📰India, China Resume Direct Flight | Daily India Briefing

Today’s deep dives: India and China will restart direct passenger flights later this month. India’s diesel shipments to Europe surged to an all-time high in September. LG Electronics’ IPO pitches India as a global manufacturing hub.

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Macro

• Most strategists expect Asian stocks to outperform US equities in Q4, citing cheaper valuations, domestic demand, and policy easing. Risks for Wall Street include high valuations, megacap concentration, and tariff impacts, while Asia benefits from improving corporate fundamentals and tech momentum.

• India’s manufacturing growth slowed to a four-month low in September, though it stayed in expansion territory. Factory prices surged at the fastest pace in 12 years as firms passed on higher input costs, partly linked to US tariffs on exports.

Equities

• Asia-Pacific dealmakers endured a weak Q3 as mega-deals like Couche-Tard’s $46 billion (₹4.1 trillion) 7-Eleven bid, leaving M&A volumes nearly flat at $319 billion (₹28.3 trillion). Still, Chinese deals surged 22 percent and India rebounded 19 percent, with advisers optimistic Q4 activity will accelerate on lower rates, private equity deployment, and multinational asset sales

Alts

• Abu Dhabi’s International Holding, chaired by Sheikh Tahnoon bin Zayed Al Nahyan, will acquire a 43.5 percent stake in India’s Sammaan Capital for $1 billion (₹88 billion), triggering an open offer. The deal highlights deepening UAE-India ties and surging foreign investor appetite for controlling stakes in Indian finance.

Policy

• RSS chief Mohan Bhagwat backed Modi’s call for self-reliance, urging reliance on swadeshi while maintaining friendly diplomacy in his annual Dussehra address. His remarks come amid US tariff pressure, economic risks, and the BJP’s reliance on RSS grassroots support ahead of key Bihar elections.

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1. India, China to Resume Direct Flights

India and China will restart direct passenger flights later this month, ending a suspension of more than five years as the two Asian giants seek to rebuild political and economic ties.

The Ministry of External Affairs said Thursday that services could begin “subject to commercial decision of the designated carriers” once operational criteria are fulfilled. The agreement follows months of bilateral talks, signaling a thaw in relations that had soured after the 2020 border clashes.

Flights between the neighbors were halted during the Covid-19 pandemic and never resumed, forcing travelers to transit through hubs like Hong Kong or Singapore. Their return marks a step toward normalization at a time when both economies face headwinds from US tariffs and slowing global trade.

India’s largest airline, IndiGo, announced daily flights between Kolkata and Guangzhou starting October 26, with plans to launch a New Delhi–Guangzhou service soon. “With this very important step, we are looking at introducing more direct flights into China,” said IndiGo CEO Pieter Elbers. Air India is also expected to revive its routes, though it hasn’t confirmed schedules yet.

Before the suspension, multiple Indian and Chinese carriers, including Air China, China Southern, and China Eastern, operated routes connecting major cities. Earlier this year, New Delhi resumed issuing tourist visas for Chinese nationals, further easing travel restrictions and boosting the outlook for cross-border business and tourism.

2. India’s Diesel Exports to Europe Hit Record High

India’s diesel shipments to Europe surged to an all-time high in September as refiners redirected fuel to cash in on stronger margins in the West during refinery maintenance season, according to shiptracking data and trade sources.

Exports to Europe totaled between 1.3 million and 1.4 million metric tons (9.7–10.4 million barrels), the highest since records began in 2017, data from LSEG, Kpler and two industry sources showed. Total diesel exports reached nearly 3 million tons, the highest in five years.

The jump was fueled by a widening East–West price spread, which averaged $45 per ton last month versus less than $30 in August, making Europe the more profitable market. At the same time, shipping costs fell by roughly $10 per ton, further boosting arbitrage flows.

European refineries cut crude runs by some 400,000 barrels per day in September, with capacity outages expected to rise to as much as 600,000 bpd in October. Traders said that shortage tightened European supply, while in Asia the redirected barrels pushed up premiums for 10-ppm sulphur gasoil to a two-month high.

Analysts cautioned that India’s diesel exports may ease in October as domestic demand rises during the Diwali festival season. However, high product margins could keep export-oriented refiners running hard, maintaining flows to Europe despite uncertainties over upcoming EU sanctions on fuels derived from Russian crude.

3. LG Electronics India IPO Underscores Push to Make Country Global Hub

LG Electronics is pitching India as its global manufacturing base as it revives its long-delayed listing of its local arm, targeting a valuation of about $8.7 billion (₹772 billion) through a $1.3 billion (₹115.3 billion) IPO.

The offering, set to open October 7, will see the South Korean parent sell a 15 percent stake in LG Electronics India. The unit has set a price band of ₹1,080–₹1,140 per share.

Beyond the capital raise, the IPO signals LG’s long-term bet on India as its central production hub. The company has already invested $600 million (₹53.2 billion) in a new factory in Andhra Pradesh, its third in the country, which will supply both domestic and global markets. “India’s cost competitiveness and strong demand make it the natural choice for scaling manufacturing worldwide,” said Sanjay Chitkara, the company’s chief sales officer.

The Andhra Pradesh plant will expand LG’s export footprint beyond the 47 countries it already ships to, particularly into Europe, while deepening its presence in India’s $38 billion (₹3.4 trillion) appliances market. The company is India’s second-largest appliance maker and plans to grow further in smaller cities and premium categories.

The IPO comes as India courts global firms with tax reforms and growing domestic liquidity, reinforcing its appeal as an alternative manufacturing hub to China. For LG, the listing is as much about raising funds as it is about cementing India as the core of its global supply chain.

See you tomorrow.

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

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