ICAI Journal Jun 2026

 

The MSME Growth Engine: Navigating Opportunities, Challenges, and the Role of CA in the Era of AI and Viksit Bharat 2047

CA. Mukul Lamba Member of the Institute

The Strategic Paradigm of India’s MSME Sector in 2026

Consider a manufacturer of hosiery based out of Ludhiana, Punjab, a skilled fabric knitter from Coimbatore, and a small-batch tea estate in Upper Assam. During the times of the old economy, these businesses were home-grown players striving to survive against exorbitant costs and intermediaries.

In the era of Viksit Bharat 2047, the concept of “small” businesses no longer exists; they are now referred to as Micro-Multinationals. Any business with a revenue of ₹100 crore in a Tier-2 city now boasts of international reach and data insights, driven by Artificial Intelligence (AI) and steered by strategic CA advisory.

The path traversed by the Indian economy in 2026 is principally defined by the strength of the MSME sector. As India advances toward its 100th year of independence, the sector has transformed into the buttress of industrial propulsion. In FY 2025-26, the sector contributes approximately 31.1% of national GDP and 35.4% of manufacturing yield. With over 7.47 crore enterprises employing nearly 38.82 crore individuals, it is the second-largest employer after agriculture. India’s real GDP is projected to grow at 7.4% in FY26, with manufacturing GVA surging 9.13% in recent quarters.

Viksit Bharat 2047: Ideological Pillars and the MSME Mandate

The mission to transform India into a developed, self-reliant nation is built on four fundamental pillars:

1. Youth (Yuva): MSMEs serve as laboratories for entrepreneurship, absorbing the demographic dividend into high-tech manufacturing.
2. Poor (Garib): The sector offers social mobility through localized employment at low capital cost.
3. Women (Mahilayen): The 2025-26 budget targets 70% participation of women in economic activities, with credit guarantee covers for women-led units enhanced to 90%.
4. Farmers (Annadata): Food processing MSMEs (supported by a ₹10,900 crore PLI outlay) facilitate value addition to make India the “food basket of the world”.

With India aiming to become a $30 trillion to $35 trillion economy by 2047, MSME contribution is expected to surge to 50% of GDP and 60% of exports.

Understanding the Economic Magnitude

• Current GDP Contribution (2026): MSMEs contribute roughly ₹100 lakh crore to a ₹320 lakh crore ($4 trillion) economy.
• The Funding Gap: Despite formalization, a credit gap of approximately ₹30 lakh crore remains.
• Government Allocation: The Union Budget 2026-27 earmarked over ₹22,000 crore for the Ministry of MSME, including a ₹10,000 crore SME Growth Fund.
• The 2047 Vision: By 2047, MSMEs are expected to manage an economic value exceeding ₹1,200 lakh crore.

The Roadmap to Viksit Bharat 2047

Pillar	Objective	Financial Target (Estimated)
Formalization	Move more micro-units to the Udyam portal.	Unlock higher opportunities in formal credit.
Technology Hubs	Establish AI-Common Facility Centers.	Reduce tech-adoption costs by 60%.
Export Scaling	Link MSMEs to global e-commerce.	Boost opportunities for MSME exports.
Skill Transformation	Reskill 10 million workers in AI-collaboration.	Increase labor productivity by 3x.

The Regional Powerhouses in INR Terms

The roadmap to $30 trillion is paved by regional clusters:

• Punjab’s Manufacturing: In Ludhiana, AI-driven predictive maintenance is saving units over ₹50 lakh annually in repair costs.
• Coimbatore’s Textile Tech: Modern looms using AI reduce fabric wastage by 12%, adding ₹1.5 crore to the annual bottom line of exporters.
• Assam’s Tea Renaissance: AI-powered soil analysis and forecasting are increasing yields by 20%, keeping the ₹20,000 crore industry competitive.

The Role of CA in the Era of AI and Viksit Bharat 2047

The CA has shifted from a conventional auditor to an “engineers of progress,” acting as the “General Surgeon” of an MSME's financial health.

A. From Compliance to Strategic Advisory: CAs now perform Data-Driven Business Modeling. Using AI, they provide “What-If” analyses regarding production increases and debt-service coverage. B. The ESG Sentinel: CAs are now authorized to certify carbon footprints and labor practices, ensuring MSMEs access the ₹80 lakh crore global green market. C. AI Governance and Ethical Audit: The mandate includes auditing AI models to ensure financial data security and compliance with the Digital Personal Data Protection (DPDP) Act.

Additional roles include:

• The Valuation Expert: Furnishing real-time valuations via AI.
• The ESG Auditor: Auditing emissions to allow "Carbon Neutral" branding at a 40% premium.
• Financial Shield: Conducting digital audits to safeguard against online frauds costing ~₹25 lakh per incident.

Audit Automation and Initiatives

CAs are encouraged to use agentic workflows to automate auditing labor, moving toward reporting automation and tracking ROI.

• ICAI MSME Clinic: Launched across 183 branches, these clinics provide weekly pro-bono advisory on finance, GST, and technology, acting as credit matchmakers.
• Addressing Liquidity: Approximately ₹10.7 lakh crore is locked in delayed payments annually. Section 43B(h) of the Income Tax Act (effective April 1, 2024) enforces payment discipline.
• Transition to MSME ODR: Since October 15, 2025, all delayed payment applications are filed on the Online Dispute Resolution (ODR) Portal for resolution within 90 to 180 days.

AI: The Catalyst for “Non-Linear” Growth

AI is now a fundamental factor of production.

• Hyper-Efficiency: IoT sensors and predictive maintenance avoid breakdowns costing ₹5–10 lakh annually.
• Democratized Marketing: AI enables rural MSMEs to sell directly to global markets via ONDC, handling localization and logistics.
• Intelligent Credit: AI-enabled Cash Flow Lending uses GST returns and digital data to grant collateral-free loans within minutes. By 2035, AI is estimated to contribute $135.6 billion to $149.9 billion to MSME value creation.

The IMPACT AI Framework for Adoption

This World Economic Forum framework organizes actions into three pillars:

1. Awareness: Utilizing AI Experience Centres and Sandboxes.
2. Action: Using the AI Maturity Index and AI Solutions Marketplace.
3. Recognition: Celebrating AI Pioneers to create blueprints for others.

Challenges: Navigating the Storm

• Digital Divide: 40% of rural units still struggle with high-speed internet and basic digital bookkeeping.
• Cost of Transition: Infrastructure upgrades are daunting for micro-enterprises.
• Cybersecurity: A single breach can cost a small unit ₹50 lakh, often leading to permanent closure.
• Reskilling: The need to train 10 million workers to work alongside AI.

Conclusion: The Lion Awakens

By 2047, the contrast between “small” and “large” business will be blurred by technology. A minor unit in a Tier-3 city, powered by AI and a technologically adept CA, will have the competencies of a multinational. The MSME Growth Engine is no longer just about survival; it is about dominance, transforming the Indian spirit of “Jugaad” into a global standard of “Innovation and Excellence”.

Author may be reached at mukullamba62@gmail.com and eboard@icai.in.

MSMEs in India: Engines of Innovation and Economic Transformation

Contributed by MSME and Start-up Committee of ICAI

Introduction

The adage perfectly describes Indian businesses: A skilled sailor doesn’t wait for the wind; he creates his own course. Small dreams that turn into businesses have navigated global uncertainties and difficult situations to strengthen the nation’s economy over decades. The businesses have also received measured governmental support. Entrepreneurial resilience and these things have further propelled businesses and contributed to the country’s economic stability.

MSMEs stands as the acronym for Micro, Small and Medium Enterprises which form the backbone of the Indian economy, a term which evolved from the early industrial regulatory framework under the Industries (Development and Regulation) Act and was later crystallised through the MSME Development Act, 2006. Recently, the government redefined MSMEs by updating investment and turnover thresholds, reflecting the sector’s transformation and its growing integration with digital markets.

Today, the numbers speak compellingly for Indian enterprise. MSMEs contribute roughly 30% of India’s GDP, account for nearly 45% of manufacturing output, contribute close to 46–48% of India’s total exports, and employ over 37.50 crore people, making them the largest employment generator in the country after agriculture. As of 27th May 2026, 8.47 Cr enterprises have registered on the Udyam Registration Portal (URP) and the initiative of Udyam Assist Platform (UAP) launched by the government is a testament to the ease of doing business and the formalisation of India’s informal economy. Parallel to this, India’s startup ecosystem has surged to approximately 230,000 DPIIT-recognised startups with 23.36 lacs approx. job creation as of May 2026, with over 130 unicorns, third globally, demonstrating world-class innovation and attracting substantial foreign investment.

Indian businesses are increasingly adopting best trading practices, accounting standards compliance, e-invoicing, GST-driven transparency, and supply-chain digitisation, making the ecosystem investor-ready. Indeed, investors are choosing India for its macro-stability, large domestic market, policy predictability, and a startup culture that blends frugality with ambition. Moreover, the sector is pivoting toward green practices: solar-powered units, energy-efficient production, and circular-economy models are becoming the norm.

Digitalisation under initiatives like Digital India, TReDS, the Udyam Assist Platform, and the Open Network for Digital Commerce (ONDC) has democratised market access, enabling even the smallest enterprises to trade nationally and globally. Through the Make in India initiative launched in 2014 and the “Vocal for Local” movement, India is manufacturing everything from smartphones and electronics to defence equipment and renewable-energy components, reducing import dependence while boosting exports. Complementing this, the Production Linked Incentive Scheme (PLI) provides performance-based incentives to boost large-scale manufacturing, enhance exports, and strengthen India’s competitiveness in global supply chains. The renaissance of modernity, rooted in civilisational commerce and propelled by technology and sustainability, affirms India’s position as a global manufacturing and trading powerhouse.

With its vast demographic dividend, India is harnessing its population, particularly its youth and skilled professionals, at peak efficiency. The nation has emerged as a premier outsourcing hub, driven by IT and IT-enabled services, business process management, accounting services, engineering R&D, knowledge process outsourcing, and increasingly, cloud services, digital marketing, and back-office operations. What sets India apart are the practices it has adopted: globally standardised service delivery models, ISO-certified quality processes, strong data security frameworks, seamless digital infrastructure, and a talent pool fluent in multiple languages and global business norms. These practices, combined with cost competitiveness, 24/7 service delivery, and a strong IP protection regime, have made India the preferred destination for foreign multinationals seeking reliable, high-quality services.

Fortune favours the bold, but it would not be wrong to admit that the sweet fruit which is favouring India’s economic ecosystem is the relentless effort by both the government and entrepreneurs who are burning the midnight oil in making it achievable. These schemes are proof that the challenges in India shall be faced with a more power-backed approach. Recognising MSMEs as the backbone of India’s economic fabric, the government has rolled out a comprehensive ecosystem of schemes designed to fuel entrepreneurship. The Credit Guarantee Scheme for Micro and Small Enterprises (CGS) now offers guarantee coverage up to 90% for loans up to ₹10 crore, enabling an additional credit of ₹2 lakh crore at reduced cost. This would not only provide financial help to budding entrepreneurs but would also give them the confidence to boost their businesses.

Schemes Favouring the Entrepreneur Ecosystem in India

Key government initiatives to support MSMEs and startups include:

• Startup India Initiative
• Raising and Accelerating MSME Performance (RAMP): Launched in June 2022 with a total outlay of ₹6,062.45 crore (2022–27), targeting approximately 5.55 lakh beneficiaries by expanding access to finance, markets, technology, and green practices.
• Digital Interventions: Including the SAMADHAAN Portal and the newly launched Online Dispute Resolution (ODR) Portal to ensure timely payment settlements.
• MSME Champions Scheme: Drives technology upgradation and common facility centres.
• Self-Reliant India (SRI) Fund: Infuses ₹50,000 crore equity into MSMEs.
• PM Vishwakarma: Offers holistic support to 18 traditional artisanal trades, including formal recognition, skill upgradation with stipends, ₹15,000 toolkit e-vouchers, and collateral-free loans up to ₹3 lakh at 5%.
• Prime Minister's Employment Generation Programme (PMEGP): Provides credit-linked subsidies (up to 35%) for setting up new micro-enterprises in the non-farm sector.
• Trade Receivables Discounting System (TReDS): Facilitates electronic financing of trade receivables.
• Startup-specific funds: Including the Fund of Funds for Startups (FFS) (₹10,000 crore) and the Startup India Seed Fund Scheme (SISFS).

This confluence of policy support, financial access, and institutional guidance is nurturing a pool of skilled professionals and ambitiously positioning India to generate its own "Big 4," making the dream of globally competitive Indian multinationals not so distant.

Legal and Policy Framework Strengthening Indian Business

The government's strategy is backed by laws and regulations that make it firmer and investor-ready.

• MSME Development Act, 2006: Provides priority sector lending mandates and delayed payment protection.
• Goods and Services Tax (GST) regime: Simplified compliance via composition schemes and threshold exemptions.
• Startup India Recognition Framework: Grants legal identity through DPIIT recognition, enabling tax exemptions and holidays.
• SME Listing Platforms: NSE EMERGE and BSE SME have seen over 1,400 SMEs listed, raising thousands of crores.
• Regulatory Reforms: The Companies (Amendment) Act, 2020, and SEBI (ICDR) Regulations, 2021, have eased exit norms and enabled easier listing.
• ESG and Data Governance: SEBI’s Business Responsibility and Sustainability Reporting (BRSR) framework (2021) and the Digital Personal Data Protection Act, 2023, establish transparency and data protection norms.

Role of Chartered Accountants in Nurturing MSMEs and Startups

Chartered Accountants act as the bridge between policies, laws, and people, serving as the best advisors for business growth. Their role has evolved from being primarily financial-focused to acting as strategic partners who:

• Drive AI adoption in business processes.
• Guide ESG integration and advise on BRSR frameworks.
• Facilitate SME IPO listings and promote green practices.
• Prepare investor-ready financials and conduct due diligence for structured deals.
• Ensure international accounting standards compliance for global scaling.

ICAI: Partner in Nation-Building

Through its dedicated MSME & Startup Committee, ICAI has strengthened the landscape via progressive initiatives.

A. MSME and Startup Yatras The ICAI MSME Yatra 2022 and the 2024 edition (covering 20,000 km across 100 cities in 100 days) facilitated thousands of Udyam and DPIIT registrations and provided expert guidance on business setup, compliance, and finance.

B. Pan-India MSME Empowerment Drive (2025)

• ICAI MSME Mahotsav: Held on 27 June 2025 across nearly 140 branches, providing grassroots support to 20,000 MSMEs through 400 helpdesks.
• ICAI MSME Startup Conclave: Mumbai event bringing together 3,000 delegates and resulting in funding for several startups.
• ICAI MSME Connect: Strategic meet in New Delhi focusing on digital transformation and policy.
• ICAI MSME Clinic: Launched in December 2025, providing weekly pro-bono advisory on finance, technology, and compliance across ICAI branches.
• Strategic Partnerships: MoUs with NPCI Bharat BillPay, IIT Delhi (FITT), and various state governments to promote digitisation and mentorship.

C. ICAI’s 2026 Roadmap

• All India MSME Associations Meet (April 2026): Focused on financial inclusion and access to credit.
• SME Fund Raising Conclave (Indore): Explored funding alternatives like SME IPOs and venture capital.
• MSME Manthan Meet 2026 (Shimla): A residential meet with Ministry officials to address grassroots hurdles and utilize government incentives.

Conclusion

As Dr. A.P.J. Abdul Kalam stated, “Dream is not that which you see while sleeping, it is something that does not let you sleep.” Today, India epitomises this vision. The nation is progressively surfacing as a global champion shaping the future economy. The profession remains steadfast in reinforcing businesses through professional acumen and prudent guidance, as India moves toward emerging as a Vishwaguru.

The Importance of the Foreign Exchange Management Act [FEMA], 1999 in India

CA. Shweta Choraria Member of the Institute

Introduction

In today’s era of rapid globalization, digital payments, and high-volume cross-border transactions, FEMA plays a very important role in facilitating international trade, managing foreign exchange reserves and maintaining the stability of the Indian currency. From the perspective of Chartered Accountants (CAs) in Practice in India, developing expertise in this field and providing consultancy services to clients engaged in multinational businesses is a welcoming and rewarding opportunity. Recognizing the growing importance of this domain, ICAI has been continuously encouraging its members by organizing Certificate Courses on FEMA and regularly updating them on recent changes and their impact on the Indian economy.

What is FEMA, 1999?

FEMA, 1999, is an Indian law enacted to regulate the flow of foreign currency, manage foreign exchange, and ensure monetary stability in the Indian economy. It covers all transactions, including capital account and current account transactions, as well as the scope of Foreign Direct Investments (FDI) and External Commercial Borrowings (ECB). The Act empowers the Central Government to frame rules and the Reserve Bank of India (RBI) to issue regulations for managing foreign exchange to facilitate external trade and maintain a stable forex market. Essentially, the Central Government sets the policy framework, while the RBI regulates authorized dealers and oversees foreign exchange transactions.

Top 10 Positive Impacts of FEMA, 1999, on the Indian Economy

1. Focus on Economic Stability & Forex Management: FEMA focuses on maintaining economic stability by regulating capital flows and ensuring that cross-border transactions do not negatively impact the balance of payments. It promotes the orderly development and maintenance of the forex market.
2. Welcoming Foreign Investment: FEMA is designed to facilitate external trade and actively encourage foreign direct investment (FDI) to boost growth. By providing clear, transparent guidelines for FDI and Foreign Portfolio Investment (FPI), it attracts foreign investors, boosting India’s GDP and capital reserves.
3. Positive Response to Businesses and Start-Ups: By reducing constraints on foreign exchange, it makes it easier to do business internationally. FEMA Valuation guidelines prevent startups from giving away equity below fair value, protecting stakeholders. Adherence also helps businesses maintain a positive legal reputation essential for attracting investors.
4. Liberalization in Trade Practices: FEMA generally allows transactions unless they are expressly prohibited, reversing the restrictive principle of its predecessor, FERA. It classifies most violations as civil offenses rather than criminal acts, significantly liberalizing trade.
5. Shifting from Regulation to Management: The shift from the Foreign Exchange Regulation Act (FERA), 1973, to FEMA represents a foundational transformation from a regime of strict control and conservation to one of management and facilitation. Under FEMA, foreign exchange is treated as an economic asset to be managed for development rather than a scarce resource to be controlled.
6. More than Law, it works like an Eco-System: FEMA forms the foundation of India’s foreign exchange ecosystem, balancing national interests with the need to attract investment and comply with global standards. It continues to evolve to meet changing economic needs and global trends.
7. Boost Foreign Investment: By liberalizing transactions and creating a conducive regulatory environment, FEMA encourages trade and investment that directly or indirectly contributes to economic growth.
8. Enhancing Investor Confidence: A transparent and predictable regulatory framework enhances investor confidence, attracting more foreign capital into India.
9. Sector-Specific Regulations: FEMA prescribes FDI caps and approval routes (automatic or government) based on industry type to regulate inflows and maintain stability. It also specializes in regulations for E-commerce regarding cybersecurity to protect digital assets.
10. Shifting from Criminal to Civil Penalties: Markedly different from the restrictive criminal-based regime of FERA, FEMA's civil-based facilitative framework promotes trade and investment by managing foreign exchange as an economic asset.

Compliances and Documentations under FEMA, 1999

Main compliances include mandatory reporting of foreign investments and transactions to the RBI through AD Category-I banks. Key requirements include:

• Filing the Annual Return on Foreign Liabilities and Assets (FLA).
• Reporting FDI via Form FC-GPR/FC-TRS.
• Filling the Entity Master Form.
• Monthly ECB-2 filings.
• Adhering to LRS limits for outward remittances.
• Complying with downstream investment rules for subsidiaries.
• Filing the Annual Performance Report (APR) for Overseas Direct Investment (ODI).
• Reporting investments in Foreign Joint Ventures (JV) or Wholly Owned Subsidiaries (WOS).
• Reporting individual foreign exchange withdrawals daily via CIMS for AD banks.
• Ensuring export proceeds are realized and returned within specific timeframes.
• Maintaining records like the Foreign Inward Remittance Certificate (FIRC) and ensuring KYC compliance.
• Filing Form 15CA/15CB with authorized banks.
• Registering for an Import Export Code (IEC).

Basic Points to be Considered under FEMA, 1999

• Retaining Resident Accounts: NRI status (staying outside India for >182 days) requires immediate conversion of Resident Savings Accounts to Non-Resident Ordinary (NRO) accounts. Maintaining a resident account as an NRI is a common violation.
• Using NRE Account after Returning: Continuing to operate a Non-Resident External (NRE) account for Indian income after returning to India permanently is a violation.
• Crypto/Prohibited Investments: Using Liberalised Remittance Scheme (LRS) funds for crypto-assets or prohibited items is treated as an LRS breach.
• Splitting Remittances: Exceeding the annual $250,000 limit by using multiple banks to hide the cumulative total is a violation.
• Filing Errors: Non-filing or incorrect filing constitutes a violation.

Important Monetary Limits under FEMA, 1999

• Liberalised Remittance Scheme (LRS): Residents can remit up to USD 250,000 per financial year for authorized purposes.
• Repatriation for NRIs/PIOs: Can repatriate up to USD 1 million per financial year from NRO accounts (income/sale proceeds).
• Educational Expenses: Allowed up to the institution's estimate or USD 100,000 per academic year, whichever is higher.
• Medical Treatment: Permitted up to the doctor/hospital estimate or within the LRS limit.
• Gifts and Donations: Remittances are covered under the USD 250,000 LRS limit.

FEMA and RBI Compliances: Core Reporting Requirements

Requirement	Applicable Forms	Timeline	Regulating Authority
FDI Reporting	FC-GPR, FC-TRS	30-60 days	RBI
Overseas Investment	Form FC	On or before ODI remittance	RBI
APR for ODI	Form APR	Annual	RBI
Import Payments	A2 Form, KYC	Before sending payment	AD Bank
Export of Goods/Services	SOFTEX Form, GR Form	Periodic (project/invoice based)	RBI/SEZ Authority

Some Recent Actions of the Government Related to FEMA, 1999

1. Export/Import Regulation: In November 2025, the RBI extended the export proceed realization and repatriation time limit from 9 months to 15 months. Travelers to Nepal and Bhutan can now carry Indian currency notes up to ₹25,000 (excluding denominations above ₹100).
2. FDI & Non-Debt Instruments (2025): Companies in FDI-prohibited sectors were permitted to issue bonus shares to existing non-residents if the shareholding pattern remains unchanged. Prior government approval for FDI from border-sharing nations was strictly enforced in 2025.
3. LRS & Tax (2025-2026): Budget 2025 increased the TCS threshold for LRS remittances to ₹10 lakh per year. Remittances below this generally avoid TCS, and those for education via financial institution loans also do not attract TCS.
4. Compounding and Compliance Procedures (2025): Applications must now be submitted via the RBI’s PRAVAAH portal. April 2025 amendments introduced a ₹2,00,000 cap for compounding minor or technical contraventions to ease compliance.
5. Enforcement Actions (2025-2026): The Enforcement Directorate (ED) has intensified investigations into “front companies” and foreign NGOs. Notable cases include provisional attachment of assets worth ₹100.44 Crore in an illegal coal mining case, searches in Goa involving recovery of ₹2.25 Crore in cash and cryptocurrencies worth over ₹90 Lakh, and the seizure of 13 bank accounts of M/s Reliance Infrastructure Ltd. related to the siphoning of NHAI funds.
6. Enhanced Reporting Monitoring: RBI upgraded the Single Master Form (SMF) system for auto-reconciliation and alerts, while reducing work duplication on the iFirm portal.

Role and Initiative taken by ICAI on FEMA, 1999

ICAI plays a vital role in administration, compliance, and education. It conducts specialized Certificate Courses, publishes handbooks like the “CAs’ Handbook on Inbound & Outbound Investments under FEMA,” and organizes webinars to help members navigate documentation and RBI guidelines.

FEMA: An Open Opportunity for Chartered Accountants (CAs)

Increasing cross-border transactions and investments offer significant career opportunities. Scope exists in:

• Certifications required by AD Banks for remittances and capital transactions.
• Client representations before the RBI for compounding and approvals.
• Regulatory management roles in leading firms, particularly in Tax Advisory and Litigation.

Challenges under FEMA, 1999

• The dynamic nature and frequent RBI circulars make compliance difficult, especially for smaller firms.
• Significant delays can occur due to approval requirements and extensive documentation.
• Unintentional non-compliance (e.g., clerical errors) can lead to severe penalties or unwinding of transactions.
• Misuse of NRI bank accounts (NRE/NRO) and illegal property purchases remain common.
• Penalties under the 1999 Act are very heavy.

Conclusion

FEMA’s flexible, transparent approach has been vital in inviting foreign investment and promoting the ease of doing business in India. However, it demands strict compliance with reporting and sector-specific restrictions. Under FEMA, what you cannot do directly, you cannot do indirectly either.

Important Government Websites

• RBI FEMA Scripts
• Enforcement Directorate FEMA
• RBI Common Man FAQs
• RBI FIRMS Portal

Based on the "Gist of Opinions" section (pages 1595–1600) of the source, here are the summaries of the Expert Advisory Committee (EAC) opinions provided in the June 2026 edition:

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1. Capitalisation of Dry Dock Expenditure (Major Inspection Costs)

Subject: Capitalisation as a separate component of dredgers and depreciation after completion of their estimated useful lives.

Company’s Response to CAG Comments:

• The Company argued that under Ind AS 16, subsequent costs can be capitalised and depreciated until the next scheduled dry-docking.
• For dredgers with expired useful lives, the Company reviewed and extended those lives based on dry dock surveys, aligning with paragraph 51 of Ind AS 16.

Committee’s Points and Opinion:

• The Committee noted that Ind AS 16 allows capitalization if it is probable that future economic benefits will flow to the entity and costs can be measured reliably.
• Routine repairs, maintenance, and day-to-day servicing must be charged to profit or loss as incurred.
• Not all dry-docking expenses meet the criteria; each item must be analyzed. However, if expenditure increases the expected utility/useful life, it meets recognition criteria.
• Ind AS 16 does not prohibit subsequent expenditure capitalization even after the original useful life has expired, but the Company should review its manner of determining useful life.
• If a component has a different useful life than the remainder of the asset, it must be depreciated separately.

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2. Structured Package of Assistance for a Hardwood Pulp Plant

Subject: Whether a capital subsidy in lieu of SGST reimbursement is a ‘grant related to asset’ or a ‘grant related to income’ under Ind AS 20.

Committee’s Points and Opinion:

• Ind AS 20 defines grants related to assets as those where the primary condition is the purchase, construction, or acquisition of a long-term asset.
• Secondary conditions regarding the location or type of asset do not change this classification.
• The Committee clarified that the frequency of the grant (one-time vs. regular) is irrelevant to determining its nature.
• While the subsidy might be calculated as a percentage of investment, this is merely the basis for the amount and does not dictate the nature of the grant.

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3. Payment to NHAI for Road Connectivity to Exhibition-cum-Convention Centre (ECC)

Subject: Accounting treatment of ₹354.89 crore paid to NHAI for external road connectivity to the ECC project.

Management’s Position:

• Management argued the road infrastructure is critical to the operational readiness of the ECC; without it, the main asset is unusable. Therefore, they capitalised it under Ind AS 16.

Committee’s Points and Opinion:

• The expenditure was for "connectivity" to a road, not a dedicated road for the project itself.
• Under Ind AS 16, only costs directly attributable to bringing an asset to the location and condition necessary for operation can be capitalised.
• The Committee noted the road and project development happened simultaneously, meaning the road was not strictly necessary for the construction of the ECC.
• The objective was to create additional access to increase attractiveness and visitor ease, which may increase future benefits but is not necessary for the ECC to be "capable of operating".
• Conclusion: The expenditure should not be capitalised as part of the PPE cost; instead, it should be recognized as an expense in the Statement of Profit and Loss when incurred.

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Important General Notes:

1. These gists are summarised versions for informational purposes and may not capture every nuance. Users should refer to the complete authoritative text at icai.org.
2. The opinions represent the view of the EAC, not necessarily the Council of the Institute.
3. Each opinion is based on specific facts provided by the querist and current laws at the time of finalisation.
4. A Compendium of Opinions in forty-four volumes is available for purchase via the ICAI CDS Portal.

Accountant’s Browser

PROFESSIONAL NEWS & VIEWS PUBLISHED ELSEWHERE Index of some useful articles taken from Periodicals received during April – May 2026 for the reference of Faculty/Students & Members of the Institute.

1. Audit

• Auditor-Client Relationship and Abnormal Tone: A Simultaneous Equations Approach by Milad Darvishi, Mahmoud Lari Dashtbayaz, Roghayeh Mahmoudi Yekebaghi and Taqi Abdul Redha AI Abdwani. Asian Review of Accounting, V. 34, No. 2, PP. 273-297.

2. Computer

• Employees Are Relying on AI for Personal Support. That’s Risky by Constance Noonan Hadley and Sarah L. Wright. Harvard Business Review, May-June 2026, PP. 67-75.
• How Gen AI Robots are Reshaping Services by Jochen Wirtz. Harvard Business Review, May-June 2026, PP. 117-125.
• Strategic Impact of AI on Bank CRM: Applications, Benefits and Future Governance by S. Jeyakumar. Banking Finance, April 2026, PP. 37-43.

3. Economics

• Horticulture Sector in India: Trends, Performance, and Impact by Sant Kumar, Anjani Kumar, Nalini Ranjan Kumar, Kriti Sharma and Immanuelraj Kingsly. Economic & Political Weekly, April 25, 2026, PP. 42-49.
• Innovation as the Driver of Economic Growth: India’s Roadmap to 2047 by Bimlesh Kumar Singh and Saifullah Khan. University News, April 20-26, 2026, PP. 26-36.
• Mind over money: How Psychology Shapes your Financial Fate by Soumya Ranjan Sahoo and Sunil Kumar Gaud. Banking Finance, April 2026, PP. 29-32.
• West Asia War: What it Means for Exporters, Importers and Marine Insurance by Balasundaram R. Insurance Times, April 2026, PP. 35-37.

4. Taxation and Finance

• Performance Commitment, Earnings Quality and Tax Avoidance: Evidence from Chinese Listed Companies by Xiaoqing Li, Haiyu Yan and Zixing Wang. Asian Review of Accounting, V. 34, No. 2, 2026, PP. 483-509.

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Note: Full texts of the above articles are available with the Central Council library, ICAI, which can be referred on all working days. For further inquiries, please contact 011-30110419 and 011-30110420 or by e-mail at library@icai.in.

Mergers and Acquisitions: Transforming the Global Business Landscape 2026-2030

CA. Neha Sedhara Member of the Institute

Overview and Strategic Necessity

Mergers and Acquisitions (M&A) have evolved from simple tools for expansion into strategic necessities in the globalized market of 2026. The period between 2026 and 2030 is set to witness transformative shifts driven by technological innovation, regulatory reforms, and sustainability. While M&A serves as a primary tool for consolidation, it is increasingly used to drive innovation and navigate the complexities of the future global business environment.

Historical Context and India’s Rise

India has recorded a massive trajectory in the M&A space, with over 28,500 deals since 1996, totaling a cumulative value exceeding $1.06 trillion. The year 2025 marked a significant rebound, with deal values reaching approximately $60.2 billion across 960+ transactions. This surge was primarily driven by high-value, billion-dollar deals and increased inbound interest in sectors like infrastructure, technology, and BFSI.

Technological Transformation

Technology, specifically Artificial Intelligence (AI), blockchain, and digital tools, has become a central driver of the M&A process. AI is used to streamline operations, automate repetitive tasks, and accelerate due diligence through advanced data analysis. Notably, Generative AI is projected to be utilized in 80% of M&A processes within the next three years, a massive jump from 16% in early 2024.

Landmark M&A Deals (2020-2025)

Several high-profile deals have reshaped the global landscape:

• Microsoft – Activision Blizzard (2022): At $68.7B, this historic deal gave Microsoft massive scale in gaming and essential access to the metaverse ecosystem.
• Reliance – Disney Merger (2024): A $8.5B consolidation creating "JioHotstar," commanding 120 TV channels and 280 million subscribers, capturing over 85% of the OTT market in India.
• AMD – Xilinx (2022): A $35B deal that elevated AMD into a full-stack semiconductor player.
• Tata Motors – Iveco (2025): A $4.4–4.5B acquisition that provides Tata Motors with strong access to Europe and Latin America while accelerating its entry into EV and hydrogen technologies.

Sectoral Spotlights: Pharma and Cement

1. Pharmaceuticals: Indian trends are converging with global benchmarks. Mankind Pharma’s acquisition of Bharat Serums & Vaccines (2024) for ₹13,768 Cr mirrors the strategic rationale of global giants like Pfizer (Arena Pharma acquisition), moving from pipeline-driven bets to portfolio-driven dominance in specialty areas like women's health and fertility.
2. Cement: The Adani Group is aggressively challenging market leader UltraTech Cement. By acquiring Penna Cement for ₹10,422 Crore, Adani Cement is on track to hit its target of 140 MTPA by FY2028, aiming for a 20% market share. UltraTech, however, remains the leader with a 23% share and plans to expand beyond 160 MTPA.

Hurdles, Legal Challenges, and the Role of Chartered Accountants

M&A transactions are fraught with regulatory and operational complexities where CAs play a pivotal role:

• Regulatory Compliance: CAs navigate domestic laws (Companies Act, 2013) and cross-border requirements like FEMA and multi-jurisdictional antitrust reviews.
• Taxation: Structuring deals to optimize Capital Gains Tax, managing Stamp Duty variations, and leveraging Double Taxation Avoidance Agreements (DTAAs) are essential functions.
• Emerging Risks: Integrating ESG compliance, managing GDPR and data localization laws, and ensuring robust cybersecurity during IT integration have become modern priorities.

Emerging Trends and 2030 Projections

• Sustainability: M&A in clean energy will accelerate to meet the global goal of 500 GW clean capacity by 2030.
• India as a Global Hub: Supported by regulatory stability and policy continuity, India is projected to maintain M&A transaction values in the range of $65–75 billion in 2026, becoming a hub for strategic global investments.
• Future Outlook: Key trends include a rise in cross-border collaborations, a heavy focus on ESG integration, and the expansion of private equity in early-stage firms.

Sector-wise Share of M&A (2025-26 Estimate)

Sector	Volume Share
IT / Technology	24%
Industrials / Manufacturing	15%
Utilities / Power / Renewable	13%
Healthcare / Pharma	10%
Financial Services	9%
Consumer Goods / FMCG	8%
Telecom / Infrastructure	7%
Others	14%

(Source: Author's estimate)

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Conclusion: M&A will remain central to corporate growth and innovation through 2030. India’s dynamic market, bolstered by proactive policies and professional expertise, will play a pivotal role in this global transformation.

Newspaper Summary 060626

 Based on the provided source, the article titled "Going electric in the Indian kitchen" appears on page 02 as a short feature or introductory piece. Here is the text as it appears in the source:

Going electric in the Indian kitchen

For decades, the Indian kitchen has been shaped by two realities: the wide availability of poorly paid domestic help or toiling homemakers, and the cultural insistence on fresh, hot food. While that remains true, the Indian kitchen has been going electric over the last few years. Moving beyond mixer-grinders and coffee makers, the kitchen gadgets of the future seem set to automate the parts of cooking that are repetitive, time sensitive, or simply too messy for a weekday evening. These machines can handle Indian cuisine, ingredients, and cooking styles. Abhishek Baxi tries automated appliances, including a multi-cooker, which.

Smart leaders turn failure into fuel

Over the past few decades, as professionals switching to entrepreneurship became more common, the perception of “failure” too has changed. The default setting was always stigma, ignoring the fact that one could harness the resulting learnings for good. This new view of failure has entered the corporate world where the best modern leaders learn to embed the values and attitudes to failure that they want to encourage. They lead the charge on failure by being open about their own failures and also taking a visible role in confronting failures in the business. In an excerpt from Fail Smarter, Dougal Shaw explains why.

Arunachal’s small tea farmers

My introduction to Donyi Polo tea estate in Arunachal Pradesh was through their famed Golden Needle teas that earned a record price in the auctions back in 2019. Over these years, I have enjoyed several conversations with Omak Apang, its owner, who always speaks proudly of the artisanal centre at the estate, which is run by a team of 10 women. Many of the teas I have enjoyed in these years were made in this centre, headed by Junmoni Baido, who began as a tea plucker nearly 40 years ago.

I travelled to the Donyi Polo estate last month. It is the largest in Arunachal Pradesh, started in 1985 by Yadap Apang, Omak’s late mother. While it was the first estate to come up here, tea itself was not new to this East Siang valley. What the estate did was create a model, offer employment, and become the knowledge hub for the villages around here.

When Donyi Polo was started, experts were sought from the planters’ body, UPASI in south India. Later, Japanese experts arrived. Takur Darrang, the manager of the estate, says when he started in 1991, tea had been planted on 20 hectares. There was a small factory that made only orthodox tea, which was sold in Kolkata. The estate has since expanded to 420 hectares, with another estate, Mouling, created further away, at a higher altitude.

But the creation of the tea estate was only the beginning. In 2008-09, the estate started the Siang outreach programme to share their tea knowledge with others. Many were small holding farmers so the intent was to support them to cultivate tea so that it yielded not just enough for a family’s own use but to also sell. Donyi Polo became the knowledge partner for farmers, teaching cultivation, pruning, and organic practices to small tea growers in this East Siang region. Darrang reckons nearly 5,000 people have been trained.

On the day before my return, there was a small gathering of tea farmers. Everyone came with tea for tasting. The table was set up under a tree in front of the artisanal centre. Junmoni Baido says she’s been making artisanal tea for 10-15 years. Darrang says 20 is more like it. It doesn’t matter, not knowing when something started, as much as what it has enabled.

I turn to Osi Taying and Oni Dupak from Mirem village, about 20km from Oyan. They show me their hands, stained brown. “It’s tea,” they smile, “because we handroll tea.” Their hands are stain-free in winter, when tea making is paused. Talk turned to what difference tea has brought to their lives. For some, the income has helped build a home, room by room. Others speak of adding a micro-factory, maybe a homestay. Or quite simply, as Osi says, being a tea farmer has allowed her to take care of her kitchen and still have some for her own expenses.

1001 Teas is a fortnightly series about the many stories hidden in the world of tea. Aravinda Anantharaman (@AravindaAnanth1) is a tea drinker, writer and editor.

Is content creation changing the menu? Influencer culture is transforming eating out, and restaurants are adapting dishes, decor and operations to be more reel-friendly

“The first thing he said was that the restaurant should be ‘Instagrammable’,” says Prateek Sadhu, chef-owner of Naar in Kasauli. He was referring to a recent conversation with someone launching a restaurant in Delhi. “They even wanted dishes designed with the camera in mind, right down to how a sauce would be poured. I don’t think that’s the right direction.”

Before the internet, restaurant recommendations came from newspapers, magazines, travel guides, food critics and journalists. Today, recommendations are more likely to come from social media creators, shifting the focus to instant discoverability. Visibility matters, and content creators have become one of the fastest ways to generate attention in a market filled with new restaurants and launches. Your social media feed is now your recommendation engine and creators by virtue of creating this content are arbiters of your choice. And so, restaurants are adapting to this reality by planning design, menus and strategies to accommodate it.

“Television, billboards, newspapers and magazines... most traditional marketing channels are expensive for restaurateurs. How else do we make people aware of our restaurants? Social media content is as economical as it is effective,” says Manish Mehrotra, chef-owner of Nisaba in Delhi.

In 2026, opening a restaurant without a social media strategy is business harakiri. Social content influences restaurant design itself. At Japonico, a Japanese restaurant that opened in Gurugram in 2025, a striking water body behind the bar was created with social media in mind, says founder Sahil Sambhi. It’s likely you’ll see similar features in any restaurant you visit—a particularly well-lit corner, a colourful wall, striking flower arrangements, and even stylish washrooms designed for the ’Gram.

Shinir Sethi, founder of Louve, a European restaurant in Delhi, says their central crystal installation was designed as a visual focal point that guests would want to photograph and share. “It features prominently in guest-generated content,” she adds.

But chefs and restaurateurs insist the fundamentals must come first. Mehrotra’s Nisaba, his first outside of Indian Accent, generated significant buzz on social media even before its launch. But as he points out, visibility can only take a restaurant so far. “A reel may bring the guest in, but once the guest is here, the experience is all that matters.”

Chef Lakhan Jethani of Mizu Izakaya, Mumbai, echoes the sentiment. “Today, content is a conversation that should be had at the creative design stage for any restaurant, but food, service, and hygiene come even before.”

Not all restaurants have had to evolve at the same pace. Legacy institutions like Bukhara and Dum Pukht built their reputation long before social media existed. For them, the relationship often works in reverse: iconic dishes attract creators, and not the other way around. Anil Chadha, managing director, ITC Hotels Ltd, explains: “Social media was not present when the naan bukhara was originally served to the diners. Today, when content creators are drawn to its visual appeal, it exemplifies how authentic experiences serve as the true catalyst for engagement.”

Chef Doma Wang of Kolkata’s The Blue Poppy Thakali takes a more old-school view. Having built her restaurant’s reputation largely through word-of-mouth over the past two decades, she says, “I don’t have the resources to host creators, but even if I did, I don’t think I would.”

For newer restaurants, this is no longer a choice, and creator collaborations are becoming more curated. Visibility is no longer about inviting creators with the largest follower counts. “We focus on identifying creators whose audience aligns with the restaurant’s cuisine, positioning, and target customer,” says Pankhuri Harikrishan, founder & CEO of Fetch.

“The fit has to be right. Changing algorithms, shrinking attention spans, and an exploding creator economy mean every reel has to work harder than the last. “Negative reviews can get you followers faster, but I choose not to go in that direction,” says Sameer Bawa, who has over 300,000 followers on Instagram.

That approach can cost opportunities. “Everybody is a food creator now,” says Anjana Gopakumar, the Kochi-based creator of @AnjanaGopakumar_. Restaurants frequently invite her to experience and promote their offerings. “When I refuse to recommend a restaurant unless I genuinely like it, brands simply find someone else.”

But authenticity has its rewards. “You build a circle of trust, and followers know they can rely on your recommendations,” adds Bawa. Gopakumar recalls the owner of Grana Pizzeria in Kochi telling her how tourists in the city still discover his restaurant through a video she posted over a year ago. “It’s gratifying to know that good storytelling can have a long shelf life,” she says.

Diners sit at the centre of this ecosystem, as both audience and participant. For Kavleen Singh and Aneesh Mediratta, a Gurugram-based couple working in consulting, social media is often where restaurant discovery begins. “If it’s a recommendation from someone we follow, we’ll usually order at least one of the dishes they have suggested,” says Singh.

Restaurateurs point to the clear link between content and business. Sahil Sambhi, who opened Nadoo in Delhi, recalls how attention on social media turned the restaurant’s egg puff into a must-order dish within the first few weeks of its launch. “After that, almost every table wanted to order it,” he says.

“Content allows diners to discover the story behind a dish even before they visit,” says Vignesh Ramachandran, chef-partner at Hyderabad’s Theta Theta Telugu. “A viral post in 2025 during our soft launch, on Chintapandu Ghee Prawns, a Telugu take on the classic Spanish gambas al ajilio, immediately saw a surge in orders. The dish remains a best-seller today.”

Does the impact go beyond immediate footfalls? “Reservations do go up, but what’s equally valuable is when people save, share, or talk about the brand within their circles. That is far more sustainable than one-time visibility,” says Karann R. Chawla, founder of She’s Here, a Gurugram-based Omakase restaurant.

There’s a clear shift in how we experience food. We still eat with our eyes first. The difference is that the first encounter with a restaurant, a dish or even a craving now happens on a screen, long before we arrive at the table.

Tanu Ganguly is a Gurugram-based journalist who writes about food, dining, and culture.

Anthropic urges global pause in AI development, flags ‘self-improvement’ risk The $1 trillion startup warns AI models are nearing capability to improve without human intervention

Anthropic is calling for top artificial intelligence labs to weigh slowing the pace of development, suggesting that AI systems are advancing so rapidly that they may soon be able to improve themselves without human intervention in ways that could pose significant societal risks. The ability to slow global AI development would “likely be a good thing,” the company said Thursday in a blog post that disclosed internal data documenting how quickly its most advanced models are improving.

The post, written by the head of its internal research institute and a company co-founder, noted that model advances appear to be on a path toward “recursive self-improvement,” when AI systems can improve on their own without human intervention. Some AI insiders have seen that threshold as a potential marker of danger and enormous societal upheaval. “We believe it would be good for the world to have the option to slow or temporarily pause frontier AI development to enable societal structures and alignment research to keep up with the advance of the technology,” the post, written by Marina Favaro and Jack Clark, says. It proposes a global agreement on how to potentially slow development and a mechanism for verifying that competitors are respecting it.

The post cautions that recursive self-improvement hasn’t yet happened and isn’t inevitable, “but could come sooner than most institutions are prepared for”. Anthropic recently concluded a fundraising round that valued the company at almost $1 trillion and filed confidential paperwork to begin the process of publicly listing its shares. The company has recently emerged as the front-runner in a ferocious competition for AI supremacy with ChatGPT-maker OpenAI, which is also expected to file paperwork for an initial public offering soon. Anthropic’s run rate is on track to reach $50 billion in annualized revenue by the end of this month, up from $9 billion at the end of 2025.

The AI industry has been divided for some time on how close current models are to reaching benchmarks like “artificial general intelligence,” or AGI, a level of intelligence that is comparable to humans, or recursive self-improvement. Some scholars, such as Yann LeCun, former chief AI scientist at Meta Platforms, have argued that frontier systems based on large-language models won’t ever be capable of making the leap to rivaling human intelligence. While seeing AI models as powerful tools, he has compared them to the intelligence of a cat and sparred with researchers who fear that AI poses an existential risk to humanity.

Anthropic’s leaders, including Chief Executive Dario Amodei, have warned about the potential for dangerous impacts from AI for years. Amodei has warned that AI could worsen inequality and eliminate as many as half of entry-level white-collar jobs. He has also warned that it is plausible that powerful AI systems could develop destructive tendencies in unpredictable ways. In an essay in January, Amodei suggested that training AI systems with science-fiction narratives of AI rebellion could, for instance, end up causing real AIs to rebel.

Clark, the blog post’s co-author and an Anthropic co-founder, believes recursive self-improvement could happen within the next two years, and possibly sooner. “In the absence of a coordinated, global slowdown, we are left with the current situation: powerful technology being developed at breakneck speed by a variety of actors in a variety of countries, locked in a competition with one another where commercial and geopolitical rivalries are drowning out the larger existential-to-the-species aspects of the technology being built,” he said.

Thursday’s blog post says the Anthropic Institute will conduct research to “help build the systems that a credible slowdown or pause would require”. The company likened the problem to nuclear-weapons treaties but acknowledged stopping cheating would be even thornier. “Training runs are far easier to conceal than missile silos,” the blog post read, adding, “whoever continues while others pause could inherit the lead”.

The company has long faced criticism that its policy work is designed to slow the advances of competitors. David Sacks, a venture capital investor and informal adviser to President Trump, has accused Anthropic’s leaders of running a “regulatory capture agenda” that could lead to an effort to ban cheaper open-source models. Others have suggested the warnings are a marketing ploy, pointing to Anthropic’s decision to limit the release of a powerful “Mythos” cybersecurity model as a way to tout its products' capabilities.

Anthropic’s leaders maintain they take safety seriously. Ethan Mollick, a professor at Wharton, said that while critics see marketing, many within the company are “true believers”. “AI labs are a mix of things,” said Mollick. “There is a trillion-dollar company with all the normal trillion-dollar company stuff like marketing teams and lawyers. Then there is a core of researchers who are just building the next models. And then there is a set of people who are philosopher kings who are concerned about the future and what comes next, and they’re all in conflict with each other at times”.

India posts 7.7% FY26 growth amid strong March qtr

Despite the quarterly moderation, the annual figure came in slightly above projections for a 7.6% growth

India’s economy expanded 7.7% in fiscal year 2026 (FY26), up from 7.1% in the previous year, according to provisional estimates released by the statistics ministry under the new GDP series (base year 2022-23).

The gross value added (GVA), which strips out volatile indirect taxes and government subsidy payouts, grew 7.9% in the March quarter (Q4), compared to a revised 8% in the previous quarter. With this performance, India maintained its position as the world’s fastest-growing major economy, following recorded growth rates of 7.1% in 2024-25, 9.2% in 2023-24, 7.2% in 2022-23, and 8.7% in 2021-22.

Chief Economic Adviser V. Anantha Nageswaran, speaking at a press conference in New Delhi, noted that while high-frequency data shows “extraordinary resilience,” there are emerging signs of stress due to external factors. He highlighted that the evolving West Asia crisis represents a significant supply shock and could potentially trigger a demand shock. Other primary concerns include:

• Oil Prices: Uncertainty regarding how prices will evolve.
• Monsoon Risks: Potential impact on inflation, disposable income, and private final consumption expenditure.

While the Reserve Bank of India (RBI) has lowered the FY27 growth forecast to 6.6% from 6.9%—citing risks from a sub-normal monsoon and geopolitical conflict—Nageswaran expressed confidence that macroeconomic stability measures and supply-side assurances would help the economy return to a 7%-plus growth path by FY28 or sooner if external conditions improve. For now, the government is proceeding with the RBI's projections of 6.6% growth with downside risks and 5.1% inflation with an upside risk.

China boosts India oil meal imports India’s oil meal exports to China has surged from $15.7 million in 2015, marking a nearly 900% rise over the decade

India has emerged as a key supplier of oil meal for China’s livestock and poultry feed, with exports having surged more than 25-fold to $157 million in 2025, as Beijing diversifies feed imports away from its traditional suppliers. India had shipped out oil meal worth $6.1 million in 2024.

According to the World Integrated Trade Solution (WITS) data, reviewed by Mint, India’s oil meal exports to China has surged from $15.7 million in 2015, marking a nearly 900% rise over the decade, and raising China’s share in India’s global oil meal shipments to 13.5% in 2025 from 0.4% in 2024.

The shift comes as China, the world’s largest consumer of animal feed ingredients, looks to reduce dependence on its traditional suppliers such as the US, Brazil and Argentina amid periodic supply disruptions, weather-related production risks and volatility in global agricultural commodity prices. China was a marginal market for Indian oil meal exports for most of the past decade, accounting for under 2% of shipments in most years. Oil meal is the protein-rich by-product left after extracting oil from oilseeds such as soybean, mustard and groundnut and is also used as an organic fertilizer.

Pricing is a key factor here. “The sharp rise in India’s oil meal exports to China was largely driven by India’s competitive pricing of rapeseed meal and China’s restrictions on Canadian canola imports,” said B.V. Mehta, executive director of The Solvent Extractors’ Association of India, an industry body representing the vegetable oil and oilseed sector. “This created a significant opportunity for Indian exporters to fill the supply gap in the Chinese feed market”.

Will do whatever it takes for steady rupee: RBI governor Malhotra says RBI doesn’t target a specific exchange rate, allows rupee to be market-driven

Subhana Shaikh subhana.shaikh@livemint.com MUMBAI

The Reserve Bank of India (RBI) will do “whatever it takes” to maintain orderly conditions in the foreign exchange market and curb excessive volatility, governor Sanjay Malhotra said on Friday while announcing the monetary policy decision.

Addressing concerns about sharp currency swings, Malhotra reiterated that the RBI does not target any specific exchange rate and allows the rupee to be determined by market forces.

“Our experience, however, suggests that it may sometimes witness movements, often caused by speculative pressures, especially in the wake of heightened uncertainty, that are not in sync with fundamentals and are disruptive of economic activity,” Malhotra said.

He stressed that while the RBI would not resist market-driven adjustments in the currency, it would intervene to prevent disorderly conditions and curb excessive volatility.

On Friday, the Indian rupee opened at 95.7250 and closed at 95.18 against the dollar, up 56 paisa from the previous close. On Thursday, it had ended at 95.7925.

RBI's reassurance comes amid a sharp decline in the Indian rupee in recent months. Since the US-Iran war began on 28 February, the Indian rupee has depreciated by over 5% to hit a record low of 96.8262 on 20 May. In 2025-26, the local unit plummeted by over 11%, according to Bloomberg data.

Malhotra said that India’s foreign exchange reserves provide a strong buffer against external shocks and that the central bank has a broad range of regulatory and market-based instruments to respond effectively as may be required.

India's foreign exchange reserves stood at $682.3 billion as of 29 May, providing import cover of about 11 months, according to the governor's statement. Before the outbreak of the US-Iran war, reserves were at $723 billion as of 20 February, RBI data showed.

“All the measures announced by the RBI governor were focused around increasing access to foreign exchange through increased foreign capital, fuelling long term growth support while also boosting foreign exchange reserves to deal with the increased currency volatility,” said Vivek Iyer, partner and financial services risk leader at Grant Thornton Bharat.

On 25 May, the governor had told Mint in an interview that the Indian rupee may be undervalued.

“With the recent depreciation, it would be reasonable to think that rupee is not overvalued. If anything, one could argue that rupee has become undervalued, both in nominal as well as in REER (real effective exchange rate) terms,” Malhotra had said.

He had said the RBI does not target any specific exchange-rate level and would intervene only to curb abnormal and high volatility or undue speculation.

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CURBING VOLATILITY

• THE RBI governor said the central bank would intervene to prevent disorderly conditions
• ON Friday, the rupee closed at 95.18 against the dollar, up 56 paisa from the previous close
• RBI’S reassurance comes amid a sharp decline in the Indian rupee in recent months
• ON 25 May, the governor had told Mint that the Indian rupee may be undervalued

Measures to ease doing business key to boosting NRI, OCI capital RBI hiked investment limits for NRIs and OCIs.

Ram Sahgal ram.sahgal@livemint.com MUMBAI

The Reserve Bank of India (RBI) and government measures to attract foreign capital from non-resident Indians (NRIs) and overseas citizens of India (OCIs) will succeed if complemented by steps to increase the ease of doing business, said market experts and securities lawyers.

The central bank hiked the investment limits for NRIs and OCIs in equities traded on the stock market, without Securities and Exchange Board of India (Sebi) registration, and extended the facility to persons resident outside India (PROI).

While the individual limit for NRIs/OCIs or person of Indian origin is being doubled to 10% and the aggregate limit is being hiked to 24% from 10% in listed companies, the same is being extended to foreign entities that hold or operate assets in India, categorised as persons resident outside India.

RBI will issue timelines for the measures’ implementation. The call for relaxation of processes stems from NRI holdings in listed stocks remaining well below the extant limits. For instance, NRI ownership as a share of Sensex market capitalisation stood at just 0.7% as of Q4 FY26, per BSE data.

“It is a step in the right direction, but needs to be complemented by simple and digital processes related to KYC, taxation, repatriation, etc., for significant inflows to materialise,” said Nilesh Shah, managing director at Kotak Mahindra Asset Management, adding that documentation processes and taxation had to be simplified to attract foreign capital.

While agreeing with Shah, senior securities lawyer Chirag Shah felt the need of the hour was to immediately address the heavy foreign portfolio outflows, as even these could, for now, stem the rupee’s slide.

“This is a good step structurally, which will result in potentially higher inflows from these cohorts notwithstanding the extant challenges involved for them to invest here,” Shah said. “The other issues can be resolved over time”.

Some of the notable Sensex companies in which NRIs hold stakes include Asian Paints (1.17%), Jio Financial (1.18%), JSW Steel Ltd (1.15%), L&T (1.27%) and Trent (5.36%) as of the March quarter, per BSE.

FPIs have pulled out $57.68 billion worth of shares from India’s secondary market since 2025, thanks to global artificial intelligence (AI) trade, slowing corporate earnings and, more recently, the West Asia war, which has disrupted nearly a fifth of the world’s crude supplies, per S.K. Joshi, consultant at Khambatta Securities.

The Rise of China in Academic Research

 The 2006 National Medium- and Long-Term Plan (NMLP) for the Development of Science and Technology is identified in the sources as a "major impetus" and a decisive turning point in China’s transformation into a global scientific superpower. Launched by the Chinese government in January 2006, this ambitious strategy aimed to transition China into an innovation-oriented economy by 2050.

Core Objectives and Implementation

The NMLP represented a shift from China's previous "catching up" strategy to a proactive effort to move ahead of other nations. The plan included several key components:

• Targeted Strategic Fields: It directed research toward areas of high-growth potential and strategic importance, specifically physics, chemistry, biology, and medicine.
• Structural Reforms: It encompassed 11 key national development areas, 16 major special projects, and 27 cutting-edge technologies. It also included reforms to patent law to encourage domestic innovation and investments in large-scale industrial projects to create synergies between R&D and practical application.
• Funding Mechanisms: The plan was implemented through successive five-year economic plans, with research and development (R&D) expenses nearly doubling by 2010.

Impact on China’s Research Rise

The sources demonstrate that the NMLP catalyzed a dramatic surge in both the quantity and quality of China's academic research:

• Volume and Leadership: Following the 2006 launch, China’s publication volume in top-tier journals rose sharply, eventually leading it to surpass the United States as the world’s leading producer of scientific research by 2022.
• Quality and Influence: Citation counts, which measure research influence, rose even more strongly than publication volume. For China-based researchers, publications per capita increased by approximately 17% relative to the rest of the world post-2006.
• Field-Specific Growth: The gains were heavily concentrated in the fields explicitly targeted by the NMLP. In these areas, publication output was roughly 85% higher by 2022 compared to non-targeted fields like mathematics and economics, which showed significantly slower growth.

Broader Context and Global Implications

The success of the NMLP challenges long-held Western skepticism regarding the efficacy of top-down, centralized planning in innovation.

• Effective State-Led Investment: The evidence suggests that sustained and strategically targeted public investment can effectively expand a country's scientific capacity and global influence.
• Shift in Global Dominance: China's rapid ascent has challenged the historical dominance of the United States and Europe in academic research. The sources suggest this new reality may force advanced economies to rethink their own science and innovation policies to remain competitive.
• Limitations and Exceptions: While STEM fields thrived under the NMLP, the social sciences—particularly economics—did not experience comparable growth. The sources attribute this to the technical nature of STEM fields being less "politically sensitive" compared to disciplines that involve critical analysis of national policies and institutional arrangements.

The sources describe the growth in China’s scientific output as one of the most significant shifts in the modern research landscape, characterized by a rapid transition from a strategy of "catching up" to one of global leadership. This rise culminated in 2022 when China surpassed the United States as the world's leading producer of scientific research.

The following key themes summarize the growth of China's scientific output within this context:

1. Massive Surge in Volume and Quality

Following the launch of the 2006 National Medium- and Long-Term Plan (NMLP), China experienced a dramatic increase in both the quantity and quality of its research.

• Publication Volume: On average, publications per capita by China-based researchers increased by approximately 17.2% relative to the rest of the world after 2006.
• Research Influence: The quality of this output, measured by citation counts, rose even more dramatically, increasing by roughly 140.1% compared to the control group in the years following the NMLP's implementation.
• Trend Over Time: While there were no significant differences in output between China and other countries before 2006, a significant and widening "publication gap" emerged thereafter, with China's output per million population being 53.8% higher than the control group by 2022.

2. Concentration in Strategic Fields

The growth has not been uniform across all academic disciplines; rather, it is heavily concentrated in the STEM fields explicitly targeted by the government.

• Targeted Success: In disciplines such as physics, chemistry, biology, and medicine, publication output was roughly 85% higher by 2022 compared to non-targeted fields like mathematics and economics.
• Disciplinary Dominance: The share of global articles produced by China-based researchers in Chemistry jumped from 2.4% (2000–2005) to 36.4% (2017–2022). Similarly, in Physics, the share rose from 2.1% to 23.5% in the same period.
• Lagging Fields: In contrast, the field of Economics showed only a small increase, with China-based researchers accounting for only 1.78% of top-tier publications by 2022.

3. State-Led Investment as a Catalyst

The sources attribute this growth to sustained, strategically targeted public investment rather than accidental market shifts.

• R&D Spending: China's research and development expenses nearly doubled by 2010. By 2020, total R&D spending reached approximately $378 billion, or 2.4% of its GDP.
• Strategic Instruments: Funding is viewed as a "powerful strategic instrument" used to align scientific capacity with long-term industrial and technological objectives, such as the "Made in China 2025" initiative.

4. Broader Implications for Global Research

China's rapid ascent has fundamentally altered the global balance of knowledge production.

• Challenging Western Dominance: This rise challenges the long-standing assumption that centralized, top-down research systems are inherently inefficient.
• Pressure on Advanced Economies: China’s expanding capacity poses a direct challenge to the historical dominance of the United States and Europe, suggesting that these regions may need to rethink their own innovation policies to remain competitive.
• Latecomer Advantage: The sources conclude that China's success proves it is possible for a "latecomer" country to overcome entry barriers and build a globally competitive research system through a coherent and sustained national strategy.

The sources indicate that the rise of China in academic research is characterized by a profound disciplinary divergence, where the impact of national policy is heavily concentrated in specific technical fields while others experience significantly slower growth. This uneven development is a direct result of the 2006 National Medium- and Long-Term Plan (NMLP), which prioritized certain disciplines to transform China into an innovation-oriented economy.

Dominance in Targeted STEM Fields

The most significant disciplinary impact is found in the fields explicitly targeted by the NMLP: physics, chemistry, biology, and medicine. The state’s strategic investment in these areas has led to a dramatic shift in global research shares:

• Chemistry: China’s share of global articles in top-tier chemistry journals jumped from 2.4% in the 2000–2005 period to 36.4% by 2017–2022.
• Physics: In the same timeframe, its global share in physics rose from 2.1% to 23.5%.
• Output Gap: By 2022, the publication output in these targeted disciplines was approximately 85% higher than in non-targeted fields.
• Quality and Influence: The impact is not limited to volume; citation counts—a proxy for research quality—increased by roughly 140.1% for China-based publications relative to the rest of the world after the 2006 policy onset.

Stagnation in Non-Targeted Fields

In contrast, disciplines excluded from the NMLP’s primary strategic focus, such as mathematics and economics, have shown much less growth.

• Economics: Despite China's massive economic growth, its researchers accounted for only 1.78% of publications in top-tier economics journals by 2022. The United States and Europe continue to dominate this field.
• Mathematics: While mathematics saw some growth (rising from 1.2% to 5.3% global share), it lagged far behind the surges seen in chemistry and physics.

Rationale for Disciplinary Prioritization

The sources suggest that the state-led prioritization of STEM over social sciences is driven by two main factors:

• Strategic Industrial Alignment: STEM disciplines are viewed as essential for industrial upgrading, "technological self-reliance," and the "Made in China 2025" initiative. Research in these areas is treated as a "strategic instrument" to convert fundamental science into commercial technology.
• Political Sensitivity: Technical fields like physics and chemistry are considered less politically sensitive. Conversely, disciplines like economics involve the "critical analysis of policies and institutional arrangements," which may face different institutional constraints and incentives within China's political economy.

Global Implications

This targeted disciplinary success challenges the assumption that top-down, centralized planning is inherently inefficient for producing "frontier innovation". The evidence shows that a sustained national strategy can successfully overcome entry barriers for a "latecomer" country and fundamentally alter the international balance of knowledge production in critical scientific domains.

The sources identify China's rise in academic research not as an accidental byproduct of economic growth, but as the result of a deliberate, state-led strategy characterized by massive investment and strategic institutional reforms. The following drivers are cited as the primary forces behind this performance:

1. The 2006 National Medium- and Long-Term Plan (NMLP)

The NMLP is described as the "major impetus" and a clear break from the past. Launched in January 2006, it shifted China's focus from "learning from the West" and "catching up" to a proactive strategy of moving ahead of other nations. The plan provided a roadmap to transform China into an innovation-oriented economy by 2050 through the coordination of national strategic needs and basic research.

2. Massive Surge in Public Investment

A fundamental driver of performance was the government's willingness to commit immense financial resources to research and development (R&D).

• Rapid Budget Growth: China’s R&D expenses nearly doubled by 2010. By 2020, total R&D spending reached approximately $378 billion, equivalent to 2.4% of its GDP.
• Strategic Allocation: Funding was used as a "powerful strategic instrument" to direct scientific capacity toward specific national industrial and technological goals.
• Targeted Funding Agencies: Performance was bolstered by agencies such as the National Natural Science Foundation of China, which is the country's largest funder of academic research.

3. Strategic Disciplinary Targeting

Rather than spreading resources thinly, the NMLP concentrated efforts on technical fields with high-growth potential: physics, chemistry, biology, and medicine.

• Concentrated Output: In these targeted fields, China's publication output was 85% higher by 2022 compared to non-targeted fields like mathematics and economics.
• Industrial Alignment: These STEM disciplines were prioritized because they align with long-term industrial objectives, such as the "Made in China 2025" initiative.

4. Human Capital and Institutional Expansion

China invested heavily in the infrastructure and people necessary for a top-tier research system.

• University Growth: The number of university students more than doubled during the 1990s as a precursor to this rise. Today, China has over 3,000 universities and more than 1,200 "highly cited researchers".
• Administrative Efficiency: Under the leadership of Xi Jinping, China established new research agencies to improve the efficiency of fund allocation.
• Shift in Metrics: More recently, China moved away from Western metrics like "impact factors" toward domestic strategic priorities, ensuring that research funding directly supports national goals.

5. Synergy Between Research and Industry

The sources highlight that China's performance was driven by an effort to convert fundamental research into commercially successful technologies. This included:

• Mega Industrial Projects: Investments designed to harvest synergies between R&D and practical industrial experience.
• Patent Law Reforms: Revisions to patent law were implemented to encourage the domestic patenting of ideas, further incentivizing innovation within China.

In summary, the sources suggest that China's performance is a "case study of a state-driven research and development strategy". This challenges the traditional Western assumption that centralized, top-down planning is inherently inefficient for producing frontier scientific innovation.

The rise of China as a global research power, catalyzed by the 2006 National Medium- and Long-Term Plan (NMLP), carries significant implications for global policy, economic strategy, and the future of scientific competition.

1. Re-evaluating State-Led Innovation

The most immediate implication identified in the source is a challenge to the "conventional assumption" that centralized, top-down research systems are inherently inefficient. Many Western scholars previously argued that such a system would prioritize quantity over quality and lead to a wasteful allocation of resources. China's success in producing high-quality research and surpassing the U.S. in top-tier publications suggests that sustained and strategically targeted public investment can effectively expand a nation's scientific capacity and global influence.

2. Research Funding as a Strategic Instrument

The source highlights that in China, research funding is not merely an administrative process but a "powerful strategic instrument". By directing resources toward specific technical fields—physics, chemistry, biology, and medicine—the state has successfully aligned scientific capacity with long-term industrial and technological goals, such as "Made in China 2025". This implies that public funding can serve as a lever for structural economic transformation, rather than just a supplement to private sector innovation.

3. Pressure on Western Scientific Dominance

China's rapid ascent has fundamentally altered the global balance of knowledge production. This shift poses a direct challenge to the historical dominance of the United States and Europe. The source suggests that scientific leadership is not a fixed state; instead, advanced economies may need to rethink their own science and innovation policies—including renewed investment and institutional innovation—to remain competitive in the global knowledge economy.

4. Pathways for Latecomer Countries

China's experience demonstrates that it is possible for "latecomer" countries to overcome significant entry barriers and build globally competitive research systems through a deliberate and coherent national strategy. This suggests a potential roadmap for other emerging economies to bypass long-standing Western dominance in academia through state-coordinated efforts.

5. Disciplinary Divergence and Political Economy

The uneven growth across different fields implies that political and institutional contexts significantly shape research outcomes. The sources note that technical STEM fields may have been prioritized because they are less "politically sensitive" and more directly tied to industrial upgrading. Conversely, disciplines like economics, which involve critical analysis of policies and institutional arrangements, have not seen comparable growth. This raises questions about whether social sciences will ever play as central a role in China’s academic landscape as they do in the West.

6. Uncertainties and Long-Term Sustainability

While the NMLP has been highly successful in the short term, the source notes several open questions regarding the future of China's research rise:

• Potential distortions arising from heavy reliance on public funding.
• The efficiency of resource allocation over the long term.
• The ability to sustain this performance in the face of demographic aging and geopolitical tensions.

Newspaper Summary 030626

 

Producer Price Index to replace WPI over 5 years; services in bigger basket

Amiti Sen New Delhi

In a major overhaul of inflation metrics, the Centre will launch a revised Wholesale Price Index (WPI) series this month, kickstarting a five-year transition to replace it entirely with a new Producer Price Index (PPI). On June 15, the Department for Promotion of Industry and Internal Trade (DPIIT) will release the revised series of WPI with base year FY23, replacing the existing series with base year FY12. This revised series will incorporate an expanded basket of 957 commodities, up from the current 697 items.

Additions to the basket include items such as solar and wind energy and nuclear electricity.

NEW SERIES

Simultaneously, the government will introduce a new series of Output PPI, Trial Input PPI, and Service PPI. The Service PPI will cover seven services: banking, securities transaction, insurance, pension funds management, railways, air (passenger), and telecom.

“Considering the wide usage of the WPI in price escalation clauses, this index will be released for five years from the date of release of the revised series, along with PPI and will be discontinued thereafter," according to a DPIIT statement. This is intended to give users sufficient time to switch from WPI to PPI.

While the WPI tracks prices of goods at the wholesale/bulk level, the PPI will track prices at the point of production (farm/factory-gate).

GLOBAL BEST PRACTICE

Pointing out the advantages of PPI over WPI, an official explained that PPI would be more consistent with the national account framework and align with global best practices adopted by advanced economies.

“Availability of both Output PPI and Input PPI explains how inflation experienced by the producer on input items are passed through the output being produced," the official said. Further, both PPIs provide for an opportunity to eliminate the double counting of inflation unlike WPI. While WPI covers goods only, PPI includes services as well.

How AT1 bond issuances have hit a rough patch since 2025

Lokeshwarri SK Chennai

Additional Tier 1 bonds or AT1 bonds have been caught in one scandal after another, making issuers shy away from them in recent years. Only ₹3,500 crore was raised through these bonds in 2025, registering a 79 per cent decline from the issuances worth ₹16,859 crore in 2024.

AT1 bonds are high-yielding but very risky instruments issued by banks to meet capital requirements under Basel-III norms. These are perpetual bonds, meaning they have no maturity date and can be written off or converted into equity by the RBI if faced with a financial crisis. This means investors may not only forego interest but could lose their entire principal under certain circumstances.

These bonds have been involved in several cases of mis-selling where high returns were highlighted without adequately explaining the risks. For example, employees of HDFC Bank’s Dubai branch were found mis-selling Credit Suisse AT1 bonds to NRI clients. Additionally, the Supreme Court has yet to give a final order regarding Yes Bank’s write-off of AT1 bonds worth ₹8,415 crore in 2020.

DECLINING NUMBERS

Data from Prime Database shows these bonds remained in favor until 2024. In 2021, nine issuances raised ₹24,271 crore, and in 2022, 18 issues raised ₹30,172 crore. However, these numbers halved through 2023 and 2024 before dwindling completely in 2025.

“The decline in AT1 bond issuances is the result of a combination of factors: the hybrid debt-equity nature of the instrument, regulatory and valuation debates, the aftermath of the Yes Bank and Credit Suisse events, concerns over pricing adequacy, a limited investor base and increasingly selective investor appetite,” says Venkatakrishnan Srinivasan, founder and managing partner of debt advisory firm Rockfort Fincap.

Furthermore, the strong balance sheets of banks post-pandemic, characterized by reduced stressed assets, may have lowered the overall requirement for capital in recent years.

PSU BANKS LEAD

Since 2021, Public Sector Undertaking (PSU) banks have led AT1 fundraising. SBI has raised the most at ₹42,208 crore across nine issuances, followed by Canara Bank (₹17,903 crore) and Punjab National Bank (₹13,044 crore). Among private banks, only HDFC Bank issued AT1 bonds worth ₹3,000 crore in 2022.

Interestingly, banks have increasingly switched to AT2 bonds since 2024. These are considered one notch less risky than AT1 bonds and can be redeemed after five years.

Srinivasan adds that future growth will depend on achieving a more balanced risk-reward framework. If issuers offer spreads that properly reflect the unique risks of these instruments, demand may continue, especially for top-rated public sector and AAA-rated private sector banks.

bl interview: ‘Enterprise AI has arrived in India at scale’

Sanjana B Bengaluru

Microsoft has announced that three leading IT companies — Infosys, TCS and Wipro — have each scaled their Microsoft 365 Copilot licences to over one lakh employees, taking the collective commitment past three lakh seats in under six months. This announcement builds on the 50,000-seat deployments announced in December 2025, highlighting how integral AI is now across engineering, service delivery and business operations at enterprise scale.

Puneet Chandok, President, Microsoft India and South Asia, discusses India’s emergence as a key market for AI adoption, Microsoft’s investment plans and the broader impact of AI on jobs and enterprise operations.

Edited excerpts:

What are some key milestones or developments at Microsoft that stood out recently? The three Indian IT majors have each scaled Microsoft 365 Copilot seats to one lakh employees, with a collective deployment across roughly three lakh engineers. This is one of the largest and fastest enterprise AI roll-outs globally on Microsoft. It’s the strongest real-world proof of enterprise AI at scale. We’re moving from pilots and experimentation to real scale, with Copilot becoming the connective tissue across these three-lakh-plus engineers. It’s also a clear signal that enterprise AI has arrived in India at scale. India is setting the pace for Asia and is amongst the fastest-moving markets globally for Copilot and AI adoption.

AI is no longer a side project or a vision; it is how work is getting done in these businesses, and how work is measured. About 49 per cent of Copilot usage we are seeing is cognitive work, which is real analysis, creative thinking and problem-solving; 58 per cent of users tell us they can do what they couldn’t a year ago. Copilot is becoming the UI for AI across all knowledge workers. This is the real-world proof of AI and Copilots being embedded into workflows and how work gets done across IT services across sectors in the country.

Is largescale AI adoption giving Indian IT services firms a competitive edge globally? At a time when differentiation matters, how is AI helping the companies stand out? This is happening in multiple ways. First, they’re making the engineers more productive, meaning productivity benefits. Engineers have more time for more value-added work. Second, it’s reducing cycle times and helping enterprises do things faster for customers, which in turn allows them to do more. It’s also allowing employees to deliver more value-added work to customers than before.

Has the appetite for AI investment changed in light of the current global uncertainty or does the momentum remain intact? India is already one of the fastest-growing markets in the world for Copilots, leading the pack. There has been sustained double-digit growth over the last few years. People are using this to think about how they become Frontier Firms, and how to get AI to work for them to increase productivity, efficiency and effectiveness. There is significant growth across our platforms, Copilots, Azure and our service lines. That’s the reason we’re investing in India.

There is growing optimism that India could become a major beneficiary of the global AI infrastructure build-out. What role will Microsoft’s investments play in that journey? There are three ways to look at this. First, we are building the right infrastructure in the country for AI to meet India’s needs. We’re also building the largest data centre footprint in the country; Hyderabad, our next region, is going live soon. Second is talent, which is scaling. India is the largest classroom in the world, and we must train Indians to use AI the right way. Third is enterprise adoption, which is where India is leading. Taken together, these three factors give strong reason for optimism about India’s AI future.

Where do these milestones place India in Microsoft’s global strategy? India is one of the most exciting markets today in the world for tech and AI, be it infrastructure, talent and skilling, or enterprise AI adoption. That’s the reason we invest in building in India. We’re seeing significant growth, so we’re excited about what we’re building and doing with customers. In some cases, we’re leading across Asia and setting the template for enterprise-scale AI adoption not just in the global South, but the world.

Many workers worry that AI could lead to job losses as companies seek greater efficiency. Is that concern justified? Is Microsoft expanding its workforce in India? AI is reducing repetitive work, not eliminating roles. Rule-based tasks are getting automated, allowing us to lift human potential to do more higher-value-added thinking and decision-making work. The nature of work is shifting across functions.

Skills are becoming more important than job titles, and careers will become more fluid. We will move across roles more quickly based on the skills we bring to the table. We are also excited about new roles like AI workflow designers, agent managers, AI trainers and evaluators. The key for us is adaptability. Anybody willing to learn fast and apply AI to work will come out on the right side of this equation. We continue to hire in areas where we’re seeing customer demand and where we’re building new capabilities across the board.

What will the MPC do this time?

Madan Sabnavis

Robert Lucas and Thomas Sargent were proponents of the famous Rational Expectations theory. The theory said that if monetary or any policy is predictable, it ceases to have any impact on economic variables. If everybody knows that the central bank will act only when inflation crosses the defined threshold, it will be business as usual; however, if the central bank suddenly announces a major change, then the impact will be significant.

In a business-as-usual scenario, there is little reason for one to expect any action from the Monetary Policy Committee (MPC). Inflation is currently well below the 4 per cent mark. While it can be argued that inflation will cross the 5 per cent mark due to global conditions and policy actions, 5 per cent is still within the range of 4-6 per cent, meaning there is no immediate need for pre-emptive action.

Therefore, the RBI projection of inflation is critical. If the MPC acts now and the war ends, leading to a rollback of measures, the move might appear hasty. The general consensus is that there will be a status quo in the repo rate, as inflation remains low. The policy stance may also remain unchanged, though a new forward-looking term like ‘calibrated tightening’ could be used to provide articulation that is more potent than actual action.

RATIONAL EXPECTATIONS

However, if the MPC chooses to apply the ‘rational expectations’ theory, it could go for a rate hike well before it is needed. A 25 bps or 50 bps hike would send a strong message that inflation will not be tolerated, spiking bond yields and raising expectations for future hikes. While higher rates could benefit FPI investors in the debt segment, they would also increase the cost of borrowing for the government.

Higher rates will come in the way of future growth as investment becomes more cautious, lowering aggregate demand. The current economic environment, heavily influenced by global developments, has made policy formulation difficult. Crude oil remains a major factor upsetting calculations, and there is speculation regarding whether the Federal Reserve will be forced to raise rates.

The domestic situation is typified by rising inflation and volatile currency, alongside a fiscal deficit that could exceed targets, leading to higher government borrowing. While raising the repo rate might be tempting given the potential for higher inflation from the ongoing war and the El Nino effect, the risk to growth is significant, as premature hikes could slow down investment without effectively addressing cost-push inflation. This makes the upcoming credit policy particularly interesting.

The writer is Chief Economist, Bank of Baroda. Views expressed are personal.

Rupee set to consolidate

WEEKLY RUPEE VIEW Akhil Nallamuthu

The rupee continued its recovery and appreciated about 0.4 per cent (42 paise) over the past week to close at 95.27 against the dollar on Tuesday. The local currency has now recovered about 1.7 per cent from the record low of 96.96 it touched on May 20.

The rebound comes despite continued foreign outflows. According to NSDL data, net FPI outflows stood at about $2.3 billion over the past week. However, the pressure from outflows was offset by a sharp correction in crude oil prices. Brent crude futures ($94/barrel) slumped 12 per cent last week, reducing concerns over India’s import bill and offering support to the rupee.

Notably, the recovery has come even as the dollar index remained largely flat over the past two weeks. This suggests that domestic factors have also contributed to the rupee’s gains. Economic data released recently indicate resilience in the domestic economy. Supported by a 6.2 per cent growth in manufacturing, India’s Index of Industrial Production (IIP) expanded 4.9 per cent in April, compared with 3.2 per cent in the preceding month. Additionally, the Centre managed to contain the fiscal deficit at 4.4 per cent of GDP in FY26, in line with its target, and has set a lower target of 4.3 per cent for FY27.

That said, uncertainty surrounding West Asia continues to linger. While fresh military exchanges involving Iran and Israel have kept markets cautious, diplomatic efforts remain active. US President Donald Trump recently expressed optimism about reaching an agreement with Iran to extend the truce and reopen the Strait of Hormuz. Overall, easing crude prices and resilient domestic indicators have aided the rupee, although geopolitical developments remain a key risk.

CHART

The rupee has witnessed a notable recovery in recent sessions. After touching a three-week high of 94.75 on Monday, it has moderated to 95.27. The chart indicates that 95 is a key resistance level.

A breakout above 95 can extend the recovery towards 94.50 and subsequently to 94.20. On the other hand, if the local currency weakens from the current level, it can find support at 95.75 and 96. The next support below 96 is at 96.25.

In the near term, the rupee is likely to move sideways, in line with the prevailing trend in the dollar index. Since May 18, the dollar index has been oscillating within the 98.90-99.50 range. The direction of the breakout from this band will likely determine the next leg of the trend. A breach of 99.50 can lift the index to 100.50, whereas a break below 98.90 can drag it to 98. Therefore, if the dollar index rallies to 100.50, the rupee could weaken towards 96.25. Conversely, a decline in the index to 98 may help the local currency appreciate towards 94.20.

OUTLOOK

Overall, the rupee appears to have entered a consolidation phase after the recent recovery. In the near term, the local currency is likely to trade within the 95-96 range, with the next directional move depending largely on which side the dollar index breaks out of the 98.90-99.50 band.

bl. research bureau

‘Zee got media rights for FIFA events for under $60 m’

Vallari Sanzgiri Mumbai

Zee Entertainment has bagged FIFA rights for 39 global football events at a reported valuation of under $60 million, broadening the scope of sports revenue beyond cricket.

“Zee has likely won FIFA rights at reported valuation of under $60 million which is lower than ₹4.5 billion paid by Viacom 18/Reliance Media Co for FIFA World Cup 2022,” said CLSA capital markets in its report, anticipating the potential fan-following and advertiser build-up from the deal.

Zee is now sitting on an eight-year contract with the Federation Internationale de Football Association (FIFA) for one of the most loved sports in the world, at a sum much lower than the Indian Premier League’s (IPL) media rights deal of $6.2 billion for 2023-27. The FIFA World Cup remains one of the most premium global media properties, catching the attention of youth brands particularly in technology, smartphones, auto, fintech, e-commerce and gaming categories.

“For advertisers, FIFA (World Cup) is perhaps the biggest test yet of whether India has matured into a multi-sport media market or remains overwhelmingly dependent on cricket,” said Umair Mohammad, Founder & CEO at Nitro Commerce.

Even so, the 2026 FIFA World Cup is expected to generate over $6 billion in global revenues, making it the biggest tournament in history. The World Cup encompasses 48 teams and 104 matches, significantly increasing inventory for broadcasters and advertisers alike. With a claim to the media rights of 39 such events until 2034, Zee now has a differentiated platform to attract both audiences and advertisers.

ADVERTISER BUZZ

Media agencies speaking to businessline noted reactions from advertisers a day after the deal announcement.

“Football has steadily built a passionate fan base in India, especially among younger urban audiences,” said Raghu Khanna, Founder and CEO of CASHurDRIVE Marketing. Khanna noted that brands today are looking beyond reach towards fan engagement and community building. “The FIFA rights strengthen the competitive landscape in India’s sports media market. They provide advertisers with an alternative premium sports property beyond cricket,” he added.

Live sports remain one of the few categories that consistently attract mass, real-time viewership, according to Pramod Pawar, Quantitative Research-Vice President, Hansa Research Group. Beyond match timings, he noted that the real challenge for advertisers is the mode of viewing.

“With the growing second-screen behaviour, advertisers today have more ways to connect with fans. Repeat telecasts and match highlights can provide Zee with an additional platform to monetise ad inventory and drive incremental advertising. The final impact on ad revenues will depend on how effectively Zee monetises this cross-platform engagement,” said Pawar.

Rupee set to consolidate

WEEKLY RUPEE VIEW Akhil Nallamuthu

The rupee continued its recovery and appreciated about 0.4 per cent (42 paise) over the past week to close at 95.27 against the dollar on Tuesday. The local currency has now recovered about 1.7 per cent from the record low of 96.96 it touched on May 20.

The rebound comes despite continued foreign outflows. According to NSDL data, net FPI outflows stood at about $2.3 billion over the past week. However, the pressure from outflows was offset by a sharp correction in crude oil prices. Brent crude futures ($94/barrel) slumped 12 per cent last week, reducing concerns over India’s import bill and offering support to the rupee.

Notably, the recovery has come even as the dollar index remained largely flat over the past two weeks. This suggests that domestic factors have also contributed to the rupee’s gains. Economic data released recently indicate resilience in the domestic economy. Supported by a 6.2 per cent growth in manufacturing, India’s Index of Industrial Production (IIP) expanded 4.9 per cent in April, compared with 3.2 per cent in the preceding month. Additionally, the Centre managed to contain the fiscal deficit at 4.4 per cent of GDP in FY26, in line with its target, and has set a lower target of 4.3 per cent for FY27.

That said, uncertainty surrounding West Asia continues to linger. While fresh military exchanges involving Iran and Israel have kept markets cautious, diplomatic efforts remain active. US President Donald Trump recently expressed optimism about reaching an agreement with Iran to extend the truce and reopen the Strait of Hormuz. Overall, easing crude prices and resilient domestic indicators have aided the rupee, although geopolitical developments remain a key risk.

CHART

The rupee has witnessed a notable recovery in recent sessions. After touching a three-week high of 94.75 on Monday, it has moderated to 95.27. The chart indicates that 95 is a key resistance level.

A breakout above 95 can extend the recovery towards 94.50 and subsequently to 94.20. On the other hand, if the local currency weakens from the current level, it can find support at 95.75 and 96. The next support below 96 is at 96.25.

In the near term, the rupee is likely to move sideways, in line with the prevailing trend in the dollar index. Since May 18, the dollar index has been oscillating within the 98.90-99.50 range. The direction of the breakout from this band will likely determine the next leg of the trend. A breach of 99.50 can lift the index to 100.50, whereas a break below 98.90 can drag it to 98. Therefore, if the dollar index rallies to 100.50, the rupee could weaken towards 96.25. Conversely, a decline in the index to 98 may help the local currency appreciate towards 94.20.

OUTLOOK

Overall, the rupee appears to have entered a consolidation phase after the recent recovery. In the near term, the local currency is likely to trade within the 95-96 range, with the next directional move depending largely on which side the dollar index breaks out of the 98.90-99.50 band.

bl. research bureau