Domestic Policy Reforms - Newspaper Summary

 The sources provide detailed sectoral updates for September 2025, illustrating how Indian industries are reacting to the confluence of external pressures, primarily US tariffs and visa restrictions, and strong domestic policy reforms, particularly the GST rate rationalization.

I. Information Technology (IT) and Business Process Outsourcing (BPO) Sector

The IT sector faces a significant structural crisis due to US policy, driving bearish market sentiment and accelerating a shift toward offshore and nearshore models.

Impact of H-1B Visa Fee Hike

The $100,000 one-time fee on new H-1B visa petitions is considered a major shock, especially for Indian IT firms who receive over 70% of all H-1B visas globally.

• Financial Erosion: The fee drastically erases the traditional cost edge Indian firms held in the US. The cost of deploying an entry-level engineer via H-1B is now 77% higher in the first year compared to local hiring.
• Market Reaction: This policy has caused the combined wealth of investors in Indian IT companies to plunge by over ₹1 trillion over two days. The Nifty IT index fell, and a sharp increase in open interest in derivatives indicates rising bearish sentiment.
• Sectoral Pressure: Seven out of 10 Nifty IT index stocks slumped. Analysts warn that mid-cap IT companies, which trade at elevated price-to-earnings (PE) multiples despite modest earnings growth, are particularly vulnerable.

Corporate Strategy Shifts and Resilience

Companies are rapidly adapting to minimize the H-1B policy's impact, aligning with India's push for digital independence.

• Offshoring Acceleration: Major firms like TCS, Infosys, Wipro, and HCL are expected to slash onsite roles and accelerate offshoring to India.
• Mid-Cap Resilience: Mid-size IT firms such as Mphasis, Cyient, and Happiest Minds Technologies are proving more resilient, as they had proactively shifted toward increased local hiring, strategic acquisitions (like Cyient acquiring Altek Electronics in the US), and offshore/nearshore delivery models. Latent View Analytics also stated that it does not expect any significant financial impact.
• GCC Expansion (Financial Services): Leading Wall Street banks, including Citigroup, JPMorgan Chase, and Goldman Sachs, are expected to lean more heavily on their Indian Global Capability Centres (GCCs) due to the rising cost of US talent deployment. The GCC market is projected to grow to $110 billion by 2030.
• Real Estate Shift: Indian co-working and flexible office operators (e.g., Bhive, 91Springboard) are positioning themselves as partners for global firms rerouting talent strategies away from the US, expecting a potential 1 lakh sq/ft incremental occupancy increase.
• Talent Flow: The policy is deterring Indian STEM students from US universities, with applications dropping 13% year-on-year, potentially boosting India's domestic talent pool and startup ecosystem.

II. Automobile and Transport Sector

This sector shows signs of robust domestic recovery, driven by GST reforms, while dealing with supply chain disruption internationally.

Domestic Demand Surge (GST 2.0 Effect)

The GST reduction and festival offers have "sparked an extraordinary wave of consumer interest and enthusiasm" in the auto sector.

• Auto dealers reported unprecedented walk-ins, a spike in enquiries, and record deliveries in the first two days of GST 2.0 and Navratri.
• Companies like Maruti Suzuki India (MSIL), Hyundai Motor India (HMIL), JSW MG Motor India, and Tata Motors sustained festival momentum.
• The Nifty Auto index gained 0.62 per cent on this robust sales outlook.

Global Disruptions and Electric Vehicles (EV)

• JLR Shutdown: Tata Motors-owned Jaguar Land Rover (JLR) extended its production pause until October 1 following a major cyber attack on August 30. This near month-long shutdown is expected to cost JLR tens of millions of pounds a day in lost revenue and severely affect its performance and that of its parent, Tata Motors, in the second quarter.
• Electric Motorbikes: The government is pushing for the adoption of electric motorcycles, which account for 65% of two-wheeler demand. However, manufacturers (e.g., Hero MotoCorp, Ola Electric, TVS) face challenges: electric motorbikes have high customer expectations regarding power and range, and their starting prices (often ₹1.4 lakh) are nearly double the price of the largest selling 75cc-110cc segment.

III. Food, Agriculture, and Consumer Goods (FMCG)

The agricultural and packaged goods sectors are navigating trade disputes, domestic policy rationalization, and crucial GI integrity issues.

Trade and Export Focus (Shrimp and China)

• US Tariff Shock: The US's 50% tariff wall has made it difficult for Indian shrimp exporters to compete with competitors like Ecuador and Vietnam.
• Pivot to China: As a result, China is rapidly emerging as a crucial destination for Indian shrimp, potentially becoming the top importer. China's strength in seafood processing and re-exports encourages Indian firms to supply raw material for duty-free re-export.
• Diversification: Indian exporters are also bolstering shipments to markets including Europe, the UAE, Japan, and South Korea, and negotiating with US buyers to share the tariff cost.

GST 2.0 Impact on FMCG (Pricing Strategy)

The GST rate cuts, effective September 22, were specifically designed to boost volume growth and consumption.

• Cheaper Goods: Household items, including soaps, shampoos, snacks, and edible oils, have become cheaper. Goods like hair oil, soap bars, and snacks saw rates reduced from 18% or 12% to 5%.
• Corporate Response (Volume vs. Price): Companies adopted varied strategies for "price-point packs" (small packs).
  • Volume Hike: Hindustan Unilever Ltd (HUL) and Bikaji Foods opted to increase the product weight or volume to avoid "odd pricing and coinage-related challenges" while retaining popular price points (like ₹1, ₹5, ₹10). Bikaji expects volume growth of over 12% in the second half of FY26.
  • Price Cut: Others, including Coca-Cola bottler SLMG Beverages and Reliance Consumer Products, implemented outright price reductions, such as cutting the 125 ml Maaza tetra pack price from ₹10 to ₹9. Coca-Cola bottler SLMG Beverages anticipates a 2–4% boost to volumes in the second half.

Agricultural Policy and GI Integrity

• Kharif Procurement: The government approved the procurement of major kharif crops (tur, urad, moong, groundnut, soybean, sesame) at their respective Minimum Support Prices (MSP) in Uttar Pradesh and Gujarat, involving an estimated outlay of ₹13,890 crore.
• Basmati GI Threat: The integrity of India’s Basmati rice Geographical Indication (GI) is at risk. Seed players, such as Hyderabad-based Shakthi Seeds, are selling unapproved Basmati varieties (like Taj hybrid) in non-GI States (like Madhya Pradesh and Rajasthan), exploiting loopholes in the seed law. This occurs despite the variety repeatedly failing official scrutiny.
• EU Geopolitical Tension: The European Union (EU) appears to be favoring Pakistan in the Basmati GI dispute by permitting the import of "Super Basmati Kernel" from Pakistan’s Sindh region into Poland and including Sindh in the defined Pakistani Basmati growing area. India has rejected suggestions for a joint GI application with Pakistan, viewing the EU’s actions as potential pressure tactics.

IV. Infrastructure, Manufacturing, and Logistics

Government investment, domestic demand, and strategic policy prioritization are key drivers in these sectors, mitigating sluggish private capex.

Capital Expenditure (Capex) and Government Support

• Capex Boost: The Centre has fiscal space and intent to raise its FY26 capital expenditure by ₹20,000–30,000 crore beyond the budgeted ₹11.21 trillion, reaching closer to ₹11.5 trillion, to compensate for sluggish private investment amid external headwinds.
• Shipbuilding/Logistics: The government granted infrastructure status to large ships (commercial vessels of 10,000 GT or more, or India-built vessels of 1,500 GT or more).
  • New Clusters: Cochin Shipyard Ltd (CSL) signed an MoU with Guidance (Tamil Nadu) to establish a shipyard with a Korean partner, potentially creating 10,000 jobs. Separately, the Andhra Pradesh government and Visakhapatnam Port Authority (VPA) entered an MoU to establish a National Mega Shipbuilding Cluster anchored at Duggirajapatnam, involving an indicative outlay of ₹29,253 crore.
  • Logistics Expansion: Danish logistics operator Scan Global Logistics (SGL) is entering India, opening offices in Chennai, Delhi, and Mumbai. The Tata ground-handling JV, AISATS, plans to expand its aviation services, cargo, and logistics presence, predicting a two- to three-fold increase in freighters operating in India over the next decade.
• Construction: Hindustan Construction Company Ltd (HCC) secured contracts worth ₹2,566 crore for Phase I of the Patna Metro Rail project, involving tunnels and six stations.

Defence and Aerospace

• Growth Outlook: The private defence sector is expected to post 16–18 per cent revenue growth in FY26, following a 20% CAGR between FY22 and FY25, driven by strong domestic demand and government policy support like Atmanirbhar Bharat. Crisil estimates the sector's order-book will expand to ₹55,000 crore by FY26-end.
• State-Level Funding Model: Maharashtra's Defence and Aerospace Fund demonstrated a successful model for funding MSMEs in the defence sector, deploying over ₹450 crore across 28 companies and helping four go public with a combined market cap of over ₹7,000 crore.
• Strategic Facilities: Tata Advanced Systems Limited (TASL) inaugurated a combat vehicle plant near Casablanca, Morocco, exemplifying India's evolving defence vision towards developing strategic autonomy and leveraging global partnerships.

V. Pharmaceuticals, Healthcare, and Diagnostics

This sector is characterized by internal regulatory challenges, strategic corporate restructuring, and expansion into high-growth areas.

Regulatory and Manufacturing Challenges

• Pharma MSMEs: The Drug Marketing and Manufacturing Association (DMMA) warned that constant rule changes and stringent compliance demands, particularly related to the Revised Schedule M (Good Manufacturing Practices), could force 4,000–5,000 small and medium-sized pharmaceutical units in Gujarat to close. They seek an extension of the January 2026 deadline until April 2027 for companies with turnover below ₹50 crore.
• Sun Pharma: Sun Pharma faces ongoing regulatory issues, with its Halol plant failing to meet regulatory requirements in the most recent June inspection. It also faces uncertainty from the US 50% tariff on Indian imports, although generics are currently exempt.
• Drug Inspector Shortage: Despite a government report highlighting an alarming shortage, the Union health ministry only appointed 49 new drug inspectors, leaving 181 sanctioned posts vacant in the Central Drugs Standard Control Organisation (CDSCO).

Corporate Strategy and Growth Segments

• Diagnostics (Metropolis): Metropolis Healthcare is shifting from aggressive organic growth to a 'String of Pearls' acquisition strategy to deepen its presence in tier-III and tier-IV markets. The firm made its fourth acquisition in 10 months, buying Ambika Pathology Laboratory in Kolhapur.
• Specialty Pharma and Obesity: Sun Pharma expects a limited impact from the US's 'most favored nation' drug pricing directive due to its focus on high-growth specialty products (dermatology, ophthalmology, oncodermatology), which contributed 20% of its FY25 revenue. Sun is also preparing to be an early mover in anti-obesity drugs with a generic version of Semaglutide (used in weight-loss drugs like Wegovy) by March 2026.
• Healthcare Services: Fortis Healthcare plans to open more dedicated obesity clinics to meet the surging demand for weight-loss drugs and therapies in India, which is projected to have the second-largest obese population globally by 2050.
• Restructuring: The Competition Commission of India (CCI) approved a multi-layered restructuring plan for Apollo Hospital’s group entities to facilitate the separate listing of its omnichannel pharmacy and digital health businesses within 18–21 months.

VI. Commercial Real Estate and Data Centers

The real estate sector is seeing polarization, with high-end commercial property attracting strong investment, while data center capacity is rapidly expanding.

• Marquee Commercial Assets: Domestic capital is accessing marquee commercial assets previously held by global funds. Nuvama and Cushman & Wakefield Pvt Ltd (NCW) is set to acquire One Paramount, a Grade-A office complex in Chennai, from Singapore's Keppel Group for around ₹2,500 crore, marking their second major acquisition in four months.
• Data Center Investment: The data center space is attracting massive capital investment. Blackstone Group's data center platform, Lumina CloudInfra, acquired two adjacent land parcels in Mumbai for ₹475 crore to build two data center units of 30 MW each. Blackstone plans to invest roughly ₹50,000 crore in creating 600 MW capacity data centers in India.
• Data Center Stock Focus: Anant Raj Ltd, a major NCR real estate player, is betting its future growth on data centers, aiming for ₹9,000 crore in revenue by FY32 from this segment. However, the segment is intensely competitive and capital-heavy, leading to volatility in the stock.

VII. Global Trade/Commodities

Global volatility is driving demand for safe-haven assets and supporting commodity prices, while Europe shifts regulatory implementation timelines.

• Safe Havens: Gold prices climbed to a fresh record high, and silver rose toward a 14-year high, driven by safe-haven flows and expectations of further US Fed rate cuts.
• Commodities: Copper edged higher due to supply disruptions and anticipated interest rate cuts, offsetting worries about high inventories and a sluggish global economy. Crude oil prices also rose.
• European Regulations (Coffee): The European Union (EU) plans to delay the implementation of the Deforestation Regulations (EUDR) by another year (beyond the already postponed December 30, 2025 date) due to technical concerns. This delay provides relief for Indian coffee growers and exporters, giving them more time to comply with complex deforestation analysis and risk mitigation mandates. Indian coffee exports had slowed this year partially because European buyers had started insisting on EUDR-compliant coffee.