📰India Borrows from China's Playbook | Daily India Briefing

India and China’s renewed cooperation spans from the military border to cracking down on Jane Street. Today, we explain more.

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Macro

• Governor Malhotra says India is in a neutral rate environment and will look at rates as inflation and growth change. Data released yesterday showed inflation at 1.33 percent, still lower than expected, but on a little uptick. Malhotra reinforced that India was in a rare Goldilocks Zone of high growth and low inflation.  

• The Singapore Exchange had talks with global banks about listing bond futures for India and other Asian countries.SGX is planning on offering 3-, 5-, and 10-year futures settling in dollar prices.

Equities

• General Atlantic-backed digital insurer Acko is seeking a $350 million (₹31.5 billion) IPO. The IPO is in early stages and will likely contain a mix of primary and secondary shares. Acko offers insurance for car, health, and travel among other things all online. 

• The government is pressing quick-commerce executives to end their 10 minute delivery plans.The Labour Secretary is meeting with executives while the opposition parties are also, for once, siding with the BJP. All of this is from the massive 200,000 worker strikes happening over the holidays.

Alts

• Standard Chartered will forego some credit card customers who do not deepen ties with the bank. The bank’s strategy is to build multi-product relationships anchored in wealth management and international banking. 

• JP Morgan is looking for a new head in India to run its banking division.The bank has 50,000 employees in the country accounting for 20 percent of total workforce.

Policy

• Trump's threat of 25 percent tariffs on anyone trading with Iran affects India in 3 ways. Modi will likely ban exports to Iran, but the other effects are crude jumping to $64 (₹5,760) and Chabahar port closing which is key for exports to Afghanistan and Central Asia. 

• US actions with Venezuela, Iran, and Russia are redefining India's autonomy doctrine.India, while reacting fast to Russia, will likely take its time with Venezuela and Iran as the situation keeps developing. China is also affected as Iran's largest trading partner and is improving its ties with India.

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India and China are Thinking Alike on the Military and Trading

India and China’s renewed cooperation spans from the military border to cracking down on Jane Street. India and China are making a deliberate effort to keep their long and volatile border quiet, even as strategic mistrust between the two Asian giants remains unresolved. Senior leaders on both sides have engaged repeatedly in recent months, and the armed forces feel an urgency to prevent a relapse into confrontation along the Himalayan frontier. At the same time, regulators in China say they are emboldened to follow India’s playbook and are looking more into Jane Street’s ETF trades in China.

That urgency reflects hard lessons from the deadly clash in June 2020, which froze relations and reshaped how both countries manage risk. Since then, disengagement agreements at friction points and tighter protocols have reduced the chance of accidental escalation. The result has been a cautious thaw, culminating in Modi’s visit to China last August, his first in seven years, and the resumption of direct flights in October. Peace along the 3,488 kilometer disputed border has become the prerequisite for any broader normalization, rather than its byproduct.

The geopolitical backdrop makes this restraint even more valuable. Both countries are contending with renewed trade pressure from the US causing global manufacturing supply chains to shift from China to India and various countries outside of the two as well. Military incursions by either side gives foreign powers, in particular the US, more legitimacy to ‘broker’ some deal or gain more leverage over both India and China.

China’s heightened scrutiny of foreign trading firms such as Jane Street in its domestic ETF market shows how both economies are thinking similarly. Pressure from Chinese regulators caused UBS (who filters some of Jane Street’s trades across asset classes in China) to put the client on hold. Beijing’s sensitivity to its domestic ETF market and volatility mirrors India’s own regulatory assertiveness after last year’s crackdown on alleged index manipulation by Jane Street. In both cases, authorities are signaling that stability, whether financial or military, takes precedence over unfettered participation.

See you tomorrow.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

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