Newspaper Summary 080726

 

China’s share of auto component supply to India rose 36% in FY26

DOMESTIC GROWTH. Sector saw ₹7.6 lakh cr turnover in FY26, up 12.7% year-on-year. BRIGHT PROSPECTS. With continued domestic demand and exports despite geopolitical headwinds, the auto components sector in India is expected to grow 8-10 per cent in FY27.

S Ronendra Singh New Delhi

Even though there was a robust growth in the Indian auto components sector in FY26, imports from China were still higher at 36 per cent during the year compared with 29 per cent in FY25, a performance review for FY26 shared by the Automotive Component Manufacturers Association of India (ACMA) has indicated.

According to the Industry Performance Review for FY26, ACMA said while the US remains the key destination for exports at 26 per cent in FY26, China is the key source of imports with 36 per cent, followed by Japan (11 per cent), Germany (10 per cent) and South Korea (7 per cent).

LARGEST SOURCE

“The auto industry is a global industry and no one country makes everything... We don’t have an OEM (original equipment manufacturer) from China though, but the OEMs from China are now selling finished products in India. Yet there is a significant import of auto components from China, and the reason for imports from China, or any place could be manifold,” Vinnie Mehta, Director General, ACMA, told businessline.

Mehta said there could be various reasons, such as technology-related ones, as some vehicle manufacturing companies are global and require critical components that are not yet made in India. Secondly, it could be that some companies have a policy to import from a Mother plant of a particular item for production in a particular geography, and that geography is China. And thirdly, it could be a very simple, price-competitive reason.

“Another reason could be, when in the domestic capacities growth happens in the vehicle industry a little too fast and there could be a capacity shortfall, they may resort to import from China. At least in one particular case where China sort of stopped export of rare earth magnets, but it has not stopped import of sub-assemblies and exported with fitted rare earth magnets or finished product from there,” Mehta explained.

OUTLOOK POSITIVE

Meanwhile, driven by robust domestic demand, higher vehicle production and sustained investments in capacity, the Indian auto components sector recorded a turnover of ₹7.60 lakh crore ($85.9 billion) in FY26, registering a 12.7 per cent growth.

With continued domestic demand and exports, despite geopolitical headwinds, the sector is expected to grow 8-10 per cent in the current fiscal. “The medium-to-long-term outlook for the Indian auto component industry remains positive. Growing domestic demand, infrastructure-led economic growth, expanding manufacturing investments, deeper global integration through Free Trade Agreements (FTAs) and increasing global sourcing from India are creating significant opportunities for the sector,” Vikrampati Singhania, President, ACMA and Vice-Chairman and MD, JK Fenner (India), said.

Australia suspends 60% of Indian fumigation service providers

COMPLIANCE DRIVE. Suspension of 44 service providers follows a biosecurity audit conducted on July 2. ADDED EXPENSE. The ban could result in some exporters having to pay additional charges for refumigation of their consignments once they land in Australia.

Prabhdatta Mishra & Subramani Ra Mancombu New Delhi/Chennai

Australia has suspended the licences of 60 per cent of fumigation service providers in India after an audit by Australian biosecurity. The suspension of these 44 service providers, including five from Haryana and three from Punjab, was enacted last week.

This decision could force some exporters to pay additional charges for refumigation once their consignments land in Australia. Containers currently in transit are not exempt; if a suspended provider handled the fumigation, the cargo must be re-treated upon arrival. The Australian department noted that these additional costs could vary from A$700 to A$1,200 per container (with A$1 valued at ₹66.14).

An owner of a fumigation agency, which services partners of leading Basmati exporters, stated that officials conducted inspections on July 2 and communicated the decision verbally the following day.

ONE-TIME EXEMPTION

While formal communication is still being processed, the suspension is already listed on the Australian authority's website. It is estimated that over 100 containers of basmati rice will likely be affected. With each container valued at approximately $22,000, at least ₹200 crore worth of consignments are at risk of being rejected or subjected to costly re-treatment.

The Australian Department of Agriculture, Fisheries and Forestry indicated that Canberra has shifted from document-based approvals toward continuous compliance monitoring and surprise audits. Australia maintains one of the world's strictest biosecurity systems, where even minor procedural failures can lead to license suspension.

Basmati exporters have raised the issue with the Agricultural and Processed Food Products Development Authority (APEDA) and the Union Ministry of Agriculture. Sources suggest the Indian government is considering seeking a one-time exemption for rice shipments that are already in transit and were certified by the now-suspended entities.

REASONS FOR SUSPENSION

The fumigation agency owner noted that Australian authorities became suspicious after finding discrepancies in the dates of fumigation and packing. Specifically, they questioned how some consignments appeared to be packed earlier than the recorded fumigation date. The owner explained that while fumigation is performed while rice is in gunny bags, agencies often have no control over when the exporter finalizes the packing.

S. Chandrasekaran, a New Delhi-based trade analyst, suggested that the forthcoming India-Australia Comprehensive Economic Cooperation Agreement (CECA) should include a special chapter on pre-border biosecurity and quality control. "Such a chapter could provide joint accreditation and periodic audits of off-shore treatment and inspection providers, notification and technical consultation before suspension, except in genuine emergencies," he said.

RBI lending restrictions dent proprietary derivatives trading

TAKING A BEATING. Average daily turnover drops 25% on NSE and 30% on BSE since July 1.

Suresh P Iyengar Mumbai

The RBI’s move to tighten bank lending for proprietary trading in the equity derivatives market from July has become evident in the sharp decline in trading turnover over the last four trading sessions.

The average daily turnover (ADT) in the derivatives segment on the NSE during the last four trading sessions fell 25 per cent to ₹1,22,677 crore compared with ₹1,63,328 crore recorded during the corresponding period last month.

FUTURES & OPTIONS

The ADT in stock and index futures on the NSE declined 4 per cent and 49 per cent, respectively, to ₹69,524 crore and ₹11,420 crore, against ₹72,223 crore and ₹22,506 crore registered during the same period in June.

Similarly, the premium ADT in index and stock options during the last four trading sessions dropped 45 per cent and 17 per cent to ₹34,038 crore and ₹7,694 crore, respectively, from ₹62,017 crore and ₹6,581 crore in the corresponding period, according to the exchange data.

A similar trend was seen on the BSE, where the ADT in futures and options during the last four trading sessions fell 30 per cent to ₹27,255 crore from ₹38,881 crore.

Ketan Marwadi, Member, Capital Market Participants Association of India, said that ever since the revised norms came into effect, the industry’s concerns extended beyond the immediate liquidity impact involving more than ₹50,000 crore.

“If a distinction is not made between speculative and directional proprietary trades, domestic intermediaries could be forced to create room for foreign proprietary firms to capture a larger share of market volumes and profitability. This could eventually lead to a gradual shift of value creation, tax revenue and employment opportunities from India,” Marwadi said.

Anand James, Chief Market Strategist at Geojit Investments, said derivatives trading volumes, particularly in futures where capital requirements are higher, are likely to remain under pressure in the near term and could moderate further as firms adjust to the new regulatory framework.

“Impact costs will also be affected as bid-ask spreads widen. While this may not significantly hurt investor profitability, high-frequency traders who rely on thin margins and high liquidity could face challenges,” he added.

MARGIN FUNDING

Sachin Gupta, Vice-President (Research) at Choice Equity Broking, said futures trading inherently depends on margin funding and as funding costs rise, many traders are likely to scale back their activity, with larger institutional participants becoming more cautious.

Feroze Azeez, Joint CEO of Anand Rathi Wealth, noted that proprietary firms account for a meaningful share of the derivatives market liquidity, particularly in options and arbitrage strategies. As firms adjust their funding structures and deploy a larger proportion of their own capital, participation is expected to become more selective.

Amid the fall in derivatives trading activity, shares of the BSE and MCX came under pressure, falling 3 per cent each to ₹3,679 and ₹2,643, respectively, on Tuesday.

Rupee enters another ‘consolidation’ phase

RUPEE WEEKLY REVIEW.

Akhil Nallamuthu bl research bureau

The rupee weakened over the past week, declining about 30 paise, or 0.32 per cent, to close at 94.97 against the dollar on Tuesday. The fall comes despite supportive factors, such as foreign inflows and lower crude oil prices, highlighting the stronger dollar’s influence on the local currency.

According to NSDL data, net FPI inflows stood at about $1.1 billion so far in July, indicating that overseas investors remain interested in Indian assets. Domestic sentiment has also improved, with the benchmark Nifty 50 index rising about 2.2 per cent so far this month, reflecting a broader risk-on mood in financial markets.

LOWER CRUDE PRICES

Crude oil prices, another key factor for the rupee, have remained favourable. Brent crude futures, currently trading around $73 per barrel, have fallen nearly 40 per cent from the $119.5 high reached in March. While the decline has largely been driven by easing geopolitical tensions, OPEC+’s decision to increase output by 188,000 barrels per day from August could help keep prices subdued going forward.

However, the rupee has struggled to capitalise on these positives because the dollar remains firm. Although expectations of a September rate hike have moderated, the greenback continues to draw support from the view that interest rates could remain elevated for an extended period. The dollar index remains well above 100, keeping pressure on emerging-market currencies.

Overall, supportive domestic factors and softer crude prices are helping cushion the rupee, but the dollar’s strength continues to limit gains. The rupee breached the 94.90 support level last week and slipped to a low of 95.49 on Monday. However, it recovered some ground on Tuesday, closing at 94.97.

The prevailing price action does not provide a clear indication of the next directional move. For now, the rupee is likely to remain within the 94.20–95.40 range. A break below 95.40 can trigger a fresh bout of weakness, dragging the currency to 95.80 and potentially to 96 thereafter. Conversely, a breakout above the 94.20 resistance can strengthen the recovery and lift the rupee towards 93.50.

The movement in the dollar index will remain crucial. The index remains comfortably above the key support at 100.50, indicating that the bulls retain the upper hand. The chart suggests that another leg of the uptrend could be underway, with the index potentially advancing to 102 in the near term. In such a scenario, the rupee may weaken towards 96.

On the other hand, if the dollar index slips below 100.50, it can decline to 99.50. Such a correction could provide room for the rupee to appreciate towards 93.50. However, a fall in the dollar index below 99.50 and, consequently, a rise in the rupee beyond 93.50 appear unlikely at this stage.

OUTLOOK

The near-term outlook remains mixed. While lower crude oil prices and continued foreign inflows are supportive, a firm dollar is likely to keep the rupee under pressure. The key levels to watch are 94.20 on the upside and 95.40 on the downside.

iD Fresh broadens portfolio with packaged snacks

Aishwarya Kumar Bengaluru

iD Fresh Food has expanded into the packaged snacks category, marking another step in its transformation into a broader branded foods company as it prepares for an eventual public listing. businessline has learnt that the company has launched a range of snacks, comprising around seven SKUs made using ragi and oats.

The portfolio includes masala ragi chips, pudina ragi bhujia, masala oats chips, pudina oats bhujia, and corn flakes mixture. The company is also active in adjacent categories such as protein batter, pancakes, thepla, chutneys, and protein-based chapatis and parottas. With the latest launch, the company enters India’s nearly ₹50,000 crore packaged savoury snacks market, currently dominated by established players such as Haldiram’s and Bikaji Foods International.

HEALTHY SNACKING

The expansion aligns with rising consumer demand for healthier snacking options. According to International Market Analysis Research and Consulting (IMARC Group), India’s market is seeing increased demand for convenient, high-protein, and natural food products.

The category expansion comes as iD accelerates preparations for its next phase of growth. The company believes its current capacity is sufficient to support growth over the next five years. Internationally, the company continues to expand through trading partnerships rather than setting up manufacturing facilities, with operations spanning the US, UK, Ireland, Canada, and Singapore. It has previously indicated plans to add 10-15 new SKUs annually, despite exiting categories such as bread and spices after pilot launches.

IPO READINESS

In another step towards IPO readiness, iD recently elevated Co-founder Jafar TK.

SEBI allows depositories to use investor protection fund income for expenses

Our Bureau Mumbai

The Securities and Exchange Board of India (SEBI) on Tuesday allowed depositories (CDSL and NSDL) to utilise up to 5 per cent of the annual interest or income earned from the Investor Protection Fund (IPF) corpus to meet certain operational expenses.

From September, depositories can use the interest or income generated from the IPF towards expenses related to dedicated employees of the respective IPF trusts, as well as administrative and statutory costs such as taxes, audit fees and charity commissioner fees.

“In case the expenses exceed the above limit, such excess expenses shall be borne by the depository and, in case of non-utilisation of such amount in the same financial year, the same shall be ploughed back into the IPF,” SEBI said. Earlier, the entire interest or income earned from such investments were treated as part of the IPF corpus.

CORPUS ALLOCATION

Under the revised framework, at least 95 per cent of the annual interest or income earned from IPF investments must be ploughed back into the IPF corpus.

SEBI has directed depositories to put in place the necessary systems for implementation, amend their bye-laws, rules and regulations wherever required and bring the revised provisions to the notice of market participants, including investors, while also publishing them on their websites.

‘With 2 million AI professionals, India can chart a different path’

Rentala Chandrashekhar, former Secretary of the Ministry of Electronics and Information Technology, has said India’s approach to artificial intelligence (AI) can be significantly different from the Western narrative, which is often dominated by fears of job losses.

“India can chart a very different path. But that is only possible with deliberate design. With vast digital capabilities backed by a $315 billion IT industry and human capital comprising 2 million AI professionals, with hundreds of thousands possessing highly-advanced AI skills, we can put AI to use in different ways,” he said.

Chandrashekhar, who was also the former President of Nasscom, was addressing a roundtable on a white paper on “AI for ALL: Catalysing Jobs, Growth, and Opportunity”, which was prepared by Prosus, a venture capital firm, in collaboration with the Ministry of Electronics and Information Technology (MeitY) and Boston Consulting Group.

STRONGER SYSTEMS

The white paper provides a framework for embedding AI into institutions and critical sectors to improve productivity, expand economic opportunity and strengthen public service delivery on a scale.

Stating that the country has several strengths, including proven implementation capabilities for massive projects like Aadhaar and UPI (Universal Payments Interface), he, however, flagged some weaknesses.

“We have limited capabilities in foundational technologies, semiconductor chips and telecom equipment. The government has introduced a seven-pillar AI mission to address these gaps,” he said.

“India’s AI opportunity will be defined by how effectively we deploy AI across sectors. From AI-enabled agriculture and healthcare to education, financial services and manufacturing, Telangana and Andhra Pradesh offer valuable lessons on how AI can translate into higher productivity, stronger public services and more inclusive economic growth,” Sehraj Singh, Managing Director, India, and VP, Global Corporate Affairs, Prosus & Naspers Group, said.

Our Bureau Hyderabad

Indonesia inks deal to buy India’s BrahMos, Astra missiles

DEFENCE TIES. Indonesia is the third potential foreign buyer of the BrahMos cruise missile after Vietnam and the Philippines.

Dalip Singh New Delhi

India’s missile diplomacy gathered pace as Indonesia signed initial agreements to purchase BrahMos supersonic missiles and Astra beyond-visual-range air-to-air missiles during Prime Minister Narendra Modi’s Jakarta visit on Tuesday.

Both missiles were successfully deployed by India to target Pakistani defence installations and terror infrastructure in the four-day long Operation Sindoor.

The two deals show intent and in-principle agreement to buy the battle-proven missiles, people aware of the developments said. A joint statement issued by the two countries said that both Modi and Indonesian President Prabowo Subianto “welcomed the elevation of defence cooperation, including on BrahMos missile system, and the air-to-air missile co-operation agreement”.

BRAHMOS NEGOTIATIONS

Sources said Indonesia had agreed to buy two batteries of BrahMos missiles, which is one more than what it previously wanted and discussed during the initial interactions with the Indian government for more than three years. A battery of BrahMos includes missiles, launchers, command post, radar and tracking systems.

As per the announcements in Jakarta, BrahMos Aerospace, a JV between the Defence Research and Development Organisation (DRDO) and Russia’s NPO Mashinostroyeniya, and Indonesia’s Defence Ministry signed the contract to take the BrahMos negotiations forward.

ASTRA MISSILES

Similarly, Indonesia’s private defence company Republikorp and India’s state-owned Bharat Dynamics Ltd signed an agreement for the Astra missiles. The quantities and the value would be decided subsequently, said sources. Details of the contract for both the missiles will now be worked on by the two countries.

Indonesia is emerging as the third potential foreign buyer of the BrahMos cruise missile after Vietnam and the Philippines, which have already inked deals, signalling that the missile is no longer a one-off export but is beginning to establish itself in the international market.

It is also the first country to acquire the Astra beyond-visual-range air-to-air missile, giving India its first export breakthrough for another indigenous missile system. The deal strengthens India’s ambition to become a major defence exporter.

Perils of digital ‘lockout’

Bank branches must help out harried customers

PT Jyothi Datta

All of a sudden, the benefit of a name like Elon Musk’s son “X” — without the accompanying alpha-numerics — becomes tangible. Almost aspirational.

With a name like that, you could breeze through “kyc” (know your customer) drills that institutions private and otherwise require from you, repeatedly. There is no worry of your name being spelt differently from the way your parents may have intended to call you.

Sometimes, it almost feels like there is a resistance movement at different institutions, as their representatives spell your name in the manner they are familiar with, in line with the region they hail from.

So, if they are from Southern India, your name has a “h”, and if they are from the northern regions, the “h” is axed in your name — observations from personal experience.

But the horror of it all comes alive when you have to digitally link all the government, private, identity and other details. That’s when the humble “h” can play havoc (with a capital “H”) — leading to anxiety-producing outcomes that can render 50-plus years of your existence as, well non-existent.

Or, it can lock you out of your online account at the big beautiful bank that you have been with for close to three decades, two cities and multiple relationship managers.

DIGITAL STRANGLEHOLD

Recounting a “lived experience” here — no amount of documentation can rescue you when you are digitally locked out. Not even bank managers, it seems, can make a dogmatic digital system heel.

Biometrics, is suggested, to bypass digital dogma.

But that too has pitfalls — who owns the data, has access to it, and how fool-proof is the system? More fundamentally, why should a citizen provide biometric information at a private institution to prove identity? And in this case, for no fault on the customer’s part?

Back to seeking answers on why the digital gateway locked a “privileged” (designated by the bank), white-haired, tax-paying customer out of her account of more than 20 years?

Multiple reasons are extended by bank representatives, seemingly just as dumbstruck by the stubborn digital system. Maybe the spelling difference between multiple government cards (again, no fault of the customer)? Checked, addressed.

Still no show. Maybe different addresses — account opened in a different city — a digital realisation not picked up last KYC? Now more documents are called for - to prove you’ve walked the streets of Mumbai for several years now.

Finally, the Eureka moment. A helpful bank representative explains — possibly, the digital system reads three components in a name.

UNWIELDY NAMES

Heaven help you, if your parents let their regional pride spill into your name to make it long, unwieldy and with three components — exacerbated by marriage that adds a fourth component. Oh! for the joy of having a name like X.

But seriously, making a bank account digitally inaccessible to a customer because the bank’s system falls short — is a violation of a customer’s financial rights. Financial institutions should have fool-proof methods available at local branches to resolve a digital deadlock — where the head of a branch, for example, can check the customer’s Cibil score, record and defaults (or absence of it), and help the customer.

This can be done with checks, counter-checks, and speed — if institutions put resources behind helping customers, rather than merely seeing them as targets to sell financial products.

A banking ombudsman is useful. But a locally accessible person and a water-tight, yet simple approach is needed for customers.

Otherwise, the digital “chakravyuh” (maze) ends up trapping honest customers, while crooked ones seemingly trapeze through it.