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Farmers have been striking to denounce ‘Modi’s surrender’ to Trump after the newest trade negotiation. Today, we explain how why the government shouldn't be too worried.
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Macro
India's economic activity accelerated based on February PMIs. Manufacturing climbed to 57.5 from 55.4 while services remained flat at 58.4. The composite index rose to 59.3 compared to 58.4 last month. There has been accelerating business confidence and the momentum is expected to continue while the US grapples with its own tariff regime.
The rupee still needs stronger inflows to avoid falling to 93.Stretched equity valuations, limited AI public investments, and a rising interest-rate gap with emerging markets have made the rupee an easy funder for trades. On a relative basis, the rupee is the most undervalued its been in 12 years.
Equities
An article from Citrini Research led to a software selloff based on AI. The substack article focused on a doom-scenario if AI continues to proliferate; India’s tech companies would be the first to stall since AI agents could perform most SaaS tasks themselves. The NSE Nifty IT tumbled 4.7 percent after the report and the sector has dumped $54 billion (₹4.9 trillion) just in February.
Temasek and ADIA plan to invest in Clean Max Enviro's $341 million (₹31 billion) IPO raise. The offering will be closely watched for signs of demand after months of underperformance in India’s renewable energy stocks. The company, until now, has been backed by Brookfield.
Specific data center stocks added $4 billion (₹364 billion) to their market cap this week.The companies were all big parts of Modi’s AI summit and are seen as insulated from a potential doom scenario outlined by Citrini. Companies like E2E and L&T were part of the group.
Alts
Equity derivatives still represent a risk to regular households. Average daily turnover at the end of 2025 was $5.2 trillion (₹473.2 trillion), the highest in the world. Excessive leverage may spark a market shock threatening household finances since household debt is 41 percent of GDP and roughly 25 percent of household assets are now in stocks and mutual funds.
Policy
The government gave a one month extension for Russian marine insurers to provide cover for ships at its ports. The insurers have enabled the oil trade to continue for so long since they were paying for any potential damages that could have occurred.
Government regulators are pursuing fund diversion charges against Zee specifically relating to its proposed merger with Sony India.The same governance lapses that were allegedly done by insiders derailed its proposed merger back in 2024.
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Why Farmer’s Strikes Should Not Worry the Government Much
Farmers have been striking to denounce ‘Modi’s surrender’ to Trump after the newest trade negotiation with 18 percent tariffs and agricultural opening. In a telling display of anxiety and political theater, protestors burned symbolic copies of an agreement whose final text remains unpublished and, in many respects, unsettled. The US-India framework agreement, much like other hastily assembled trade arrangements concluded by Washington over the past year, is still being negotiated in substance even as it is presented in principle. The specifics of agriculture remain unclear, and it is entirely possible that large swaths of Indian farming will be unaffected.
Agriculture in India is not merely an economic sector but a deeply important political constituency. Modi, despite cultivating an image of unassailable authority, has twice retreated in the face of sustained rural backlash. Early in his tenure, he withdrew proposed land acquisition reforms after encountering fierce resistance. More dramatically, in 2021, he repealed three farm laws intended to liberalize agricultural markets after a year-long protest movement that saw thousands of farmers encamp on the borders of Delhi. That episode revealed the limits of executive dominance in the face of organized agrarian dissent. Today’s agitation unfolds against a similarly sensitive electoral backdrop. Key state elections loom, including in politically pivotal Uttar Pradesh and Punjab, where farming communities constitute decisive voting blocs. For a leader whose national coalition rests heavily on dominance in the Hindi heartland, even the perception of rural alienation carries material political risk.
Opposition parties, often fragmented and struggling to coalesce around a unifying critique, have quickly identified trade as a vulnerability. The fluid nature of the US-India agreement allows them to demand specific assurances that the government is not yet positioned to provide. In the absence of definitive language, accusations of betrayal are politically potent because they cannot be conclusively rebutted. The debate is thus less about policy substance than about trust and narrative control.
Yet the structural logic of reform suggests that retreat would be a strategic error. The wealthiest and most politically influential farmers, particularly those in states bordering the national capital, derive their power from wheat, rice and dairy. These sectors are reportedly outside the scope of the current framework. More broadly, resistance to both the US agreement and the recently concluded trade pact with the EU has been more muted than many anticipated. This relative calm implies that opposition, while vocal, may not be numerically overwhelming.
Trade agreements have historically served as catalysts for reform by locking in commitments that alter domestic politics. When China prepared for accession to the WTO, external obligations were leveraged to justify painful but transformative restructuring. India now faces a similar fork in the road. Rather than interpreting rural protest as a mandate for reversal, the government could use this moment to revisit and refine the agricultural reforms abandoned in 2021. Carefully redesigned legislation could expand market access for sharecroppers and rationalize subsidy structures. If voters have indeed grown more comfortable with economic integration, the political space for calibrated reform may be wider than assumed.
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Written by Yash Tibrewal. Edited by Shreyas Sinha.
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