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Today, we explain the headline-grabbing New Delhi air pollution problem.
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Macro
Indian removal of duties on agricultural items has been fully revealed now. The total list is now dried distillers’ grains, red sorghum, tree nuts, fresh and processed fruit, certain pulses, soybean oil, wine and spirits, and additional products. Additional products are yet to be fully defined.
Inflation for January hit estimates with CPI up 2.75 percent y-o-y. The new series is under the RBI’s revised reading with minimized weight for food items. While inflation is below the 4 percent benchmark, the revised rating could lower odds of future cuts depending on how growth continues this year.
Metals investors invested $1.3 billion (₹115 billion) in January on top of $3.3 billion (₹300 billion) in December.The sector is up 10 percent this year with capital goods being the only other industry seeing any foreign investment activity.
Equities
The NSE hired Rothschild for its $2.5 billion (₹226.3 billion) raise. The world’s biggest derivatives house is selling 4-4.5 percent of its equity.
Unilever India's quarterly profit was $782 million (₹70.8 billion), up massively from a one-time sale. It spun off Kwality Wall for $499.4 million (₹45.2 billion) but revenue fell 4.4 percent and costs rose 5 percent. Profits would have massively missed if not for the exceptional gain; as a result, shares fell 4.6 percent on the news.
SBI overtook TCS in market value for the first time in 15 years. Domestically focused names are loved more by local and international traders while India’s banks have also become a hotbed for growth in the nation.
Solar energy firms Insolation Energy and Oriana Power surged over 24 percent after the trade deal. The tariffs set to 18 percent makes it so India can begin exporting to the US again, and avoid its oversupply risk which limits prices. Silver rising made production expensive while sellers had to cut prices to beat the supply glut.
Eicher Motors jumped after strong quarterly results and higher earnings estimates.CLSA, Jefferies and Citi cited solid demand for motorcycles and commercial vehicles while Macquarie was more reluctant, citing valuation already prices in domestic volume growth.
Alts
World Bank's investment arm is going to help global firms set up India funds. IFC used to make a few small commitments but ramped up to $60 million (₹5.4 billion) last year. IFC is going to have a focus on PE funds.
Goldman is not treating India as a developing market anymore and is pushing to control deal flow domestically. The bank has injected $500 million (₹45.3 billion) into the banking franchise in the last 3 years and ranks 4th among equity offerings and mergers in the country.
The derivative market shows a bullish tilt for February for equities.There is a huge amount of open interest in next week’s call options while the VIX dipped below 15 percent, showcasing new calm over the market.
Policy
Trader Minister Goyal says Indian textiles will be tariff free if they use US-produced raw materials. This includes cotton or other fibers; all other textiles will be subject to the same 18 percent tariff country-wide. The deal is similar to Bangladesh’s arrangement which worried textile producers earlier last year who were losing out to the smaller country’s sellers.
Tamil Nadu is a front runner for a JV to produce ships with Korean firms. Modi earmarked $7.7 billion (₹700 billion) in shipbuilding incentives since India produces less than 1 percent of all commercial ships. Federal and state governments in Tamil Nadu are working together (despite being run by opposite parties) to become a massive site for construction.
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Delhi and India’s Pollution Problem Persists
Each winter, Delhi locals watch as toxic smog blankets the city and surrounding regions. More than 30 million residents are exposed to hazardous air coming in at 400+ AQI triggering respiratory illness, cardiovascular disease, and long-term cancer risks. This was the first year where residents did not take the yearly outcome gently. Protesters in November gathered at the India gate with dozens being detained by the police. A second protest led to more clashes with the police.
To put the air into context, New York City, the most populated area in the US, sees AQI peak at just 150. Of the 10 most polluted cities in the world, China only features Shanghai at the bottom of the list while India boasts 3. Almost 1.7 million deaths were attributed to air pollution in 2019 and a World Bank study estimates air pollution has shaved more than half a percentage point from India’s annual GDP growth — arguably a greater threat than trade barriers.
Despite the severity, policy responses remain fragmented. Temporary construction bans, water-spraying “smog guns,” cloud-seeding trials and air-purification towers have delivered little measurable improvement. Add the fact that the old Budget actually cut 16% of pollution control spending, something omitted in Finance Minister Sitharaman’s speech last year. Courts have intervened, with India’s Supreme Court criticizing regulators for an inadequate response, even as authorities outline longer-term plans focused on electric buses, metro expansion, and emissions control.
The political challenge is profound. Modi has pledged to transform India into a developed nation by 2047, yet no advanced economy tolerates pollution at comparable levels. Limited budget allocations and muted electoral pressure suggest the issue still ranks below immediate economic concerns for many voters and especially the government’s view on how much voters care.
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Written by Yash Tibrewal. Edited by Shreyas Sinha.
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Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.