha MUMBAI

Initial public offerings (IPOs) are losing their appeal for private equity (PE) and venture capital (VC) investors seeking to monetize their holdings. While IPOs have traditionally been seen as the primary liquidity event, data from the past five years indicates that investors are now realizing significantly higher exit values through post-listing bulk and block deals than through the offer-for-sale (OFS) segment of an IPO.

Divergence in Exit Strategies

Since 2024, there have been 43 PE- and VC-backed IPOs where shares worth nearly ₹59,000 crore were sold via the OFS route. This figure represents only about one-third of the ₹1.9 trillion realized through post-listing bulk and block deals during the same period.

An OFS allows promoters and existing investors to sell shares to the public during an IPO, whereas post-listing options allow them to sell shares on the exchanges after the company is already listed. Over the last two years, more than 950 block deals were executed, signaling a clear preference for deferring large exits until after listing due to volatile valuations.

Widening Gap Between IPO and Post-Listing Exits

The shift toward post-listing exits began in late 2023 and has continued despite brief pauses caused by geopolitical and trade disruptions. A comparison of the data shows a widening gap:

• 2021: Investors sold shares worth roughly ₹48,000 crore through OFS, compared to nearly ₹62,500 crore through post-IPO trades.
• PE Exit Share (2021 vs. 2025): In 2021, IPOs accounted for 12% of PE exits while block trades were at 23%. By 2025, IPO exits shrank to 8%, while block trades rose to 30%.
• The 2023 Peak: The divergence was most extreme in 2023, when block trades surged to 47% of total exits, while IPO exits collapsed to just 6%.

Why Block Deals are Winning

Market experts suggest that selling shareholders are intentionally trimming the OFS component of IPOs, choosing to hold onto stakes to pursue secondary sales once companies are listed.

Pranav Haldea, managing director at Prime Database Group, notes that the block deal ecosystem has matured significantly. "What has changed is the depth of domestic liquidity, especially from mutual funds, which are now willing and able to absorb large secondary stakes," Haldea said. He added that many older private equity funds have reached their exit phase, making block deals the preferred monetization mechanism.

Abhishek Guha, a partner at Trilegal, points out that block deals offer structural advantages for large financial investors. "There is far greater flexibility in pricing since block deals are private and negotiated," Guha noted, adding that these deals also provide superior discretion and speed. Following a year of aggressive sell-downs, funds are now recalibrating their pace, and many more exits through block sales are expected in 2026.

400 million calls daily: Trai mulls tougher spam rules

By Jatin Grover NEW DELHI

India’s telecom regulator, the Telecom Regulatory Authority of India (Trai), is looking to widen its current enforcement framework and is prepared to tighten rules if compliance gaps persist among telemarketers. This move comes as telecom operators are now blocking or flagging nearly 400 million suspected spam calls and messages every day.

The Scale of the Spam Problem

Trai Chairman Anil Kumar Lahoti revealed in an interview that the regulator has taken several measures over the last 18 months to curb unsolicited commercial communications. Currently:

• Approximately 75 million calls or SMS are blocked daily through scrubbing against the customer preference register.
• Telecom operators are flagging an additional 320 million spam instances daily from 10-digit phone numbers.
• A major challenge remains that only 220 million out of 1.16 billion mobile subscribers have registered their preferences on the DND (Do Not Disturb) platform, meaning roughly 80% of users remain open to receiving unwanted calls.

Digital Consent Acquisition (DCA) Framework

Trai is moving toward a full rollout of the Digital Consent Acquisition (DCA) framework, which aims to make user consent for promotional calls and SMS digital and visible to the consumer.

• Pilot Success: A pilot involving 11 banks and telecom operators proved the system works technically.
• Full Rollout: The regulator is now moving toward a complete rollout for these entities, involving the Indian Banking Association (IBA).
• Legacy Consents: To ease the transition, banks are allowed to upload their existing "legacy" consents to the digital platform based on their own certification. Users will eventually be able to check and revoke these consents once the data is digitized.

Fraud Prevention and Number Identification

To combat fraud, Trai has held extensive discussions with banks, requiring them to whitelist thousands of URLs. Any SMS containing a URL that has not been whitelisted is now blocked.

Additionally, new numbering rules are being implemented to help users identify genuine calls:

• 160 Series: All service and transactional calls (such as OTPs, balance alerts, or official notifications) from banks, insurance companies, and mutual funds will originate from this series.
• 140 Series: All standard telemarketing calls will continue to originate from this series.

Future Regulatory Action

Lahoti stated that Trai is currently engaged with stakeholders to identify specific gaps in telemarketer responsibilities. If the existing rules prove insufficient, the regulator is open to strengthening the Telecom Commercial Communications Customer Preference Regulations (TCCCPR) to fix responsibilities.

Separately, Lahoti noted that recommendations for the next spectrum auction are in their final stages and are expected to be submitted to the Centre within a month.

Netflix’s Hollywood edge heats up India OTT rivalry

By Lata Jha NEW DELHI

The niche, urban, English-language OTT space in India is bracing for a significant shake-up following Netflix’s recent deal to stream all films produced by Sony Pictures Entertainment globally after their theatrical release. Furthermore, the streaming giant is potentially moving to acquire the massive Warner Bros library, a move that would further consolidate its position.

Impact of Catalogue Consolidation

Industry experts believe these international shifts will fundamentally alter consumer choices in India. The clustering of global libraries under fewer platforms reduces friction for consumers who are tired of navigating multiple subscriptions to find their favorite content. This consolidation is forcing rivals like Prime Video and JioHotstar to rethink their strategies for targeting up-market, premium users.

While Netflix moves toward a dominant position, Prime Video is fighting back with an "add-on" strategy. It recently onboarded Moviesphere+, a subscription-based platform from Lionsgate that offers heavyweights like The Hunger Games: The Ballad of Songbirds and Snakes, Mad Men, and The Princess Bride.

A Depth-Driven Market

According to Berjesh Chawla, managing director and lead at Accenture in India, the English OTT category functions differently from mass-language streaming. Consumption is concentrated in urban markets and driven by long-running franchises, making it a depth-driven category rather than a reach-driven one. Platforms that can own, organize, and consistently serve these franchises in one place are best positioned to lead.

Charu Malhotra, co-founder and MD of Primus Partners, notes that while English OTT content has demand, India does not yet have a single, unified leader in that niche. Currently, Netflix shares the space with Prime Video, HBO (streaming on JioHotstar via Discovery and Warner ties), and others like MUBI.

Pricing and Strategic Response

For consumers, the most visible impact of this rivalry may come through packaging and pricing. A platform that establishes itself as the "home of Hollywood" could justify premium pricing or higher subscription tiers, though competitive pressures are expected to keep prices in check.

Prime Video and JioHotstar could respond with bundled offerings or discounts, particularly through telecom partnerships. This might include flexible pricing or combining verticals, such as pairing sports with English films or bundling premium global catalogues with television subscriptions.

Long-Term Structural Changes

Consolidation may also alter how Indian rights deals are structured. If Netflix has "first dibs" globally, it could put pressure on free or low-price licensing models in India. While structural changes are possible, experts suggest they will be gradual, and rivals will continue to fight on the basis of price, bundles, and specialized content.

Ultimately, leadership in the English OTT space will depend on clarity of positioning. A platform that becomes the obvious "home for Hollywood, plus global hits" is likely to capture urban subscriptions, forcing rivals to double down on differentiation through exclusives, regional depth, or curated experiences.

Elon Musk’s go-to banker is back in action for the SpaceX IPO

By Corrie Driebusch & Becky Peterson

Michael Grimes, the longtime Morgan Stanley rainmaker, spent years laying the groundwork for his bank to land a role leading the initial public offering (IPO) of Elon Musk’s rocket maker SpaceX. However, by the time Musk finally decided to take the company public, Grimes was serving in the Commerce Department, having followed the billionaire to Washington, D.C. From afar, he watched former colleagues pitch for roles on what could potentially be the largest IPO of all time.

Returning to the Middle of the Action

This week, Grimes returned to the private sector and is in line to reap millions of dollars in fees. Morgan Stanley announced on Monday that he is rejoining the bank as chairman of investment banking, a promotion from his previous role as head of global technology investment banking.

SpaceX is a highly coveted prize for IPO bankers, especially after its valuation skyrocketed to $1.25 trillion last week following a merger with Musk’s AI startup, xAI. The offering is expected to raise tens of billions of dollars to fund ambitious plans, including launching data centers in space and colonizing the moon.

A Massive Fee Pool

Bankers estimate that if SpaceX raises the $40 billion some envision, the participating banks could split fees of roughly $400 million. The largest portions of these fees would go to the four expected lead banks: Morgan Stanley, Bank of America, JPMorgan Chase, and Goldman Sachs, as well as the individual bankers, like Grimes, who helped secure the mandates.

Deep Ties to Musk

Musk’s relationship with Morgan Stanley is extensive; both his money manager, Jared Birchall, and xAI’s CFO, Anthony Armstrong, are alumni of the bank. Grimes has spent years developing a personal rapport with Musk, becoming one of the few bankers the entrepreneur "tolerates." During his three decades at the bank, Grimes assisted Musk with the Tesla IPO in 2010 and the 2022 acquisition of Twitter.

During the Twitter deal, Grimes famously instructed his team to work in “minutes and hours” rather than days to keep up with Musk’s rapid pace. He has historically gone to extremes to win clients, such as playing hours of FarmVille to land Facebook's 2012 IPO or moonlighting as an Uber driver to secure a role on that company’s 2018 offering.

The Government Detour

Grimes left Morgan Stanley a year ago when Musk launched the Department of Government Efficiency (DOGE). He took a role leading the Commerce Department’s Investment Accelerator, reporting to Commerce Secretary Howard Lutnick. Even after Musk left Washington after six months, Grimes remained to lead President Trump’s “Invest in America” push, which included helping the government take a 10% stake in Intel.

A Record Year for IPOs?

While the U.S. IPO market was relatively quiet during Grimes's time in government, 2026 has the potential to be a record-breaking year. In addition to SpaceX, other major technology firms like OpenAI and Anthropic are also considering significant market debuts.

Inside Hyderabad 500075: India’s Property Hotspot

The pincode had the highest residential sales by value in the country in 2025.

Short Story

• THEN: Hyderabad’s real estate market peaked in 2005–07 after the IT boom but faced setbacks during the 2008 economic slowdown and Telangana’s statehood struggle.
• WHAT: Both housing and commercial markets have bounced back on a wide NRI buyer base, local spending power, and demand for homes, offices, and Global Capability Centres (GCCs).
• NOW: Rapid growth has been further fueled by government support and a strong business ecosystem that continues to draw in national developers and investors.

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Giant mounds of broken black stones and rocks, typical of the Deccan Plateau, lie beside the eight-lane Nehru Outer Ring Road in Hyderabad. Nearby, the tips of tall towers and yellow construction cranes are visible from afar, marking the rise of Neopolis in west Hyderabad. Spread across over 530 acres, Neopolis—which means "new city" in Greek—looks like an urban center being built from scratch.

Hyderabad’s "Manhattan"

Property agents are marketing this area as Hyderabad’s own Manhattan. What was empty land just a few years ago is now a site of frenzied activity, featuring branded residences, premium offices, high-end homes, and a World Trade Centre. Major players like MyHome Group and Godrej Properties Ltd are either launching massive projects or aggressively buying land here.

The Telangana government’s vision for Neopolis is a mixed-use district with unlimited floor space index (FSI), meaning there is no vertical limit. This policy inspired the tagline on the government website: "Time to go beyond the skies." Officials believe Neopolis will eventually outperform established hubs like Mumbai's Bandra Kurla Complex (BKC).

Record-Breaking Numbers

According to data from Liases Foras Real Estate Research, 500075 (Hyderabad Urban)—which covers Neopolis, Kokapet, and Narasingi—was the pincode with the highest residential sales by value in India in 2025. Last year, residential stock worth ₹24,341 crore was sold in this area, surpassing two high-performing Gurugram pincodes.

This boom is driven by several factors:

• A strong non-resident Indian (NRI) buyer base.
• Significant spending power of local buyers seeking larger homes.
• Thriving demand for offices and Global Capability Centres (GCCs).
• A proactive government push to market and develop prime land.

Highs, Lows, and the Great Revival

Following the IT boom of the 1990s, Hyderabad's market peaked between 2005 and 2007. However, the 2008 global slowdown and the subsequent Telangana statehood struggle caused the market to collapse. While other Indian cities recovered, Hyderabad remained a laggard for years as the bifurcation struggle continued.

The eventual formation of Telangana led to a massive resurgence. Infrastructure quality became a primary advantage, attracting multinational firms and GCCs beyond just the IT sector. Office rentals have risen by 25–30% in recent years as demand for premium space has spiked.

The Hub for Global Captives

While Bengaluru still leads in total office leasing, Hyderabad attracted the highest share of new GCCs set up in India over the last three years. Major global names like Netflix, Eli Lilly, Costco, and Stolt-Nielsen have either recently entered or are expanding their presence in the city. Additionally, beauty giant L’Oréal recently announced it would set up its first beauty technology hub in Hyderabad with an investment of ₹3,500 crore.

Sky-High Land Valuations

The demand for land in Neopolis has led to record-breaking auctions conducted by the Hyderabad Metropolitan Development Authority (HMDA). In November 2025, a 4.03-acre land parcel was sold for ₹151.25 crore per acre, a new record for the area. Earlier, pharma firm MSN Laboratories bought land at ₹177 crore per acre, the most expensive per-acre transaction in the city's history.

National developers are racing to establish a footprint:

• Godrej Properties entered the market in early 2025 and has already sold stock worth ₹3,000 crore across two projects.
• Brigade Enterprises recently launched Brigade Gateway in Neopolis, which will feature one of the city's tallest residential buildings.
• MyHome Group has several projects lined up on 85 acres in the area, including luxury homes spanning nearly 10,000 sq. ft.

Comparison with Bengaluru

Developers note that Hyderabad is now seen as more than just a backup to Bengaluru. In terms of infrastructure, work environment, and buying capacity, some experts argue Hyderabad is currently the stronger market. While Bengaluru often struggles with monsoonal flooding and crumbling infrastructure, Hyderabad's government is praised for proactively identifying and addressing urban pain points.

Challenges Ahead

A common criticism is that growth is heavily concentrated in Western Hyderabad, leaving older parts of the city behind. To address this, the government recently approved the Hyderabad Industrial Lands Transformation Policy, aimed at converting 9,000 acres of legacy industrial land into multi-use zones. Furthermore, while the vertical boom continues, there are signs that home sales are beginning to soften after years of rapid growth.

Carlyle to buy Nido Home Fin for ₹2,100 cr

The deal for the Edelweiss unit is expected to close by 31 July 2026.

By Agnidev Bhattacharya MUMBAI

US-based asset manager The Carlyle Group Inc. will acquire Nido Home Finance Ltd, the housing loan unit of Edelweiss Financial Services Ltd, in a ₹2,100 crore deal. The Rashesh Shah-led financial services firm informed the exchanges of the agreement on Monday.

Details of the Transaction

The acquisition will be executed through investment funds affiliated with Carlyle Asia Partners—CA Sardo Investments—and Salisbury Investments Pvt., which is the family office of Aditya Puri. Puri, the former chief executive and managing director of HDFC Bank, currently serves as a senior adviser on Carlyle’s Asia private equity team.

The deal involves two primary components:

• Secondary Purchase: The funds will pick up a 45% stake in Nido from Edelweiss for ₹602 crore, involving the sale of 31.2 million shares.
• Primary Infusion: The Carlyle-backed funds will make a primary equity capital infusion of ₹1,500 crore. This includes issuing 25.7 million fresh shares to CA Sardo and 185,000 to Salisbury at a price of ₹193 per share.

Upon completion, these funds will collectively hold approximately 73% of Nido on a fully diluted basis. The issue price represents a 73% premium over the stock's closing price on the previous trading day. Additionally, the funds will receive fresh warrants priced at ₹193 apiece, and Edelweiss may receive an "upside share" if Carlyle realizes returns above a specified threshold.

Stakeholder Perspectives

Edelweiss described the transaction as a "win-win-win" for all parties involved. For Edelweiss, it advances the objective of value creation; for Nido, it provides fresh capital to reinforce growth; and for Carlyle, it facilitates entry into India’s housing finance sector.

"Housing remains a critical national priority for India, and we have strong conviction in the growth potential of the housing finance industry," said Sunil Kaul, partner and Asia financial services sector lead at Carlyle.

About Nido Home Finance

Established in 2010, Nido Home Finance (formerly known as Edelweiss Housing Finance) focuses on affordable housing and mass-market segments. Key performance metrics include:

• Assets Under Management (AUM): Currently manages assets worth ₹4,804 crore.
• Reach: Serves over 800 talukas across India.
• Financial Contribution: In fiscal 2024-25, it contributed 5.5% (₹521 crore) to Edelweiss's top line and 14% to its net worth.

Market Context

This transaction marks the second major deal in India's housing finance sector within a single week. On February 3, private equity firm Advent International announced it would acquire a 14.3% stake in Aditya Birla Housing Finance Ltd for ₹2,750 crore.

The Carlyle-Edelweiss deal is subject to regulatory approvals and is expected to close by July 31, 2026. Legal advisers for the deal included AZB & Partners for Edelweiss and Trilegal for Carlyle.

Trade Reset: US Tariff Cuts Welcome, but Energy Security Paramount

India and the United States have announced the finalization of the framework for an interim trade agreement, which serves as a precursor to a more comprehensive bilateral deal. For Indian exporters, particularly in labor-intensive sectors, this framework offers significant and meaningful relief.

Benefits for Indian Exports

The commercial upside for India is primarily on the export side of the agreement:

• Regained Competitiveness: Sectors such as textiles, gems and jewellery, and shrimp exports are expected to regain their competitive edge in the US market.
• Tariff Reductions: With US duties on Indian exports set to fall to 18%, Indian goods will become more affordable compared to those from regional competitors.
• Significant Gains: The deal is expected to benefit sectors that currently account for nearly 40% of India's exports to the US, including pharmaceuticals and electronics, which already enter duty-free.

India’s Concessions and Obligations

While the export benefits are clear, India's own concessions are broader and less precisely defined:

• Import Duties: India has agreed to eliminate or reduce import duties on almost all US industrial goods.
• Specific Purchases: New Delhi has stated its intention to purchase $500 billion worth of US energy, aircraft and aircraft parts, technology, and coking coal over the next five years.
• Agricultural Limits: The deal currently maintains protections for India's sensitive dairy and poultry sectors, though it leaves room for future negotiations on "unspecified additional products".

Strategic Concerns and "Red Lines"

The agreement is not without its strategic complexities and potential risks:

• Oil Policy: The US executive order regarding tariff rollbacks is reportedly contingent on India's commitment to stop purchasing Russian oil. This linkage has raised concerns regarding India’s strategic autonomy and its ability to source energy based on national interest.
• Policy Precedents: Some analysts warn that tying trade concessions to specific foreign policy commitments (like the purchase of Russian oil) sets an undesirable precedent for future negotiations.
• Unresolved Issues: There are still areas of ambiguity, particularly regarding agriculture, where trade agreements must balance economic engagement with the need to protect domestic food security.

Ultimately, while the interim framework provides a welcome boost to Indian exports and restores a degree of predictability to trade relations, experts emphasize that strategic autonomy remains indispensable as India continues to engage with Washington on a broader Bilateral Trade Agreement.

DIIs DOMINANCE

In a significant structural shift, domestic institutional investors (DIIs) have now overtaken foreign institutional investors (FIIs) in Nifty50 ownership, reflecting the deepening of India’s domestic capital base. Gaurav Bhandari, CEO of Monarch Networth Capital, noted that while the shift was accelerated by cyclical global risk-off sentiment, it represents a fundamental change in market dynamics.

Over the last few years, domestic institutions have become a permanent and predictable source of capital, driven largely by SIP-led mutual fund inflows, insurance allocations, and retirement savings. This rise in domestic influence comes as many actively managed equity schemes faced a slowdown in collections due to high valuations, sluggish corporate results, and ongoing FII selling.

While the broader trend shows DIIs taking the lead, recent market momentum has also been supported by a resurgence in FII inflows and rupee appreciation, even as intermittent profit-booking remains visible across various sectors. Market participants are now looking toward global data releases and the final leg of Q3 earnings to determine the next phase of this rally.

India Under Pressure to Toe US Line on Oil

Joe Biden never thumped his chest and demanded that India immediately halt buying Russian crude oil. He understood that forcing large volumes of oil off the global market risked a price shock that could ripple through economies worldwide. Those fears were well-founded, as Brent crude surged past $100 a barrel following Russia’s invasion of Ukraine. During that period, India emerged as a crucial shock absorber, buying discounted Russian crude and exporting refined fuels that helped stabilize global prices.

Fast forward to 2026, and the White House’s current occupant believes the oil game has changed. With crude prices hovering around $60 a barrel and soft demand, Donald Trump appears willing to gamble by ordering India to cut Russian oil purchases to zero. Despite discounts of up to $26 a barrel, India’s crude purchases from Russia are expected to fall to approximately 500,000 barrels a day in March and April, leading to fears that the country has caved to US demands.

India currently finds itself under intense pressure in US trade negotiations. While New Delhi aims to present itself as a natural destination for companies diversifying away from China, this pitch is weakened by prolonged trade confrontations with Washington. Almost the entire world, including the EU, UK, Japan, and Southeast Asian rivals, has already struck tariff deals with the US.

In the textile sector, India received a "rude shock" when the US granted special zero-tariff treatment to Bangladesh for garments made with US cotton. In contrast, Indian exports face an 18 per cent duty even when using the same US cotton, making Bangladesh a far more attractive sourcing option. Additionally, India’s pledge to buy $500 billion worth of US goods over five years remains ambitious, given it imported only $41 billion in the most recent financial year. While big-ticket items like Boeing aircraft and defense equipment are cited as potential contributors, many Indian carriers rely heavily on French Airbus fleets, and US armaments often carry restrictive political and operational conditions.

On agriculture, India has moved cautiously, cutting tariffs on fruits and nuts while keeping dairy, poultry, and meat protected. However, Russian crude remains the greatest controversy. Flows from Russia dropped from nearly 2 million barrels a day to 1.2 million in December and January and are likely to fall further, reshaping refinery economics.

Trump has issued a blunt warning that continuing to buy Russian oil could trigger the return of 25 per cent tariffs. Strategist Brahma Chellaney noted that by lifting the "Russian oil penalty" only on the condition that India cease all imports from Russia, Washington has "effectively weaponised trade to constrain Indian foreign policy".

For years, New Delhi insisted on buying the cheapest crude available. Being forced toward costlier oil from the US or Venezuela adds freight costs and involves grades often ill-suited to Indian refineries. Across both trade and energy, India is increasingly being asked to accept US diktats in exchange for erratic market access.

Author: Paran Balakrishnan

FDI in banking sector drops from $898 m to $115 m in 2 yrs

Foreign direct investment (FDI) equity inflow in the banking sector has seen a sharp decline, falling to $115 million at the end of FY25 from $898 million in FY23, the Finance Ministry informed the Rajya Sabha on Tuesday.

In a written reply, Minister of State for Finance Pankaj Chaudhary described FDI as a major source of non-debt financial resources vital for economic development. He noted that FDI infuses long-term sustainable capital into the economy and facilitates technology transfer, greater innovation, competition, and employment creation.

Total FDI inflow consists of:

• Equity inflow
• Equity capital of unincorporated bodies
• Re-invested earnings
• Other capital

Chaudhary also highlighted the regulatory framework governing these investments. According to the Reserve Bank of India’s (RBI) Master Directions, acquiring or controlling 5 per cent or more of the paid-up capital or voting rights in a banking company requires prior approval from the RBI. Additionally, the RBI continues to issue guidelines to regulate priority sector lending (PSL), which is applicable to all commercial banks.

Author: Our Bureau, New Delhi