📰First Direct Flight to China | Daily India Briefing

Today’s deep dives: Vodafone’s shares surged as much as 10 percent in Mumbai on Monday. Rubio promises that U.S.’s budding relationship with Pakistan doesn’t undermine “historic” ties to India. The first direct flight between India and China in more than five years took off last night.

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Macro

• The cost of shopping around for non-Russian oil is a 5 to 12 percent hit to earnings. Refiners would experience this hit until 2027 as global conflicts moderate. Tighter refining capacity globally could keep margins tighter than that 5 to 12 percent downside scenario. 

• The market snapped a six-day winning streak with earnings season still ongoing. The Nifty 50 is near all-time highs even with tariffs and other geopolitical tensions. The market’s next leg will be on earnings that continue to come out this week and the next. 

• The cost of borrowing silver fell to 5.6 percent after peaking at 34.9 percent earlier this month.The lease rate symbolizes the level of demand against current supply. There was both historic demand from global (and Indian) festive seasons in addition to historic shortages in metal hubs like London.

Equities

• Softbank backed Lenskart is expected to IPO and raise $828 million (₹73.7 billion). Bidding for shares will begin later this week and shares will start to trade the following week. The company is an eyewear retailer backed by Fidelity, KKR, Temasek, TPG, Softbank, and Abu Dhabi’s sovereign wealth fund. 

• Foreign investors are hopeful of bullish auto stocks based on a Singapore roadshow. Motilal Oswal hosted the show with Maruti Suzuki standing out. The next debate on autos is whether entry level cars make a resurgence or if luxury vehicles continue to lead the industry. 

• Fractal Analytics is planning its $555 million (₹49.3 billion) IPO for next month.The company is seeking a valuation of $3 billion (₹266.1 billion) though most details are still under deliberation. The company provides enterprise AI services to improve human decision making.

Alts

• LIC denies that the government pushed for $3.9 billion (₹344.2 billion) in Adani. LIC was the sole buyer of Adani Ports and Special Economic Zone’s record bond sale of $569 million (₹50 billion). It also invested in Adani when the company came under fire after the Hindenburg report. 

• India's oldest coal power plants could be retired by 2030 with new energy sources coming online.The large plants in India are more than 40 years old making them terribly inefficient. The rapidly growing green energy fleet coming online in the next 5 years also bolsters the grid. Coal will still make up ⅔ of India’s energy fleet.

Policy

• India has started verifying voter roll checks for more than 500 million people. The intensive measure will take place over 12 provinces of which 4 are going to local polls next year. Supporters cite frequent migration, multiple registrations, and inclusion of foreigners/deceased. Opposition says electoral rolls will be manipulated and the move exists to support the BJP.

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1. Vodafone Will Likely Face a Reduced Tax Fine

Vodafone’s shares surged as much as 10 percent in Mumbai on Monday, reaching their highest level since September 2024, after a new court ruling. The court allowed the government to review the company’s dues linked to its adjusted gross revenue calculations which had long been an issue between India’s telecom firms and regulators. Solicitor General Tushar Mehta told the court the government was open to reassessment “in the interest of Vodafone’s nearly 200 million users.”

The Modi administration, now a 49 percent shareholder in Vodafone Idea following a debt-to-equity conversion earlier this year, has been under pressure to find a resolution. The telecom carrier, India’s third largest, owes nearly $22.7 billion (₹2 trillion) in back payments, and has not reported a quarterly profit since 2016. Officials have privately acknowledged the need to ease the company’s financial burden, with Bloomberg News earlier reporting that the government was considering a partial waiver of dues.

The move also carries geopolitical weight. It comes just weeks after British PM Starmer’s first official visit to India since the two countries signed a landmark trade deal in July. Easing pressure on Vodafone (a British multinational) could be seen as a diplomatic olive branch to London. 

For New Delhi, providing relief to Vodafone Idea would not only stabilize a key player in the domestic telecom sector but also reassure global investors unsettled by India’s history of abrupt regulatory actions. Analysts say a resolution would help strengthen investor confidence in India’s policy consistency just as the country seeks to attract fresh capital amid a turbulent global trade environment.

The government’s stance marks a notable shift from earlier years, when officials were reluctant to intervene in the AGR dispute despite its crippling impact on the industry. With public funds now tied up in the carrier, the case has evolved from a private-sector controversy into a state concern — one with major implications for both market stability and India’s international credibility.

2. Rubio Promises Pakistan Ties Don’t Undermine “Historic” India Relationship

Washington’s latest outreach to Islamabad is part of a broader recalibration of US policy in South Asia but Secretary of State Marco Rubio insists it won’t undermine America’s “deep, historic, and important” relationship with India. Speaking to reporters en route to Doha, Rubio described the engagement with Pakistan as purely pragmatic, reflecting the kind of foreign policy in which both Washington and New Delhi pursue relationships that may not always align. His comments come amid heightened diplomatic maneuvering across Asia, where the Trump administration’s trade and security policies have strained old alliances and created new openings.

The renewed American interest in Pakistan marks a subtle but significant pivot under Trump, who has openly sought to rebuild a partnership with Islamabad after years of drift. This shift has unsettled India, particularly after Washington praised Pakistan’s mediation role following a near-war between the two nuclear neighbors in May. Trump has claimed he used trade as leverage to push both sides toward peace, something New Delhi rejected outright, while Pakistan celebrated his intervention, even nominating him for a Nobel Peace Prize. For India, the optics of such diplomacy are difficult, especially as Trump’s tariff hikes (50 percent on Indian exports compared to 19 percent on Pakistan’s) deepen trade tensions.

Rubio emphasized that the outreach to Pakistan is not limited to counterterrorism cooperation. Washington now wants to expand collaboration into critical minerals and oil, sectors where Pakistan has already inked new deals with the US. The effort underscores Trump’s broader strategy to secure resource access and supply chains in South Asia, especially as competition with China intensifies. The timing is also notable: Pakistan’s government, led by Prime Minister Shehbaz Sharif and Army Chief Asim Munir, has welcomed US overtures as a chance to attract investment and reduce dependence on Beijing.

At the same time, Rubio is working to reassure India of Washington’s commitment. On the sidelines of the ASEAN Summit in Malaysia, he met with Minister Jaishankar to discuss trade and India’s continued imports of Russian oil. Trump has demanded that India cut off purchases of Russian crude, arguing the flows indirectly finance Moscow’s war in Ukraine. For now, India continues to buy Russian oil, which makes up roughly a third of its imports, but Rubio noted that New Delhi has signaled plans to diversify its supply and buy more energy from the US.

3. India and China Finally Resume Direct Flights

The first direct flight between India and China in more than five years marked a significant diplomatic milestone on Sunday night, underscoring a cautious thaw in relations between the two Asian giants. IndiGo Flight 1703 departed Kolkata for Guangzhou, officially restoring a direct air link that had been severed since the Covid-19 pandemic and subsequent border tensions in 2020. The route, connecting eastern India with southern China’s manufacturing heartland, is expected to boost trade, business travel, and tourism after years of strained engagement.

The resumption comes amid a broader warming of ties between New Delhi and Beijing, as both nations grapple with the economic headwinds from US tariffs. The decision to restart flights was first announced by Modi during his August meeting with President Xi Jinping on the sidelines of the SCO Summit, his first visit to China in seven years. The move was interpreted as a deliberate step toward stabilizing relations that had soured following deadly border clashes in Ladakh in 2020.

IndiGo’s CEO Pieter Elbers described Guangzhou as a major hub for Indian businesses, exporters, and professionals. He said that restoring the route would facilitate trade, education, tourism, and health-care links, particularly for SMEs that depend on faster logistical connectivity. For now, the new air corridor reflects a mutual recognition of economic interdependence amid geopolitical frictions. After a series of false starts earlier this year, including a pause linked to India’s brief conflict with Pakistan, both governments finally gave the green light for a full restoration of routes this fall.

Further expansion could follow: Air India is reportedly in discussions to launch New Delhi–Shanghai flights, though no official date has been set. For India and China, whose combined populations account for more than a third of humanity, the reopening of direct air links offers a pragmatic foundation for rebuilding trust — even as strategic competition, border tensions, and trade imbalances persist beneath the surface.

See you tomorrow.

Written by Eshaan Chanda & Yash Tibrewal. Edited by Shreyas Sinha.

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