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Newspaper Summary 030226

India, US sync on trade, tariffs

US reciprocal tariff to fall to 18%; punitive tariffs on Russian oil purchases may go; deal to benefit India, says Modi

US President Donald Trump announced on Monday that he and Prime Minister Narendra Modi have agreed to a comprehensive trade deal between India and the US. This agreement comes nearly a year after both sides initially agreed to work toward a bilateral trade pact. Under the deal, Washington will lower its reciprocal tariff on Indian goods from 25% to 18%, while India has agreed to reduce its tariffs and non-tariff barriers against the US to zero.

Additionally, the US is removing an extra 25% duty on Indian goods that had been applied in response to India’s purchases of crude oil from Russia. Trump stated that he spoke to Modi earlier in the day and that the agreement was reached “effective immediately”. The two leaders discussed various issues, including trade and efforts to end the war between Russia and Ukraine.

Trump further claimed that Prime Minister Modi agreed to stop India's Russian oil purchases and instead buy more energy from the United States and potentially Venezuela. According to the US President, India will buy more than $500 billion worth of US energy, technology, agricultural products, coal, and other goods, committing to "Buy American" at a significantly higher level.

Prime Minister Modi shared his reaction in a post on X, stating, “Wonderful to speak with my dear friend President Donald Trump today. Delighted that Made in India products will now have a reduced tariff of 18%”. Modi expressed his gratitude to President Trump on behalf of the 1.4 billion people of India and noted that the cooperation between the world’s two largest democracies would unlock immense opportunities. He also stated that President Trump’s leadership is vital for global peace and that India fully supports his efforts toward that goal. Following the announcement, the Gift Nifty (formerly SGX Nifty) rose by 2.6%.

16th Finance Commission: Just a course correction, not a paradigm shift

By Sindhu Hariharan

The 16th Finance Commission has submitted its report to the President, and it was tabled in Parliament on the Budget day. While the Commission has stuck to its core principle of equitable redistribution of resources among the poorer States, it has introduced some changes in the criteria for horizontal distribution of the divisible pool of taxes.

Some Tweaks

The Commission has retained the vertical devolution share at 41 per cent, the same level as the 15th Finance Commission. However, it has tweaked the criteria it uses to share the funds among various states to address the concerns of progressive states. The most significant change in the formula is the introduction of "contribution to the GDP" as a new norm, which looks at a state's contribution to the nation's GDP growth and gives it a weightage of 10 per cent.

Additionally, the Commission has used the 2011 census figures for population and tweaked other weightages, such as demographic performance and per capita distance. Despite these refinements, the net result shows that there is not much difference in the devolution between the 15th and 16th Commissions.

Revenue Deficit Grants Shelved

A notable departure is that the 16th Finance Commission has ended the revenue deficit grant previously given to select states to help them eliminate the excess of revenue expenditure over revenue receipts. The Commission argued in its report that this grant created perverse incentives for the persistence of revenue deficits rather than encouraging policies for their elimination.

Urban Local Grants

In a bid to accelerate the development of the government’s "third tier," the 16th Finance Commission announced a 45% jump in allocation to urban local bodies, totaling ₹3.56 trillion. Experts noted that this allocation equals the outlay of centrally sponsored schemes during the entire 13-year period from 2014-15 to 2026-27, potentially marking a pivotal transition in first-mile infrastructure and services.

Mixed Reaction

States have given mixed reactions to these proposals:

• Kerala welcomed the report as its share rose from 1.9% to 2.4%.
• Tamil Nadu expressed disappointment that the vertical devolution was not increased to 50% and noted it has the lowest share among developed states.
• Himachal Pradesh estimated that withdrawing the revenue deficit grant would lead to a ₹40,000 crore shortfall.
• Karnataka pointed out that despite contributing 8.7% to India's GDP, the state continues to receive low allocations.

At 4.5 lakh units, PV dispatches grow 11% on-year in January

IN FAST LANE. Maruti Suzuki, Hyundai Motor record highest-ever monthly sales

By S Ronendra Singh New Delhi

Passenger vehicle (PV) wholesales (dispatches to dealers) grew by over 11 per cent year-on-year (y-o-y) to around 4.5 lakh units in January, compared with 4,03,093 units in the same month last year, according to industry estimates.

Market leader Maruti Suzuki India (MSIL) reported its highest-ever dispatches in a single month, a figure that includes exports and sales to Toyota. MSIL's exports also reached an all-time monthly high of 51,020 units in January. In domestic dispatches, MSIL saw marginal growth of 0.5 per cent, reaching 1,74,529 units. Partho Banerjee, Senior Executive Officer (Marketing & Sales) at MSIL, noted that the company recorded total sales of over 2.78 lakh units and currently has nearly 1.75 lakh pending orders in the domestic market.

Banerjee stated that MSIL introduced a price protection scheme for first-time buyers in January to encourage upgrades, noting that there would be no price increase despite pressure from commodity prices.

Other major manufacturers also reported strong growth:

• Tata Motors Passenger Vehicles: Dispatches rose 46 per cent y-o-y to 70,222 units.
• Mahindra & Mahindra (M&M): Domestic dispatches grew 25 per cent to 63,510 units. M&M recorded 93,689 bookings (worth ₹20,500 crore) for the XUV700 and XUV 3XO in just four hours.
• Hyundai Motor India: Recorded its highest-ever monthly domestic sales of 59,107 units, a 9.5 per cent increase.

2-Wheeler Segment

The two-wheeler segment saw Hero MotoCorp grow 26 per cent to 5,20,208 units, driven by demand for scooters and the newly launched Glamour X motorcycle. Royal Enfield reported a 16 per cent jump in domestic sales to 93,781 units and is targeting one million total sales this financial year.

Shifting Preferences

Despite the overall growth, the contribution of hatchback cars (such as the Alto) remained steady at about 20 per cent of total PV sales. Tarun Garg, MD and CEO of Hyundai Motor India, attributed this to a structural shift as customers increasingly prefer compact SUVs, which now offer more choices and healthy stock levels.

Outlook Ahead

“As we move ahead, the robust booking numbers for January give us great momentum as we enter the early 2026,” Garg added.

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Starting with a Bang

Auto domestic dispatches for the month of January 2026

Category / Company	Jan-26	Jan-25	% Change
Passenger Vehicles
Maruti Suzuki India	1,74,529	1,73,599	0.5
Tata Motors	70,222	48,076	46
M&M	63,510	50,659	25
Hyundai Motor India	59,107	54,003	9.5
Kia India	27,603	25,025	10.3
Toyota Kirloskar Motor	30,630	26,178	17
2-Wheeler Segment
Hero MotoCorp	5,20,208	4,12,378	26
Honda Motorcycle & Scooter	5,19,579	4,02,977	29
TVS Motor	3,83,862	2,93,860	30.7
Royal Enfield	93,781	81,052	16
Commercial Vehicles
Volvo Eicher	10,601	8,449	25
Tata Motors	38,844	30,083	29
Ashok Leyland	17,222	16,202	21.2
Tractors
Escorts Kubota	9,137	6,058	51
M&M	38,434	26,105	46

(Source: Industry estimates/Company data)

‘Govt may consider raising PSB FDI limit’

By Subhash Narayan New Delhi

The government may consider hiking the foreign direct investment (FDI) limit in public sector banks (PSBs) from 20% to as high as 49% following a review of foreign direct holdings in these banks. Department of Financial Services secretary M. Nagaraju stated on Monday that the primary goal of this move is to attract foreign investors to Indian banks, raise their capital base, and create larger banking institutions.

Speaking after the Union Budget presentation, Nagaraju confirmed that the finance ministry is currently conducting inter-ministerial consultations on the proposal. While the exact level is still under consideration, he clarified that any decision taken would have to be less than 49%, as the government is legally required to maintain at least a 51% stake in these banks.

In contrast, the FDI limit for private banks currently stands at 74%, with up to 49% allowed through the automatic route without requiring prior permission from the government or the Reserve Bank of India. For private banks, government permission is only required for FDI exceeding the 49% threshold.

Better options ahead

Budget rightly checks speculation in derivatives

The stock market reacted rather violently to the Union Budget on Sunday, with the benchmark Nifty 50 index losing around 2 per cent. A primary driver of this reaction was the increase in the Securities Transaction Tax (STT) on derivative contracts. Specifically, the STT on the sale of future contracts was raised from 0.02 per cent to 0.05 per cent, while the tax on the sale or exercise of equity option contracts increased from 0.1 per cent to 0.15 per cent.

Market experts suggest that while this move caused a sharp temporary reversal, it is likely to benefit the stock market in the long run. The regulator has been increasingly worried about the surge in speculative activity within the equity derivative segment since the pandemic, led largely by individual investors. Retail participation in derivatives recently reached an all-time high, with 31 per cent of the trading pie coming from this group.

The STT increase announced in the Budget is designed to act as a disincentive for retail traders, effectively making leverage investments to be less attractive. For those trading in equity futures, the outgo on STT has increased by 150 per cent, whereas for options, the increase is a more moderate 50 per cent. The editorial notes that pushing traders toward options is a positive step, as the capital outlay and risk associated with futures are significantly higher.

Beyond derivatives, the Budget introduced another significant change by taxing share buybacks at the hands of shareholders instead of taxing the company. This moves the tax burden to the investor's individual income tax slab rate, which is often higher than the previous company-level tax. This proposal is expected to curb the frequency of buyback announcements and bring the tax incidence on dividends and buybacks closer together.

While these measures created immediate market friction, the sources suggest they align with a broader goal of ensuring market stability and discouraging excessive retail speculation in high-risk instruments.

Apple’s value share hits 28% in India

Tech giant Apple has recorded its highest-ever value share of 28% in the Indian smartphone market, driven by a surging “premiumization” trend where consumers are increasingly opting for high-end devices, according to a report by Counterpoint Research.

The report highlighted a significant shift in the world’s second-largest smartphone market, noting that while volume growth remains steady, the total market value is expanding at a much faster clip as Indian buyers trade up to more expensive models,.

According to Counterpoint’s latest insights, Apple had a 23% value share in India in 2024. Overall, India’s smartphone market grew 1% y-o-y in volume and 8% y-o-y in value in 2025.

Budget will foster competitiveness

GROWTH THRUST. A holistic approach, with liquidity measures for MSMEs and policies for textiles, will surely work.

By S Mahendra Dev and RK Tripathi

India’s ambition to attain a trillion-dollar economy status places renewed focus on long-term sustainable growth drivers, structural reforms, and growing institutional capacity. Against this backdrop, Budget 2026 places competitiveness at the center of the economic framework to ensure India remains a bedrock of a resilient global economy.

Strategic Alignment

The Budget is placed against a landscape of global uncertainties and the newly concluded Free Trade Agreement (FTA) with the European Union. Key measures to enhance competitiveness include modernizing agricultural infrastructure, enhancing capital investment in machinery, and creating common service and certification facilities for weavers and artisans. By addressing long-standing gaps in skills and technology, the Budget aims to help the Indian industry emerge as a global powerhouse, particularly if it adopts Industry 4.0 practices through collaboration with academia and research institutions.

Sectoral Support

• MSMEs and Artisans: The Budget introduces the Ghar Ghar Swaraj Initiative to strengthen traditional handlooms and handicrafts, which represent a significant segment of the rural economy. This involves focusing on global market linkages, branding, and training to benefit millions of artisans.
• University Townships: A major proposal involves setting up five university townships along major industrial corridors. These centers are intended to act as hubs for specialized skills, bridging the gap between industry requirements and laboratory readiness.
• Textiles: The Budget recognizes that village industries are steadily losing ground to mechanization. In response, it offers targeted support for the textile sector through the Khadi and Village Industries Commission (KVIC), providing infrastructure, credit, and market exploration.

Liquidity and Innovation

To address the "capital scarcity" of MSMEs, the Budget proposes several innovative liquidity measures:

• Mandating the use of TReDS (Trade Receivables Discounting System) for central public sector enterprises (CPSEs) to ensure timely payments.
• Expanding the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to provide credit guarantees for invoice discounting.
• Integrating the Government e-Marketplace (GeM) with TReDS to ease working capital constraints.

Vision for 2047

The Budget reinforces the "Make-in-India" vision and the long-term goal of Viksit Bharat 2047. By focusing on "cooperative mitras," the government aims to modernize the cooperative sector through tax easing and diversification into value-added segments like food processing and energy. Ultimately, this holistic approach seeks to convert the "engineering state" mindset into a sustainable, self-inclusive economy where the benefits of growth are widely and equitably shared.

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S Mahendra Dev is Chairman and RK Tripathi is Joint Secretary in the Economic Council to the Prime Minister. Views are personal.

Deepening India’s role in global supply chains

The thrust on new age sectors further enhances India’s competitiveness

By R DINESH

The Budget sends a signal of stability and credibility at a time when global uncertainty continues to test economic resilience. The Finance Minister’s commitment to a fiscal deficit of 4.3 per cent reinforces the government’s growth priorities with macroeconomic discipline.

A substantial focus on capital expenditure, with an allocation of ₹12.2 trillion, reinforces that the government is looking at a sustained, multi-year measure. As this investment is geared towards sectors like electronics, semiconductors, green energy, and infrastructure, it will foster long-term growth, integration and efficiency.

Manufacturing Push

The Budget places special emphasis on strengthening manufacturing and investment into India by attracting foreign investment through a predictable window for customs and corporate tax on technology. These measures, along with better visibility of policy, send a strong signal of intent to global investors. The thrust on new-age sectors will increase India’s manufacturing integration and tech ecosystem, as well as manufacturing and supply chains, improving India’s competitiveness and global standing.

For MSMEs, mandating TReDS (Trade Receivables Discounting System) as the settlement platform for all public procurement and central public sector enterprises (CPSEs) creates a centralised Government e-Marketplace (GeM) template for wider adoption across supply chains. The proposed ₹10,000 crore SME Growth Fund and ₹20,000 crore for the Corporate Mitras scheme for MSMEs in Tier-2 and Tier-3 towns can help create scale and efficiency, enabling these enterprises to integrate into corporate and global value chains over time.

Logistics Thrust

Proposals such as new dedicated freight corridors (DFCs), high-speed rail, and national waterways linking industrial centres and ports will significantly enhance logistics. At the same time, the cargo promotion scheme aims to increase the share of coastal and inland waterways from 6 per cent to 12 per cent by 2047, clearly highlighting the focus on supply chain resilience. Additionally, the creation of regional university townships to address skill gaps is a welcome focus on building relevant talent for these sectors.

The Budget reinforces India’s ambition by enabling a larger role in global supply chains while building the domestic capability of the logistics and manufacturing sectors.

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The writer is Chairman, TVS Supply Chain Solutions Ltd.

High-value crop status a turning point for cashew

By AJ Vinayak Mangaluru

With India’s raw cashew nut (RCN) production remaining stagnant at around 0.7 million tonnes (mt) per annum despite having a processing capacity of nearly 2 mt, the Union Budget’s proposal to support high-value agriculture in coastal areas brings a ray of hope for a paradigm shift in the sector.

For the first time, Finance Minister Nirmala Sitharaman mentioned cashew in her Budget speech, stating the government will launch schemes to enhance productivity, increase farmers’ incomes, and create climate-resilient opportunities in coastal areas. The high-value crop status was also extended to other crops such as coconut, sandalwood, cocoa, and coffee.

Positive Signal

The industry has welcomed the announcement as a long-awaited recognition of cashew’s potential. Gunjan Vijay Jain, president of the Nuts and Dry Fruits Council of India, noted that the Budget sends a strong and positive signal for the nuts and dry fruits sector by recognizing high-value agriculture as a key driver for farm income growth and export competitiveness.

Kalbavi Prakash Rao, managing partner of Kalbavi Cashews in Mangaluru, highlighted the current imbalance in the industry, stating that while India has the capacity to process 3 mt of RCN, it is only producing roughly 0.7 mt. He remarked that with domestic consumption growing at 7 per cent plus and the ingredient segment consumption at 10 per cent, the industry must become self-reliant in raw material to avoid excessive exposure to global market volatility.

A New Chapter

R Jaganmohan Pillai, chairman of the Nuts and Dry Fruits Council of India’s Nutking brand, described the move as a "turning point for self-reliance and global leadership". He believes the focus on high-value agriculture will encourage domestic production and reduce the industry’s dependence on imported raw nuts, which often carry a high price premium.

Industry experts suggest that this shift toward supporting manufacturing-linked infrastructure and productivity will enable the Indian cashew industry to reclaim its top position in the global export market.

The provided sources do not contain an article titled "jet fuel consumption hit record high in january" or any specific information regarding aviation turbine fuel (ATF) consumption levels for that period.

While the sources cover various economic indicators and record-breaking figures for January 2026, they focus on other sectors:

• Passenger Vehicles: Dispatches grew by 11% year-on-year to approximately 4.5 lakh units, with Maruti Suzuki and Hyundai recording their highest-ever monthly sales,,.
• Power Consumption: India's power consumption rose 3.8% to 142.74 billion units in January 2026, driven by increased heating requirements during intense cold in North India.
• Manufacturing Activity: The HSBC India Manufacturing PMI rebounded to 55.4 in January, signaling a stronger improvement in operating conditions after a two-year low the previous month,.
• Smartphone Market: Apple reached its highest-ever value share of 28% in the Indian market during this period,.
• Aviation Sector News: The sources mention that Air India grounded a Boeing Dreamliner in early February due to a potential defect with the aircraft's fuel control switch, and that the budget proposed scrapping basic customs duty on imported civilian aircraft components,,.

If you are interested in details regarding the aviation industry or energy-related policies from the sources, I can provide information on the duty relief for aircraft components or the $500 billion energy and technology deal discussed between President Trump and Prime Minister Modi,.

CHINA’S TRADE ARC: LESSONS FOR INDIA

By Puneet Kumar Arora & Jaydeep Mukherjee

China’s economic resilience, even in the face of significant global pressure, offers a distinct lens through which to view its success as an “engineering state.” As argued in Dan Wang's Breakneck: China’s Quest to Engineer the Future, Chinese leaders prioritize large-scale building, rapid industrial expansion, and centralized problem-solving, which helped the nation post a record trade surplus of $1.2 trillion in 2025 despite multiple rounds of US tariffs.

Credit and Scale

Exporting is capital-intensive, requiring firms to finance large-scale production, manage long working-capital cycles, and invest in global marketing networks. China’s domestic credit to the private sector stands at approximately 194% of its GDP, providing a level of financial depth similar to Japan (197%) and the US (201%). This access to finance allows Chinese firms to dominate exports and withstand tariff shocks. In stark contrast, India’s domestic finance to the private sector is at a meagre 50% of GDP, which limits the ability of Indian exporters to scale, diversify, and sustain competitiveness.

The Role of Imports

A crucial part of China’s strategy since joining the WTO in 2001 has been its integration into global value chains. Rather than discouraging imports, China ships in capital goods, advanced machinery, and critical technologies to embed them into export-oriented manufacturing. This allows firms to upgrade technologically over time. For India, the lesson is that high-quality imports are essential for export competitiveness; recent rollbacks of quality control orders and easier access to imported inputs are noted as steps in the right direction, particularly for MSMEs.

Redirecting Exports

While US tariffs on Chinese goods peaked at about 45% (later easing to 30%), causing exports to the US to fall by 20%, China’s export engine did not stall. Instead, shipments were redirected, with exports rising sharply to Africa (26%), Asean (13.4%), India (12.8%), and the EU (8.4%). This was further aided by trans-shipments through markets like Thailand and Vietnam. India has shown resilience by negotiating free trade agreements (FTAs) with Oman, the UK, and the European Free Trade Association (EFTA), though a trade pact with the US remains elusive.

Strategic Agility

China has shifted its export composition toward technology-intensive sectors where it has established global dominance:

• High-Tech: Smartphones, consumer electronics, and telecom equipment.
• Clean-Tech: Batteries, electric vehicles (EVs), and renewables.
• Strategic Leverage: In 2025, China’s rare-earth exports reached their highest levels since 2014, signaling strategic leverage over global supply chains.

These are the segments where global demand is expanding fastest, driven by digitalization and climate commitments.

Consumption vs. Exports

Despite its trade success, concerns remain about the sustainability of China’s growth model, which is overtly reliant on the external sector. Household consumption in China makes up only 39–40% of GDP, well below the global average of 65%. India, by comparison, has a consumption-led model, with private spending contributing about 60% to its GDP. The sources suggest that while exports are crucial, India must avoid pursuing export growth at the cost of domestic consumption, as economies overly reliant on exports are more vulnerable when global conditions turn adverse.

India looks to harden drug law to curb opioid abuse

The regulator plans an overhaul of the Drugs and Cosmetics Act to sharply raise punishments

By Priyanka Sharma New Delhi

In a bid to stem the alarming opioid crisis, India's apex drug regulator is planning a comprehensive overhaul of the Drugs and Cosmetics Act. The proposed changes aim to sharply raise punishments and fines to deter the illegal diversion of habit-forming pharmaceutical opioids. According to government documents and officials, this move could materially tighten oversight across India's $50-billion pharmaceuticals market.

Stricter Penalties and Legal Alignment

The proposal by the Drugs Controller General of India (DCGI) involves increasing imprisonment for violations by three-and-a-half times—from two years to a minimum of seven years. Additionally, financial penalties could see a 28-fold increase, rising from the current ₹20,000 to at least ₹5 lakh. These changes are intended to align the Drugs and Cosmetics Act with the much stricter Narcotic Drugs and Psychotropic Substances (NDPS) Act.

Under the current law, many offences are often bailable and inadequately enforced. The new framework seeks to make these offences cognizable and non-bailable. This development is significant given that a 2019 government report estimated India has approximately 2.5 million "dependent users" of pharmaceutical opioids.

Drugs Under Scrutiny

The regulatory focus is on formulations under Schedules H, H1, and X, which account for 30% of high-value prescription antibiotics, psychotropics, and analgesics in India. Specific drugs identified for their high potential for misuse as intoxicants include:

• Codeine-based syrups
• Alprazolam and Zolpidem (prescribed for anxiety and insomnia)
• Tramadol (a potent opioid analgesic)
• Diazepam (prescribed for muscle spasms and alcohol withdrawal)

New Tracking and Enforcement Measures

To secure the supply chain, the government plans to create a separate schedule for these specific drug formulations. A mandatory real-time digital tracking system for purchase orders will be implemented to create a digital trail.

Under this new playbook, manufacturers will be required to furnish formal purchase orders and immediately notify authorities—including drug inspectors at both source and destination and the Superintendent of Police in relevant jurisdictions—upon the dispatch of these medicine batches.

These proposals were discussed during the 67th Drugs Consultative Committee (DCC) meeting held in November 2025 and are currently under review by the DCGI.

LIQUIDITY IS NOW RBI’S REAL CHALLENGE

By Dhiraj Nim

All eyes are now on India’s Monetary Policy Committee (MPC) ahead of its final rate decision for fiscal year 2026. After repo rate cuts totaling 125 basis points (bps), the rate-cutting cycle is expected to conclude, and policymakers may shift focus from the cost of funds to the quantum of liquidity. While India's growth-inflation outlook remains comfortable, the greater challenge for the Reserve Bank of India (RBI) is that transmission remains weak due to tight banking liquidity.

This tightness is evidenced by the weighted average call rate averaging above the repo rate and a rise in certificate-of-deposit rates. The liquidity issue does not stem from inadequate base-money creation but rather from three specific factors within the banking system.

First, currency in circulation has surged 10.7% year-on-year, the highest since early 2022. This rise in currency leakage, which began in mid-2024, is consistent with improving rural demand and a wave of state elections in 2025. Second, the RBI’s forex interventions have tightened domestic onshore liquidity. As the rupee declined, the central bank sold US dollars, sometimes heavily, to deter speculative positioning. Third, the banking system’s incremental credit-deposit ratio is likely to rise. While credit growth has improved, deposit growth has not strictly kept pace, creating persistent upward pressure on interest rates.

The RBI has already embarked upon durable and temporary liquidity infusions, but more may be needed. The most urgent task is to ensure that past rate cuts are transmitted effectively, which requires the RBI to provide additional liquidity and anchor rates in line with the policy rate and stance.

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Dhiraj Nim is an economist at ANZ Research. Views are personal.

Iran’s Gen Z helped propel the protests. They paid with their lives.

A generation who grew up in a more connected world rebelled against a failing economy and strict social rules

By Feliz Solomon

On Jan. 7, Parviz Afshari received the last messages his son, Sam, would ever send him: “I’m planning to join the protest tomorrow/ But don’t tell Mom”. Relatives found the 17-year-old boy’s body four days later among rows of corpses in a morgue in the Iranian city of Karaj. Sam is part of an expanding list of teenagers and young people emerging as victims of a brutal crackdown in a country where almost half the population is under 30.

A Digital Memorial

As an internet blockade restricts information, a digital memorial has emerged on social media, filled with photographs and biographies of dead athletes, artists, and students. While youth have often formed the front lines of mass protests globally—from China in 1989 to the Arab Spring—the movement in Iran took on a unique tenor. Initially spearheaded by conservative bazaar workers disgruntled over the collapse of Iran's currency, the protests morphed into an antiregime uprising when young people joined, presenting the greatest challenge to Shiite cleric rulers in nearly five decades.

The Cost of Rebellion

The scale of the violence is still coming into view due to a near-total communications blackout that began on Jan. 8. Human-rights researchers suggest the death toll may surpass 10,000, potentially making it the deadliest episode of political suppression in modern history. While Iranian authorities claim roughly 3,100 deaths were linked to terrorism, the U.S.-based nonprofit Human Rights Activists in Iran has confirmed over 6,000 deaths, including at least 137 people under the age of 18.

This generation, the first in Iran to grow up with widespread internet access, witnessed a brief window of optimism during the 2016 easing of sanctions before the nuclear deal collapsed, plunging the nation back into isolation. With youth unemployment above 20%, many feel the ultraconservative regime is entirely out of touch.

Lives Snuffed Out

The stories of the victims highlight the personal toll of the crackdown:

• Sam Afshari (17): A student of English and German who loved computers and swimming, Sam was planning to join his father in Bavaria to study IT. He was killed by a gunshot wound to the back of his head; when his family found him, a second wound had torn through half of his face.
• Rebin Moradi (17): A soccer player who called his family while leaving a game to say he was joining a demonstration; he was found four days later in a Tehran morgue.
• Amirali Heidari (17): Just days away from his 18th birthday, witnesses say security forces shot him in the chest and then beat him to death with a rifle butt as he lay bleeding.

A Fight for Dignity

Experts note that these young Iranians take to the streets fully aware of the risks. “Iranian Gen Z wants to be part of the world and, in very basic terms, be able to express themselves freely, have economic opportunities, and live with dignity,” said Holly Dagres, a senior fellow at the Washington Institute.

For many, the struggle is a continuation of the “Woman, Life, Freedom” movement sparked in 2022 by the death of a young woman in the custody of the “morality police”. As one exiled artist put it, despite the deadly consequences, for this generation, “This was their time”.

Trump launches $12 billion minerals stockpile

US President Donald Trump is set to launch a strategic critical minerals stockpile with $12 billion in seed money. This initiative is a bid to insulate manufacturers from supply shocks as the United States works to slash its reliance on Chinese rare earths and other metals.

Project Vault

The venture, dubbed Project Vault, is designed to marry $1.67 billion in private capital with a $10 billion loan from the US Export-Import Bank. These funds will be used to procure and store minerals for automakers, technology firms, and other manufacturers. Senior administration officials, who requested anonymity to discuss the unannounced plan, described it as a first-of-its-kind stockpile for the US private sector.

Strategic Focus

The effort is modeled after the nation’s existing emergency oil stockpile. However, instead of crude oil, this project focuses on minerals such as gallium and cobalt, which are essential components in iPhones, batteries, and jet engines. The stockpile is expected to include:

• Rare earths and critical minerals.
• Strategically important elements subject to volatile prices.

Weaning from China

The launch represents a major commitment to accumulate minerals deemed critical to the industrial economy, specifically the automotive, aerospace, and energy sectors. It highlights President Trump’s ongoing effort to wean US supply chains away from China, which currently serves as the world’s dominant provider and processor of critical minerals.

INSIDE THE 16TH FC’S 41% TIGHTROPE WALK

A Mint explainer on the Finance Commission’s latest report and why many states remain upset.

By N Madhavan

The 16th Finance Commission (FC) has released its recommendations for the period 2026-2031, which will decide the allocation of resources between the Centre and the states. In a delicate balancing act, the Commission has retained vertical devolution at 41% while tweaking the criteria for horizontal devolution to reward contribution to economic growth and ending the revenue deficit grant.

The Context of Devolution

In India’s federal setup, Article 280 of the Constitution mandates the President to appoint a Finance Commission every five years to recommend how to divide the net tax proceeds (the divisible pool) of the Union. The current report, headed by economist Arvind Panagariya, arrives as relationships between the Centre and many states are frayed over the devolution process. Progressive states, particularly in the south, feel they are being punished for pursuing development and reducing population growth.

Past Trends

The first Finance Commission in 1951 recommended that 16% of the gross tax revenue (GTR) be shared with states. By the 15th Commission, this devolution (excluding grants) had doubled to 32.1% of GTR. While the 15th Commission recommended an overall vertical transfer of 41%, data suggests that when all transfers are considered, states currently receive roughly 69% of total revenue receipts, excluding capital receipts.

State Grievances

Many states remain angry for two primary reasons. First, they claim they are not receiving their full recommended share of the divisible pool. Second, they argue the Centre is offsetting their share by levying higher cess and surcharges, which are not shared with states. During consultations, 18 of the 28 states sought an increase in devolution to 50%. The Centre refuted these claims, arguing it needs more revenue for defence and macroeconomic management.

The "Good Bargain"

The 16th FC denied the states' claim for 50% devolution, maintaining the limit at 41%. It also refused to cap cess and surcharges, citing their constitutional role in raising resources for emergencies. However, the Commission suggested a "good bargain": folding revenues from cess and surcharges into regular taxes, which would allow states to agree to lower devolution percentages with no actual loss of revenue.

Horizontal Devolution Tweaks

To address the concerns of progressive states, the Commission introduced a new norm—"contribution to the GDP"—which rewards a state’s contribution to national growth with a 10% weightage. It also used 2011 census figures and adjusted other weightages, such as demographic performance and per capita distance. Despite these refinements, the net result shows little difference in devolution levels compared to the 15th Commission.

Grants and Local Bodies

• Revenue Deficit Grants Shelved: The Commission has ended these grants, arguing they created "perverse incentives" for states to persist with deficits rather than adopting policies to eliminate them.
• Urban Local Grants: In a major shift to empower the "third tier" of government, the Commission announced a 45% jump in allocation to urban local bodies, totaling ₹3.56 trillion. Experts noted this allocation equals the entire outlay of centrally sponsored schemes over the 13-year period from 2014 to 2027.

Mixed Reactions

The proposals have drawn varying responses from state leadership:

• Kerala welcomed the report as its share rose from 1.9% to 2.4%.
• Tamil Nadu expressed disappointment that vertical devolution remained at 41% instead of 50%, noting it has the lowest share among developed states.
• Himachal Pradesh estimated a ₹40,000 crore shortfall due to the withdrawal of the revenue deficit grant.
• Karnataka criticized the low allocation, noting that despite contributing 8.7% to India's GDP, its share remains inadequate.

How to make good small talk and why that’s important

By Manu Joseph

Speaking to a stranger can be a rich experience, even if they are ordinary individuals. When seeking good small talk, one should not have material ambitions or seek out only the beautiful and the famous; instead, the focus should be on the value of a transient conversation.

The Challenge of Silence

The biggest problem with small talk is often the sudden awkward silence. While silences are frequently defamed as signs of boredom, they are actually necessary pauses that allow the mind to recoup. The author suggests that the more we know someone, the quieter we naturally become, and silences do not necessarily mean you have run out of things to say.

Why We Speak to Strangers

Strangers are the “background extras” in the engrossing stories of our lives, which typically have very few central characters. Despite being extras, it is important to speak to them. Many people who are considered naturally good at small talk often lead "dreary" conversations characterized by obvious observations or common ice-breakers like bad-mouthing the food or the host.

A Different Approach

In an ideal world, small talk would move away from standard questions like “So what do you do?” and toward more interesting, albeit unusual, inquiries such as “What’s your uric acid level?”. While some people take pride in being "bad at small talk" as if it were a sign of intelligence, the author argues that one should actually strive to be better at it.

How to Master Small Talk

The secret to effective small talk is not to be interesting yourself, but to make the other person genuinely interesting. This is best achieved by:

• Treating strangers as though they are not strangers: This removes the numbing boredom of standard pleasantries.
• Asking probing but decent questions: Using "uric acid" as a metaphor, the author suggests asking questions that prompt people to share their "numbers" or personal details, as people are generally content and entertained when asked about themselves.
• Taking risks: Small talk becomes meaningful when you take the risk of appearing somewhat unsophisticated.

Ultimately, small talk is a way to find interest in others and can lead to rich, unexpected conversations if approached with genuine curiosity rather than material ambition.

OECD Report : Australia

 According to the sources, the Australian economy is currently normalising following a five-year period of "highly unusual" macroeconomic fluctuations triggered by the pandemic, global energy and food price shocks, and subsequent interest rate hikes. While the economy experienced a significant slowdown in 2023 and 2024, it is now on a path toward recovery with growth expected to align with pre-pandemic trends.

Growth Projections and Recovery Drivers

Real GDP growth, which slowed to approximately 1.1% in 2024, is projected to recover to 1.8% in 2025 and reach 2.3% in both 2026 and 2027. This recovery is expected to be driven by several key factors:

• Household Income: A rebound in real disposable household income as nominal wage gains catch up to inflation.
• Monetary Easing: An easing of interest rates, which is already supporting a rebound in sensitive sectors like housing investment.
• Private Demand: Investment and private consumption are set to grow more rapidly as the heavy impetus from government consumption growth begins to ease.

Inflation and Monetary Policy

Australia achieved a "soft landing" in the labor market, but inflation management remains a primary focus. Headline inflation peaked at nearly 8% in late 2022 and successfully returned to the 2-3% target band in late 2024. However, an unexpected upturn occurred in the third quarter of 2025 (reaching 3.0% for core inflation) due to the withdrawal of energy rebates.

The Reserve Bank of Australia (RBA) began an easing cycle in February 2025, with subsequent cuts in May and August 2025. The sources suggest that if inflation continues to trend downward in 2026, there may be space for further easing toward a neutral monetary stance.

Labour Market and Wage Dynamics

The labor market has remained remarkably resilient despite restrictive monetary policy.

• Employment: The number of people employed and participation rates are at record highs, supported by a strong rebound in immigration and higher female labor force participation.
• Wages: Despite a tight labor market, real wage growth has been weak. Between early 2022 and late 2025, real hourly wages in Australia fell by 2.6%, a steeper decline than in nearly any other OECD economy, largely due to Australia's relatively "inertial" wage-setting system of multi-year collective agreements.

Fiscal Position and Long-term Pressures

The general government deficit widened to 3.4% of GDP in 2025, though it is projected to narrow to 2.5% by 2027. While Australia maintains a relatively light debt burden compared to its peers, the sources highlight significant long-term fiscal pressures:

• Structural Deficit: A structural deficit has opened at the federal level on a cash basis.
• Ageing and Healthcare: Population ageing is expected to increase health and aged care costs by 1.5% of GDP by 2050.
• Climate and Transition: The costs of climate adaptation and the loss of fuel excise revenue (due to the shift to electric vehicles) present further budgetary challenges.

External Risks and Structural Challenges

The macroeconomic outlook is sensitive to several global risks identified in the sources:

• China and Trade: Australia depends heavily on China for commodity demand. Recent shifts in US trade policy (including 10% to 50% tariffs) and broader global trade tensions could indirectly impact Australian national income.
• Productivity: A major headwind is the long-term slowdown in productivity growth, which was already at its lowest rate in decades prior to the pandemic.
• Housing: High housing costs and a structural shortfall in supply continue to weigh on labor mobility and intergenerational equity.

In the larger context of the 2026 Economic Survey, the sources conclude that while the cyclical recovery is underway, sustained living standards will require reinvigorating business dynamism, strengthening competition, and addressing the housing and energy transitions.

In the context of the OECD Economic Survey: Australia 2026, fiscal policy is described as being in a state of rebalancing following the major shocks of the pandemic and subsequent energy price spikes. While the public finances have weakened in recent years, the sources emphasize the need for a gradual consolidation to address a structural deficit and rising long-term spending pressures.

Current Fiscal Position and Strategy

The general government deficit expanded by approximately 1.5 percentage points of GDP over the last three years, with the federal budget returning to a net lending deficit in 2024-25. This deterioration was driven by permanent spending increases, income tax cuts, and cost-of-living reliefs.

• Federal Strategy: The 2025-26 Federal Budget aims to put debt on a sustainable footing by limiting spending growth and directing revenue windfalls (often from high commodity prices) toward budget repair.
• State and Territory Pressures: Sub-federal governments recorded an aggregate deficit of 2.1% of GDP in 2024-25. States face a "vertical fiscal imbalance," where they are responsible for 40% of spending (notably health and education) but collect only 20% of total revenue. Consequently, public debt has risen in most states, particularly in Victoria and the Northern Territory.

Long-term Fiscal Pressures

The sources highlight several "substantial pressures" that will challenge fiscal stability in the coming decades:

• Population Ageing: Increased health and aged care costs are projected to add 1.5% of GDP to public spending by 2050.
• NDIS Sustainability: The National Disability Insurance Scheme (NDIS) currently costs 1.5% of GDP. While reforms passed in 2024 aim to save AUD 60 billion over a decade, the government must effectively cap annual growth at 8% to ensure sustainability.
• Climate Transition: Achieving net zero will require significant public investment, while the shift to electric vehicles will erode fuel excise revenues, which currently account for about 0.6% of GDP.

Tax System Reform

A central theme in the sources is that Australia’s tax mix is inefficient and skewed toward direct taxation (labour and corporate income). To support growth and address deficits, the sources recommend rebalancing the system toward more efficient bases:

• GST Reform: Australia’s 10% GST rate is low by international standards. The sources suggest broadening the base by reducing exemptions and considering a rate increase (potentially to 15%) to reduce reliance on labour taxes.
• Property Taxation: The sources advocate for replacing state-based stamp duties (which hinder labour mobility) with recurrent land taxes.
• Superannuation: Recommendations include further reducing tax concessions for high-wealth individuals to ensure the system focuses on retirement adequacy rather than wealth accumulation.
• Natural Resources: The sources suggest Australia has historically undertaxed resource rents and could raise additional revenue (up to 0.5% of GDP) through minor adjustments to the royalty system.

Fiscal Framework and Governance

While the Charter of Budget Honesty provides transparency, the sources suggest the framework could be strengthened by:

• Spending Targets: Introducing a numerical spending target to provide a clearer budget envelope, especially since revenues are volatile and heavily influenced by global commodity prices.
• Intergovernmental Coordination: Enhancing the role of the Council on Federal Financial Relations to manage medium-term cost drivers across both federal and state levels.
• Bracket Creep: The sources note that the non-indexation of tax brackets (fiscal drag) has increased the effective tax burden on households, though periodic cuts have partially mitigated this. Indexing thresholds is suggested to improve transparency and reduce arbitrary tax increases.

In the larger context of the OECD Economic Survey: Australia 2026, revitalising competition is presented as a critical lever for reversing the long-term slowdown in productivity growth and easing cost-of-living pressures,,. The sources indicate that competition has waned over the past two decades, characterized by declining business dynamism—such as lower firm entry and exit rates—and rising market concentration and profit margins,,.

The Current Competitive Landscape

Australia faces unusual challenges in fostering competition due to its geographical remoteness (the "tyranny of distance") and highly dispersed population, which naturally predispose the economy to fragmented and concentrated markets,,. Key findings regarding the current state include:

• Rising Mark-ups: Average firm-level mark-ups increased by approximately 6% between 2003 and 2017, suggesting that many firms face less pressure to lower prices,.
• Market Concentration: Industry concentration is notably higher in Australia than in the United States and has been rising.
• Policy Stagnation: While once a global leader following the 1990s Hilmer reforms, Australia’s product market regulation (PMR) settings have remained largely unchanged while other OECD peers have moved forward with more vigorous reforms,.

Key Reform Pillars

The 2026 Survey highlights several major initiatives and recommended actions to restore competitive intensity:

1. Merger Control Reform The sources highlight the introduction of a mandatory notification merger regime (commencing in 2026) as a significant step forward,. This replaces a permissive voluntary system that allowed many "stealthy" or incremental acquisitions to go unnoticed. The new regime shifts the Australian Competition and Consumer Commission (ACCC) from a prosecutorial to an administrative review model, bringing Australia into alignment with international best practices,.

2. Revitalising National Competition Policy (NCP) A "revitalised" NCP agenda has been established to tackle regulatory fragmentation across Australia’s federal system,. This includes:

• Incentive Payments: Reintroducing "Competition Payments" to reward states and territories for meeting agreed reform benchmarks, such as streamlining planning and zoning or harmonizing occupational licensing,,.
• Regulatory Harmonisation: Addressing differences in state-level rules—for instance, in solar panel regulations or heavy vehicle permits—that raise costs for small businesses and limit labour mobility,.

3. Strengthening Enforcement and Oversight The sources advocate for a more vigorous enforcement of existing competition laws, noting that there have been relatively few successful complex abuse-of-dominance cases,. Recommendations include simplifying the legal framework for cartel conduct, boosting ACCC enforcement capacity, and making systematic use of data-rich market studies conducted by both the ACCC and the Productivity Commission,,.

Sector-Specific Objectives

The sources identify several highly concentrated sectors where specific barriers to entry should be removed:

• Aviation: Reforming slot allocation at major airports (like Sydney) to increase transparency and provide more "use-it-or-lose-it" pressure on incumbents,,.
• Banking: Ensuring proportionality in licensing to allow smaller digital challengers (neobanks) to enter the market and mandating standardized notifications to help consumers switch products,,.
• Supermarkets: Requiring major chains to publish daily price and product size data in standardized formats to improve transparency and address "shrinkflation",.
• Telecommunications: Encouraging a fourth mobile network operator through infrastructure sharing (roaming and towers) and pro-competitive spectrum allocation, particularly in regional areas,,.
• Construction: Promoting Modern Methods of Construction (MMC), such as prefabrication, by establishing national standards and using government procurement to create the necessary scale for innovation,,.
• Motor Vehicles: Removing parallel import restrictions to allow agents other than manufacturers to import cars, which could lower retail prices and increase consumer choice,.

According to the sources, housing in Australia is characterized by high quality and spaciousness, yet it is currently expensive and in short supply, creating a significant strain on well-being and economic productivity. Over the past 30 years, real house prices in Australia have risen more in relation to household incomes than in any other OECD country.

The Current State of Affordability

The sources state that housing costs have surged over the past three years due to a combination of rising interest rates, high rental inflation, and a chronic shortage of dwellings.

• Price and Debt: Australian households carry a high ratio of mortgage debt to disposable income. Because the vast majority of mortgages are adjustable-rate, households felt the impact of rising interest rates almost immediately, leading to a sharp increase in mortgage interest payments as a share of income.
• Rental Stress: By 2023, 54% of low-income renters were in "rental stress," paying more than 30% of their income in rent.
• Social Impact: High costs have reduced homeownership among the young and limited geographic mobility, which prevents workers from moving to high-productivity areas. This "urban sprawl" also increases greenhouse gas emissions due to longer commutes.

Supply-Side Constraints

The sources identify restrictive land-use regulations as the primary factor behind the long-term shortfall in housing supply.

• Zoning and Planning: Regulations often include building height restrictions and minimum lot sizes that prevent the development of medium- and high-density housing in major cities. Australia’s land-use planning is highly decentralized and overlapping, which tends to result in tighter regulations.
• Construction Productivity: Productivity in the construction sector is lower today than it was 20 years ago. The industry is fragmented, with many small firms that lack the scale to innovate or adopt Modern Methods of Construction (MMC), such as prefabrication.
• Social Housing: Social housing makes up only about 4% of the housing stock, down from 6% in 1990 and roughly half the OECD average.

Demand-Side Drivers and Tax Distortions

The sources argue that current tax and policy settings further exacerbate the affordability crisis by boosting demand rather than supply.

• Favorable Taxation: Residential property investment is supported by a 50% capital gains tax reduction and "negative gearing," which allows investors to deduct rental losses from their other taxable income. These settings tend to inflate property prices.
• Stamp Duties: High state-based transaction taxes (stamp duties) make it costly for people to move or downsize, while recurrent land taxes remain relatively low.

Proposed Policy Solutions

To address these challenges, the OECD Economic Survey: Australia 2026 recommends several structural reforms:

• Rebalancing Property Taxes: The sources advocate for replacing state-based stamp duties with recurrent land taxes to improve mobility and align the taxation of real estate with other assets.
• Planning Reform: Federal incentives should be used to encourage states and local authorities to ease planning restrictions and facilitate higher-density construction around transport connections.
• Boosting Social Housing: The sources recommend increasing public funding and raising the targets for the Housing Australia Future Fund (HAFF) to expand the social housing stock.
• Industrializing Construction: Establishing national standards and a voluntary certification scheme for MMC would help the construction sector achieve the scale necessary to lower costs and increase supply.

In the larger context of the OECD Economic Survey: Australia 2026, the climate transition is framed as both a significant long-term fiscal challenge and a critical opportunity to reinvigorate industrial productivity. While Australia has historically been viewed as an international laggard, the sources indicate that recent legislative efforts have put the country on a path to meet its medium-term goals, though substantial structural hurdles remain.

Emissions Targets and Progress

Australia has enshrined its climate goals in law through the Climate Change Act of 2022, which targets a 43% reduction in emissions by 2030 (from 2005 levels) and Net Zero by 2050.

• 2030 Outlook: Australia is currently considered broadly on track to meet the 2030 target; as of 2024, emissions were 28.2% below 2005 levels.
• 2035 Ambition: The government recently set a 2035 target of 62-70% reduction, which the sources describe as a "high degree of ambition" that will require a significant acceleration of effort beyond existing power-sector policies.

The Electricity Sector: Successes and Volatility

The energy sector has driven the bulk of Australia’s recent emission reductions, largely due to a rapid shift to renewables and the declining use of coal. However, this transition has introduced new complexities:

• Intermittency and Pricing: High penetration of solar and wind has led to a rising incidence of negative wholesale electricity prices, particularly in South Australia and Victoria. This indicates a pressing need for increased investment in grid transmission and battery storage to balance supply and demand.
• Capacity Investment Scheme (CIS): To manage this, the government expanded the CIS with a target of adding 26 GW of renewable generation and 14 GW of clean dispatchable capacity by 2030.

Sectoral Challenges: Transport and Agriculture

While the energy sector is decarbonizing, other major emitters are lagging:

• Transport: This sector is the second-largest emitter and its emissions have been rising. Australia remains heavily car-dependent, and the sources suggest that urban sprawl and low fuel taxes contribute to a slow take-up of electric vehicles (EVs). To address this, the sources recommend gradually raising motor fuel taxes toward European levels and implementing road-user charges to offset the eventual loss of fuel excise revenue.
• Agriculture: Accounting for 18% of emissions, this sector lacks a clear reduction strategy. The sources note that while there is research into methane-reducing feed supplements, the red meat industry recently abandoned its 2030 carbon neutrality target as "unrealistic".

"Future Made in Australia" and Green Industry

The transition is a central pillar of the government’s industrial policy. The Future Made in Australia agenda commits approximately AUD 23 billion over ten years to develop priority sectors like green hydrogen, critical minerals, and green metals.

• Green Iron Potential: Australia is uniquely positioned to lead in green iron production by combining its massive iron ore deposits with exceptional solar and wind resources.
• Critical Minerals: Australia is already the world’s largest producer of lithium and a major producer of cobalt, offering a significant opportunity to diversify global supply chains away from China.

Adaptation and Economic Resilience

Australia is "highly exposed" to climate risks, including extreme heat, bushfires, and coastal flooding.

• Economic Toll: Seasonal changes between 2001 and 2020 have already reduced annual average farm profits by 23%.
• Policy Response: The sources highlight the importance of the National Adaptation Plan (NAP) and the need for better disclosure of climate risks in property sales to ensure the insurance industry can price hazards accurately.

Ultimately, the sources conclude that while the 2030 targets are within reach, achieving Net Zero by 2050 will require "further policy efforts" to manage the exit of coal, decarbonize transport and agriculture, and integrate climate risks into land-use regulations.

In the larger context of the OECD Economic Survey: Australia 2026, revitalising productivity growth is identified as the primary requirement for sustaining high living standards and supporting future wage increases. Productivity growth in the five years preceding the pandemic was roughly half the average of the previous half-century, and more recently, labour productivity has stalled, leaving it no higher than it was a decade ago.

The Productivity Challenge

The sources attribute the recent extreme weakness in productivity to a mix of cyclical, sectoral, and structural factors:

• Sectoral Shifts: A significant drag has come from the non-market sector (such as healthcare and aged care), which is labour-intensive and where productivity is difficult to measure. Additionally, the mining sector has faced a structural trend toward lower productivity as easy-to-access deposits are exhausted.
• Business Dynamism: There has been a notable decline in firm entry and exit rates, as well as job mobility, which reduces the "creative destruction" necessary to reallocate resources to more efficient firms.
• Measurement Lags: The sources note that the recent surge in migration may temporarily lower measured productivity because new migrants often start in lower-wage roles before their productivity catches up with native-born workers.

Key Reform Pillars for Growth

The sources outline a comprehensive reform agenda aimed at reversing these trends through competition, regulatory streamlining, and human capital development:

1. Revitalising the National Competition Policy (NCP) A central reform theme is the "revitalised" NCP, which uses incentive payments to encourage states and territories to remove regulatory barriers. This includes streamlining commercial planning and zoning to support new development and harmonising standards for Modern Methods of Construction (MMC) to address the productivity slump in the building sector.

2. Reducing Regulatory Fragmentation Australia’s administrative and regulatory burdens remain high compared to top OECD performers. The sources recommend:

• Occupational Licensing: Expanding Automatic Mutual Recognition to all states (notably Queensland) and narrowing exemptions to allow workers to move more easily between jurisdictions.
• International Standards: Adopting an expedited approach to recognising trusted overseas standards (e.g., for medical devices or construction products) to reduce duplicative testing and lower costs for foreign competitors.

3. Tax and Institutional Reform The sources argue for a tax mix shift toward more efficient bases to support growth. This includes broadening the GST and increasing its rate to 15% while reducing reliance on labour taxes—a move estimated to boost the GDP level by 1.6% over 10 years. Other proposed reforms include indexing the retirement age to longevity and increasing business R&D support.

4. Human Capital and Inclusivity To maximise the productive potential of the workforce, the sources highlight the need to:

• Improve Education: Strengthen vocational education and improve outcomes in the school system.
• Gender Equality: Address the gender pay gap and remove barriers to female labour force participation, which remains lower in hours worked compared to men.
• Migration Alignment: Ensure the migration system effectively matches incoming skills with acute labour shortages in sectors like construction and healthcare.

Estimated Macroeconomic Impact

The OECD's long-term modelling suggests that a coordinated package of these structural reforms could be highly transformative. If Australia successfully reduces regulatory barriers to levels seen in top-performing countries like Denmark or the Netherlands, and implements the suggested tax and R&D reforms, the cumulative impact could boost the GDP level by 3.4% over 10 years and up to 5.8% over 20 years.

Newspaper Summary 020226

 Based on the sources provided, the article titled "Critics’ Choice Rather Than Crowd-pleaser" provides a critical summary of Nirmala Sitharaman’s ninth and "least exciting" budget.

The text of the article is as follows:

Unremarkable. That sums up Nirmala Sitharaman’s ninth and least exciting budget. She said the “reform express” of Prime Minister Narendra Modi was well on its way, but avoided introducing any major new reforms, such as reducing the huge subsidy for urea fertilisers. Her budget emphasis was on continuity, revelling in GDP growth of 8% in the first half of FY26. Why rock the boat when it is moving so smoothly in the face of global headwinds?

The broader analysis associated with this "critics' choice" perspective includes the following insights:

• Market Impact: The Nifty sank, largely due to a stiff increase in securities transaction tax (STT) for futures and options. The government aims to slow the explosive growth of derivative trading by amateur retail investors, 93% of whom lose money to market experts.
• Fiscal Consolidation: The sources describe fiscal consolidation as continuing "at a crawl". The fiscal deficit is projected to dip only slightly from 4.4% of GDP to 4.3% next year, while the Centre’s debt-GDP ratio is expected to move from 56.1% to 55.6%. At this pace, the article suggests it will take decades to reach the 40% debt-to-GDP ratio targeted by the NK Singh committee.
• Budget Quality: Despite the slow pace of deficit reduction, the article notes that the quality of the fiscal deficit is improving, as it will finance a welcome rise in government capex from ₹11 lakh crore this year to ₹12.2 lakh crore next year.
• Political Cycle: The article observes that in India’s political cycle, the first and last budgets of a five-year term usually emphasize freebies, implying this middle budget opted for realistic consolidation instead.

Based on the sources, the article titled "It’s a TKO for Dalal Street Speculators" details the market reaction to a sharp hike in the securities transaction tax (STT) aimed at curbing derivatives speculation.

The following is a reproduction of the key reporting from the article:

It’s a TKO for Dalal Street Speculators

TRADERS USE OPTION TO SELL: Sharp hike in securities transaction tax pulls Nifty and Sensex down by 2%; brokerages feel the heat.

Sunday’s budget circled back to July 2004, a period when the then-finance minister P Chidambaram introduced the Securities Transaction Tax (STT) for the first time, causing equities to crater. Sunday was no different; with India currently the global leader in derivatives, a higher STT on futures and options caused the Nifty and the Sensex to lose 2% each.

Curbing Speculation Finance Minister Nirmala Sitharaman stated the proposal seeks to curb F&O speculation. The impact will be felt across the board, affecting retail traders, institutions, high-frequency traders, algorithmic traders, and brokers.

The specific tax increases are as follows:

• Futures: Raised to 0.05% from 0.02%.
• Options Premium: Raised to 0.15% from 0.10%.
• Options Exercised: Raised to 0.15% from 0.125%.

Brokers noted that the futures outgo would rise by 150%. For example, the STT on one lot of Nifty Futures at 25,000 levels will increase from ₹325 to ₹812 starting April 1. Analysts warn that this sharp increase serves as a headwind by materially raising hedging and trading costs, which is likely to impact market liquidity and increase impact costs.

Brokers Battered Brokers were the top losers following the announcement, with the Nifty’s Capital Markets index tumbling 5.8%. Individual hits included:

• Angel One: Fell 8.6%.
• Groww (Billionbrains Garage Ventures): Dropped between 5% and 8%.
• BSE, Nuvama Wealth, and CDSL: Also dropped between 5% and 8%.

While retail participation is not expected to be significantly impacted because most operated with small lot sizes, the move is a setback for foreign funds already struggling with underperformance in Indian stocks. Higher transaction costs may cause FIIs to view India less favorably compared to other global markets.

Based on the sources provided, the article titled "Buybacks to be Taxed as Capital Gains; Retail Investors Benefit" reports on a significant shift in how share buybacks are treated for tax purposes.

The following is a reproduction of the reporting and analysis from the sources:

Buybacks to be Taxed as Capital Gains; Retail Investors Benefit

Move corrects a distortion, say experts; foreign promoters to pay more.

The Union Budget has proposed a major reset in the taxation of share buybacks, shifting them from being treated as ‘deemed dividends’ back to capital gains. Tax experts stated that this change corrects a distortion in equity taxation and restores buybacks as a more efficient capital-return mechanism. Under the proposed framework, the cost of acquisition will now be adjusted within the capital gains computation, removing the split-character treatment that had created distortions under previous law.

Impact on Retail and Promoters The new structure significantly benefits minority and retail shareholders while altering the economics for promoters:

• Individual/Retail Shareholders: Buyback proceeds will be taxed at 12.5%, which is significantly lower than the current slab-based rate of up to 30%.
• Indian Promoters: Will continue to be taxed at 22%.
• Foreign Promoters: Will face a higher levy of 30% (subject to tax treaty rates).

A Shift in Strategy Independent directors and analysts suggest that buybacks will now be used primarily to address capital-structure inefficiencies rather than for tax arbitrage. Shailesh Haribhakti noted that promoters must recognize that buybacks are no longer a tax-efficient substitute for dividends.

Ketan Dalal, managing director of Katalyst Advisors, observed that the framework places promoters in a significantly higher tax bracket, with gains taxed at rates closer to normal income rather than preferential capital gains. This creates a strong disincentive for buybacks in companies with high promoter shareholding. Raamdeo Agrawal added that because promoters take the buyback decisions and now face higher taxes, there is a chance that profits will be retained in the company to the potential detriment of minority shareholders.

Correcting Past Distortions This move reverses a system implemented in October 2024 where buyback proceeds were treated as dividends and taxed at regular rates, while the cost of acquisition was recognized separately as a capital loss. Less than 18 months later, the old system has been restored with added complexity regarding the distinction between promoters and non-promoter shareholders. Last year, 14 companies bought back shares worth ₹19,711 crore, significantly lower than the record ₹55,273 crore seen in 2017.

Based on the sources, the article titled "Foreigners Get a Direct Pass to Indian Equity" reports on a new budget proposal designed to attract foreign retail investment directly into the Indian stock market.

The following is a reproduction of the reporting and analysis from the sources:

Foreigners Get a Direct Pass to Indian Equity

India will open a new door to foreign retail money at a time when overseas fund managers are pulling out from local stocks.

The budget has proposed allowing individuals residing outside India—beyond Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs)—to buy listed stocks directly. Under the proposal, Persons Resident Outside India (PROIs) can invest in listed companies through portfolio investment schemes (PIS).

New Investment Limits The proposal introduces significant changes to investment caps:

• Individual Cap: Doubled to 10% for each individual PROI.
• Aggregate Limit: Raised to 24% for all PROIs, up from the previous 10%.

Anyone who does not qualify as an Indian resident under foreign exchange rules will be treated as a PROI. Currently, these individuals typically bet on Indian markets through pooled investment vehicles managed by foreign institutions, Category-III Alternative Investment Funds (AIFs), or limited NRI channels.

Strategic Advantages By creating this "third pathway" beyond foreign direct and portfolio investments, the government aims to attract global wealth that wants India exposure without the FPI compliance hassle, while simultaneously building resilience against FPI outflows. Experts noted that the 10% individual cap is strategic, as it keeps PROIs below the control threshold and will not complicate FDI characterization, takeover regulations, or trigger open offers.

Pankaj Bhuta, founder of PR Bhuta & Co., stated that a direct route allows investors to choose their own stocks instead of relying on institutions, benefiting from a streamlined KYC process and full, unrestricted repatriation of funds.

Roadblocks and Implementation Despite the policy shift, the immediate impact on inflows may be limited as overseas investors currently remain in a risk-off mode regarding India. Analysts suggest the biggest hurdles will be onerous KYC checks and client onboarding, including the requirement for documentation that is strictly compliant with the Foreign Exchange Management Act (FEMA).

Based on the sources, the article titled "Tech, GCCs Set Sail with Safe Harbour Shield" details the government's efforts to boost investment in Global Capability Centres (GCCs) and R&D through tax reforms.

The following is a reproduction of the reporting and analysis found in the sources:

Tech, GCCs Set Sail with Safe Harbour Shield

Changes to the safe harbour regime are expected to trigger a wave of investments by new global capability centres (GCCs) or the research and development arms of multinationals, providing much-needed tax and policy certainty.

Major Policy Shift Finance Minister Nirmala Sitharaman announced key proposals to improve the ease of doing business for new GCCs and established technology giants like Microsoft and Google, who operate their largest centers outside the U.S. in India. The moves are designed to reduce transfer pricing disputes and lower the compliance burden for these entities.

The specific reforms include:

• Threshold Increase: The safe harbour threshold for IT services providers was raised significantly to a turnover of ₹2,000 crore, up from the previous ₹300 crore.
• Unified Margin: A common safe harbour margin was announced at 15.5%.
• Simplified Classification: Several categories of services were bunched under a common "IT" head to reduce ambiguity.
• Data Centre Provision: A safe harbour margin of 15% was proposed for data centres providing services to related foreign companies.

Boosting Global Confidence Industry leaders welcomed the move, noting that long-term tax certainty is vital as AI workloads expand rapidly. Ashish Aggarwal, vice-president of policy at Nasscom, stated that the move would reduce dispute costs and free up administrative capacity to focus on higher-risk cases, making India a more attractive base for global delivery.

India currently hosts approximately 1,800 GCCs, with major players like Mercedes-Benz, BMW, Walmart, Ikea, JP Morgan, and Bank of America operating massive captive centres in the country. Industry data shows that one new GCC opened every week last year, and experts expect this pace to accelerate following these reforms.

Future Horizons The budget also proposes a 20-year tax holiday for foreign data centre investments, effective until 2047, for provision of global cloud services. Additionally, the government plans to establish an Education-to-Employment Enterprises standing committee to strengthen the IT talent pipeline, aiming for India to capture 10% of the global services market share by 2047.

Based on the sources provided, the article titled "Cart Blanche for Global Ecomm Shopping" details significant relief for Indian consumers who purchase goods directly from international websites.

The following is a reproduction of the reporting and analysis from the sources:

Cart Blanche for Global Ecomm Shopping

DUTY DOWN: Customs levy on personal imports halved to 10%; high-end electronic goods, apparel, sneakers may see lower landed costs.

Lower Costs for Overseas Goods Indian consumers shopping directly from global ecommerce platforms are set to receive relief at a time when the rupee is falling, as the budget proposes to halve the customs duty on personal imports to 10%. Effective April 1, this cut applies to all dutiable goods imported for personal use, with the exception of cars, alcoholic beverages, tobacco products, printed books, and items requiring an import license. Industry executives suggest this move will drop the landed cost of items ranging from electronics to fashion, which are often imported privately because they are either unavailable in India or launched here much later.,

Dominant Categories and Platforms Personal imports into India are currently dominated by categories such as electronic gadgets, kitchen appliances, gaming accessories, cameras, sneakers, apparel, and beauty products. Most of these purchases are routed through overseas versions of platforms like Amazon, eBay, Alibaba Group’s AliExpress, Temu, and Desertcart, as well as webstores of global brands primarily from the US, UK, and China.

Expert Analysis and Consumer Caution Industry experts offer a nuanced view of the impact:

• Targeted Benefit: Former Arvind Fashions managing director J Suresh noted the duty cut would primarily help a narrow segment of consumers seeking specific designs or early launches, such as a just-launched Armani jacket, as most mainstream global brands are already locally available.
• Niche Markets: Deba Ghoshal, an electronics industry veteran, highlighted that people often import high-end appliances and gaming consoles because many brands do not sell these specific products within the Indian market.
• Opaque Fees: Consumers remain cautious, as many global platforms collect upfront import fees of 30-40% to cover customs assessment uncertainties, which may prevent the duty reduction from translating into substantial savings for the end user.
• Offsetting Surcharges: The relief will be partially offset by a new social welfare surcharge of 10% of the total customs duty payable.

Revised Baggage Rules In addition to ecommerce changes, the budget includes a plan to overhaul baggage rules for international travelers. Indians returning from overseas travel (excluding neighboring countries like Nepal, Bhutan, and Myanmar) will see their duty-free allowance increased from ₹50,000 to ₹75,000. However, the allowance for liquor remains capped at 2 liters per passenger.

Based on the sources, the article titled "A Slow-cooked Recipe for Wholesome Consumption" describes the government's strategic choice to prioritize long-term economic stability over immediate fiscal stimulus.

The following is a reproduction of the reporting and analysis found in the sources:

A Slow-cooked Recipe for Wholesome Consumption

STABILITY OVER STIMULUS: Govt seeks to achieve demand stimulation from long-lasting growth in disposable personal incomes over short-term relief measures.

Earning Capacity Over Spending Impulse The budget places its primary faith in India’s earning capacity rather than its immediate spending impulse. It is not a budget aimed at artificially stimulating consumption through short-term fiscal relief; instead, it reflects a conscious policy choice to protect purchasing power through macroeconomic stability. The underlying philosophy is that discretionary spending will rise more effectively as a result of growth that is earned, durable, and sustainable.

Organic Growth Through Investment Rather than engineering an immediate upswing, the government’s approach allows consumption to strengthen organically as investment-led growth feeds into employment and incomes, albeit with a lag. Public capital expenditure (capex), particularly in infrastructure and manufacturing, serves as the backbone of this strategy. These investments are intended to support demand over time through:

• Job creation across various skill levels.
• The development of stronger vendor ecosystems.
• Improved national productivity.

Targeted Sectoral Signals The strategy is reinforced by a focus on moving up the manufacturing value chain. Key signals include:

• Future-Aligned Manufacturing: Deepening electronics component manufacturing and expanding the India Semiconductor Mission to build a full-stack ecosystem.
• Strategic Resilience: The development of rare earth corridors and the chemical ecosystem to drive value addition and supply-chain resilience.
• Productivity Multipliers: Emphasis on shared manufacturing and testing facilities within industrial clusters to help smaller firms compete globally.

Stability for the Middle Class and Rural Markets While the budget continues to emphasize the middle class and agriculture to support income stability, it limits direct consumption incentives that often have strong multiplier effects in areas like furniture and home improvement. The government remains steadfast in its focus on strengthening India’s growth trajectory by supporting investment-led consumption rather than chasing near-term outcomes.

Based on the sources, the article titled "Banking on Change, Cool Money, New Hopes" discusses the formation of a high-level committee tasked with overhauling India's banking sector to align with the "Viksit Bharat" 2047 vision.

The following is a reproduction of the reporting and analysis from the sources:

Banking on Change, Cool Money, New Hopes

BIGGER & BETTER: High-level committee being formed to review PSB mergers, easing of foreign flows and also voting rights at pvt banks.

Building Balance Sheet Arsenal A high-level committee on banking is expected to examine bank ownership structures with the goal of building fewer but bigger lenders. These institutions are intended to have the "balance sheet arsenal" necessary to power India's entry into the league of developed nations and support long-gestation infrastructure projects.

Key Reform Areas The panel's review is expected to be comprehensive, focusing on several long-standing issues:

• Public Sector Consolidation: The committee will likely examine the consolidation of smaller government banks.
• Voting Rights in Private Banks: A major task will be reviewing the alignment of voting rights with ownership stakes. Currently, voting rights are capped at 26%, and relaxing this could sweeten deals for overseas investors interested in running Indian banks.
• Foreign Investment Caps: The panel is expected to examine the 20% foreign direct investment (FDI) cap in state-run banks and move toward more uniform, transparent rules for foreign ownership.

Industry Perspectives Banking leaders have welcomed the move as timely given the fundamental shifts in the industry. Amitabh Chaudhry, MD and CEO at Axis Bank, noted that the sources of bank deposits have changed significantly, making this an opportune moment for the government and the RBI to reassess next-generation reforms.

Rajiv Anand, MD and CEO at IndusInd Bank, identified the "disconnect between ownership and voting rights" as one of the two big issues currently plaguing the sector. While balance sheets are currently strong, bankers believe a structural review will improve capital deployment efficiency and strengthen risk monitoring frameworks.

Future Vision While the specific details of the committee’s composition are yet to be announced, it is expected to consist of senior bankers and experts. Their ultimate goal is to determine the scale and scope of the banking industry required to support the needs of a growing economy toward 2047.

Based on the sources, the article titled "Beyond Basics, Clear and Present Prudence" describes the budget as a pragmatic statement of intent that prioritizes stability and long-term growth architecture over short-term stimulus.

The following is a reproduction of the reporting and analysis found in the sources:

Beyond Basics, Clear and Present Prudence

STRONG INTENT: With the ease of doing business, a focus on ease of living and creating jobs.

Fiscal Discipline as an Anchor The budget is characterized as a pragmatic and prudent statement of intent. Despite a highly volatile global environment and significant geopolitical uncertainties, the Finance Minister chose to anchor the budget in fiscal discipline, a move described as both timely and reassuring. By remaining committed to the "basics" of fiscal prudence while sustaining growth momentum, the government aims to provide stability for the financial sector.

Investment and Infrastructure The government has prioritized investment, productivity, and job creation, with public capital expenditure (capex) remaining the backbone of the budget. With public capex targeted at ₹12.2 lakh crore, the government intends to maintain momentum in infrastructure creation, which is viewed as essential for attracting private investment. Specific measures to support this include:

• Infrastructure Risk Guarantee Fund: A proposed fund aimed at reducing implementation risks to attract long-term capital and overseas investors.
• Nuclear Power: Extending zero basic customs duty on imports for new projects until 2035 to lower capital costs and ensure energy security.
• Logistics: A focus on dedicated freight corridors and ship repair operations (MROs) to improve industrial efficiency.

Advanced Manufacturing and Technology The budget acknowledges a significant transformation in India's industrial landscape, moving towards an advanced, technology-driven economy. Key strategic initiatives include:

• Data Centres: A long-term tax holiday until 2047 for foreign companies providing global cloud services, aimed at accelerating the AI ecosystem.
• Semiconductors: Expansion of the India Semiconductor Mission to encourage private investment in fabrication, design, and equipment manufacturing.
• Rare Earth Corridors: A proposal to create dedicated corridors to develop strategic supply chains and an end-to-end domestic value chain in a geopolitically sensitive sector.

Services and GCCs The sources highlight a shift toward institutionalizing India's competitiveness in technology and digital operations. The budget incentivizes Global Capability Centres (GCCs) as powerful drivers of services exports and advanced skills development. To enhance tax certainty, the government decided to unify all IT services under a single category with a common safe harbour margin of 15.5%.

Support for MSMEs and Employment The budget's focus on emerging sectors is expected to have a strong trickle-down effect on India’s 10 million registered MSMEs. Key support measures include:

• The proposed ₹10,000-crore SME Growth Fund.
• Credit guarantee schemes for invoice discounting to provide additional capital for small businesses.
• Recognition of tourism and healthcare as high-employment sectors with the potential for large-scale livelihood opportunities.

Banking Reforms A high-level committee on banking will be established to focus on the next generation of banking reforms. While the current system is described as robust with healthy capital ratios, the committee will evaluate measures to prepare the sector for a "more demanding future".

Based on the sources provided, the article titled "Laying Rare Earth Corridors for Manufacturing" outlines the government's strategy to develop a domestic ecosystem for critical minerals to ensure supply chain resilience.

The following is a reproduction of the reporting and analysis from the sources:

Laying Rare Earth Corridors for Manufacturing

Mining belts in ODISHA, KERALA, AP AND TN to link minerals, manufacturing.

Strategic Mineral Corridors India plans to create dedicated rare-earth corridors in the mineral-rich states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to promote integrated mining, processing, research, and manufacturing. These four states together account for 89% of India's 12.73 million tonnes of monazite reserves, the key mineral containing rare-earth elements.

Securing Supply Chains Finance Minister Nirmala Sitharaman emphasized that these measures are vital to reduce import dependence in an external environment where trade is imperilled and supply chains are frequently disrupted. The initiative is designed to achieve self-reliance in the manufacturing of rare earth permanent magnets (REPM), which are critical for upstream industries including:

• Electric vehicles (EVs)
• Renewable energy
• Electronics
• Aerospace and Defence

The push for indigenization was catalyzed after China, the world’s largest supplier, previously curbed REPM exports, triggering global shortages that threatened multiple industries.

Fiscal and Policy Support Heavy Industries and Steel Minister H.D. Kumaraswamy stated that these corridors will position India as a global hub for high-value and sustainable manufacturing. To support this, the budget proposed:

• Customs Duty Scrapped: The 2.5% basic customs duty on monazite has been removed.
• Capital Goods Exemption: Import duties are waived for capital goods required for the processing of critical minerals.
• Tax Incentives: Certain critical minerals have been added to Schedule XII of the Income Tax Act, allowing expenditures on prospecting and exploring to be eligible for deductions under Section 51.
• Existing Funding: This initiative builds upon a ₹7,280 crore scheme for rare earth permanent magnets launched in November 2025.

Regional Impact Experts noted that the inclusion of Tamil Nadu is strategic due to its status as an automotive manufacturing hub, while for Kerala, the corridors could be a "game-changer" by helping the state harness its mineral wealth with ecological sensitivity. The initiative aims to create an integrated mining-to-manufacturing ecosystem, facilitating an end-to-end domestic value chain in a geopolitically sensitive sector.

Based on the sources, the article titled "Check MAT: Nudge Towards an Alternate" discusses the government's overhaul of the Minimum Alternate Tax (MAT) framework in the Finance Bill, 2026.

The following is a reproduction of the reporting and analysis from the sources:

Check MAT: Nudge Towards an Alternate

FINANCE BILL 2026 overhauls the MAT framework, cutting the rate to 14% and sharply limiting its credits to nudge cos towards 22% regime.

A Significant Policy Shift The Finance Bill, 2026 has proposed a major reset of India's Minimum Alternate Tax (MAT) framework, lowering the rate from 15% to 14%. Under the new proposal, MAT will become a final tax effective April 1, 2026, and no new MAT credits will be allowed to accrue after this date. The changes are designed to streamline corporate tax calculations and nudge more companies toward the concessional 22% corporate tax regime.

New Limits on Tax Credits The sources state that the transition marks a shift from the previous system where MAT—originally a "backstop tax" to ensure companies with high book profits paid a minimum levy—effectively functioned as an advance tax with credits freely available for set-off. Under the new rules:

• Set-off Cap: Companies opting for the 22% concessional regime can set off brought-forward MAT credit accumulated up to March 31, 2026, but only up to 25% of their tax liability in a single year.
• Carry-Forward Window: These credits remain usable only within the existing 15-year carry-forward window starting from the year they arose.
• "Use-it-or-Lose-it": Experts describe the tighter conditions as a "use-it-or-lose-it" situation, forcing companies to re-evaluate their migration timing and cash-flow strategies.

Impact on Large and Small Firms Tax experts note that the impact will be highly company-specific. Firms that have operated for long periods under tax-incentivized structures, such as Special Economic Zones (SEZs), have accumulated substantial legacy credits and may find staying in the older regime more financially optimal in the near term. Conversely, newer or late-cycle companies with smaller credit pools may be more willing to migrate to benefit from the lower headline tax rate and simplified compliance.

Government Objectives From the government’s perspective, these amendments aim to address persistent concerns regarding indefinite credit accumulation and the administrative burden of managing two parallel tax systems. Additionally, the Finance Bill provides clarity by excluding non-residents taxed under presumptive schemes (such as foreign shipping and aviation firms) from the MAT framework.

Based on the sources, the article titled "On the Mark to Make it Happen Faster" details the government's strategy to significantly expand India's manufacturing sector.

The following is a reproduction of the reporting and analysis from the sources:

On the Mark to Make it Happen Faster

EYEING A QUARTER OF GDP: Manufacturing takes centre stage with allocations across seven strategic sectors.

A Strategic Core The budget places manufacturing at the core of India’s expenditure priorities, utilizing targeted allocations across strategic and industrial sectors. The government aims for the sector to contribute one-quarter (25%) of India's gross domestic product (GDP), a substantial increase from the current 16-17%. This push comes at a critical time as India remains one of the fastest-growing major economies, despite record selling of Indian equities by foreign investors and the rupee weakening to all-time lows.

Scaling Strategic Sectors The government’s primary focus is on scaling up seven strategic and frontier sectors, including semiconductors, rare earths, electronics, and textiles. Key fiscal commitments include:

• Chemical Parks: A first-time allocation of ₹600 crore to launch three dedicated parks.
• Semiconductors: ₹1,000 crore allocated to the India Semiconductor Mission (ISM) 2.0, which focuses on indigenous design and manufacturing of materials and machinery.
• Electronics: A massive ₹40,000 crore outlay for the Electronics Components Manufacturing Scheme to fortify domestic supply chains.
• White Goods: Funding for the production-linked incentive (PLI) scheme for ACs and LED lights rose more than threefold to ₹1,004 crore.
• Biopharma: The ₹10,000-crore Biopharma SHAKTI mission was introduced to build an ecosystem for the domestic production of biologics and biosimilars.

Ensuring Atmanirbharta Finance Minister Nirmala Sitharaman emphasized that these measures, guided by the principle of Atmanirbharta (self-reliance), are intended to build domestic capacity, ensure energy security, and reduce critical import dependencies while supporting job creation. The focus extends to specialized industries, including schemes for container manufacturing, seaplane production, and a dedicated initiative for sports goods.

Trade and Regulatory Support To bolster these industrial goals, the budget simplifies customs tariffs by rationalizing exemptions and embedding effective rates. A significant one-time measure includes allowing eligible manufacturing units in Special Economic Zones (SEZs) to supply the domestic tariff area at a concessional rate, further strengthening the link between domestic manufacturing and export capabilities.

Based on the sources provided, the article titled "Duty Relief for Exports to Brave Trade Winds" details the government's strategy to protect key Indian export sectors from global trade volatility and high tariffs.

The following is a reproduction of the reporting and analysis from the sources:

Duty Relief for Exports to Brave Trade Winds

Cushioning the impact of 50% US tariffs through eased import rules for key export sectors.

Targeted Relief for Marine and Footwear Sectors To mitigate the effects of high US tariffs, the budget has eased duty-free imports for certain inputs used in the export of processed marine products and leather or synthetic footwear, which are among India’s primary exports.

Specific measures include:

• Seafood Processing: The limit for duty-free imports of certain inputs will be increased to 3% of the free on board (FoB) value of the previous year's export turnover, up from the current 1%.
• Fish Catch: The budget now allows for the duty-free export of fish catch taken in the high seas and the Exclusive Economic Zone.
• Footwear Inputs: The scope of duty-free inputs has been expanded to include shoe uppers, rather than just finished footwear, to ease supply constraints for exporters.

Addressing Sectoral Declines These measures are seen as vital interventions following a marginal 0.23% dip in leather and leather product shipments, which totaled $3.3$ billion between April and December FY26. By expanding the scope of duty-free inputs, the government aims to lower production costs and enhance the global competitiveness of traditional labor-intensive sectors.

Operational and Logistic Support Beyond direct duty relief, the government is providing structural support through:

• SEZ Flexibility: Eligible manufacturing units in Special Economic Zones (SEZs) are now permitted to supply the domestic tariff area at a concessional duty rate.
• Logistics Efficiency: A renewed focus on improving logistics via dedicated freight corridors is expected to aid the export sector.
• Working Capital: Officials noted that these changes provide exporters with more time to ship orders, reducing working-capital stress and lowering the risk of penalties.

Customs Modernization The broader customs overhaul mentioned in the sources includes the introduction of a single digital window for faster clearances and the use of technology to replace intrusive manual container inspections. These steps are intended to help Indian exporters integrate more smoothly into global value chains that have low tolerance for delays.

Based on the sources provided, the article titled "Operation No Turbulence" provides a critical analysis of the macro backdrop and structural challenges facing the Indian economy at the time of the budget.

The following is a reproduction of the reporting and expert analysis from that article:

Operation No Turbulence

A Straight and Narrow Pathway, With Heavy Lifting Still Ahead: With temporary supports fading, deep structural weaknesses persist.

Macro Backdrop and Demand Shifts The budget was presented against a backdrop where supportive measures from 2025—including GST and I-T cuts, lower crude prices, and a strong monsoon—had driven a cyclical recovery. However, as these temporary boosts fade, demand must shift more sustainably toward government infrastructure spending and real estate, both of which are now slowing after several years of rapid growth.

Structural Malaise in Investment and Consumption Experts in the article argue that the economic challenges are structural rather than cyclical. Specifically:

• Flatlined Investment: Corporate investment has remained stagnant at around 12% of GDP since FY13.
• Depressed Consumption: While private consumption saw a "pop up" after GST cuts, it remains well below its pre-pandemic trend.
• Excess Capacity: Slowing nominal growth and 25 months of falling core inflation signal persistent and possibly widening excess capacity.

External and Technology Risks India faces significant uncertainty on the external front, particularly regarding trade and technology. While India softened the blow of 50% US tariffs by tapping alternative markets, permanent trade resolutions remain delayed.

In the technology sector, the article notes that India is struggling to keep pace in the global AI race, lagging in every segment of the value chain from upstream chip manufacturing to midstream large language models. Additionally, software services exports are threatened by AI-led job displacement and new restrictions on H-1B visas.

The Fiscal Strategy Against this "cloudy background," the budget chose to tread the path of the "straight and narrow," continuing fiscal consolidation with a target deficit of 4.3% of GDP. However, achieving this goal is heavily dependent on nominal GDP growth rebounding to the projected 10%; if growth falls short, meeting the deficit target will be challenging. The article concludes that while these reforms mark progress, their scale appears modest compared to the entrenched challenges of private consumption and investment.

Based on the sources, the article titled "Strong on Intent, But Whatever Happened to Reforms Express?" provides a critical evaluation of the budget against five strategic imperatives: boosting domestic demand, enhancing export competitiveness, building supply chain resilience, accelerating reforms, and ensuring fiscal discipline.

The following is a reproduction of the reporting and analysis from the sources:

Strong on Intent, But Whatever Happened to Reforms Express?

The budget shows strategic clarity in its pivot back to investment over consumption, but its reform agenda appears more procedural than transformational.

Investment Over Consumption To boost domestic demand against an increasingly protectionist global environment, this budget prioritizes investment over consumption. This marks a significant shift from the previous year’s approach, which utilized personal income tax and GST rate cuts to stimulate spending. Public capex is maintained at 3.1% of GDP, demonstrating a continued commitment to growth through infrastructure, including:

• New dedicated freight corridors.
• An infrastructure risk guarantee fund to boost private developer confidence.
• Seven high-speed rail corridors serving as "growth connectors".

Export Integration and Resilience The budget aims to position India as a competitive manufacturing hub by deepening value addition in electronics and supporting capital goods manufacturing through hi-tech tool rooms and container manufacturing schemes. It maintains a focus on labour-intensive manufacturing through dedicated schemes for mega textile parks and sports goods.

To build resilience, the government has proposed:

• Rare earth corridors for integrated mining, processing, and research to secure critical minerals.
• Energy resilience through customs duty exemptions for nuclear power projects until 2035.
• A 21.8% boost in defence capital outlay to modernize military hardware and reduce dependence on foreign suppliers.

Procedural vs. Transformational Reforms The sources characterize the budget’s reforms for competitiveness as limited in scope. Measures such as customs duty rationalization and trust-based systems are described as procedural improvements rather than a major transformational overhaul. While the Finance Bill establishes a high-level committee for the banking sector and mentions the restructuring of Power Finance Corporation and REC, implementation timelines remain unclear. The sources suggest that "heavy lifting" on structural reforms will require policy initiatives and legislative changes that typically occur outside the budget cycle.

Underwhelming Fiscal Signals The sources find the fiscal signals to be underwhelming, noting that the fiscal deficit target of 4.3% of GDP indicates less aggressive tightening than anticipated. Similarly, the debt target of 55.6% of GDP suggests that the government will need a much faster consolidation pace in the coming years to reach its 50% goal by FY31. This slower trajectory raises concerns regarding supply pressure in bond markets and potential crowding-out effects.

Conclusion While the budget is viewed as largely growth- and inflation-neutral in the near term, its medium-term impact will depend critically on the government’s ability to execute announced measures and deliver substantial policy action beyond the budget framework.

Based on the sources, the article titled "Lead Roles for Services, Biopharma & Textiles" outlines the government's strategic pivot toward high-value services and specialized manufacturing to drive India's goal of becoming a developed nation by 2047.

The following is a reproduction of the reporting and analysis from the sources:

Lead Roles for Services, Biopharma & Textiles

FOR A DEVELOPED NATION: Panel to suggest measures for doubling India’s share in global services sector to 10% by 2047.

Doubling the Services Edge India intends to more than double its global share in the services sector to 10% by 2047. To achieve this, the budget proposed forming the Education to Employment and Enterprise Standing Committee to identify priority areas for high growth, employment, and exports. This high-powered panel will also gauge the impact of emerging technologies, including artificial intelligence (AI), on jobs and skill requirements.

Fulfilling Youth Aspirations Finance Minister Nirmala Sitharaman stated that a renewed emphasis on the services sector is necessary to fulfill the aspirations of a youthful India, noting that nearly 250 million individuals have moved out of multidimensional poverty over the last decade. Proposed interventions span various career pathways, including:

• Digital and AI-enabled services.
• Health and medical tourism.
• Yoga, Ayurveda, and hospitality.
• Creative services and skill development.

The services sector currently accounts for more than 55% of India’s economy and 47% of its exports, making it a primary driver of job creation. The budget further supports this by providing greater safe harbour protection for IT services and a tax holiday until 2047 for foreign companies providing global cloud services via Indian data centers.

Offsetting Trade Deficits The services sector plays a critical role in macroeconomic stability, as its trade surplus significantly offsets the goods trade deficit. In the first three quarters of the current fiscal year, the services trade surplus reached $152 billion, helping to balance a goods trade deficit of $248 billion.

Strategic Push for Biopharma The budget announced the ₹10,000-crore Biopharma SHAKTI mission to establish India as a global manufacturing hub for biologics and biosimilars. This initiative shifts policy focus beyond generics to complex biologic medicines, which are viewed as key to longevity and affordable healthcare. The program will involve:

• Strengthening the regulatory capacity of the CDSCO to meet global standards.
• Establishing a network of 1,000 accredited clinical trial sites.
• Investing in new NIPER institutions to build specialized talent.

Scaling Textile Exports To capitalize on new free trade agreements (FTAs) with the UK, Oman, and the EU, the government is launching several coordinated missions to scale textile exports. These include:

• The National Fibre Mission for self-reliance in special-use fibres.
• The Mahatma Gandhi Gram Swaraj Initiative to link handloom and handicrafts to global markets.
• The creation of Mega Textile Parks in mission mode.
• The Samarth 2.0 upgraded skilling program to modernize the textile workforce.

These combined efforts represent a "balanced and forward-looking approach" to raise the productivity of India's labor force while building resilience against global trade volatility.