📰India Drops EV Tariffs, Funds Turn Bullish on Bonds, Air India Loses Boeing Loophole

Good afternoon, 

Welcome to the best way to stay up-to-date on India’s financial markets. Here’s what’s in today’s newsletter:

• India is planning to reduce its 100 percent tariff on electric vehicle imports to just 30 percent,

• India’s bond market experienced its most significant rally in over two years,

• and Air India’s loophole that allowed it to quickly buy Boeing airplanes is ending soon.

Then, we close with Gupshup, a round-up of the most important headlines.

Have a question you want us to answer? Fill out this form and you could be featured in our newsletter.

—Shreyas, [email protected]

Market Update.

India to Cut Tariffs on Electric Vehicles.

India is planning to reduce its 100 percent tariff on electric vehicle imports to just 30 percent; the move defies the country’s automobile lobby, which hoped to delay the tariff cut by four more years. Reducing tariffs on electric vehicles, while generally an important global market, is a clear bid to appease Elon Musk, who has seen his Tesla sales plummet in Europe and is pushing for easier access to the Indian market. Just earlier this month, Tesla finalized setting up showrooms in Mumbai and New Delhi—its first in the country—and is planning to kickstart sales later this year. President Trump has said it is “impossible” for Tesla to sell in India due to tariffs.

As the world braces for President Trump’s “Liberation Day,” a set of tariff announcements at 4:00 PM ET today that will reshape global trade, India is making concessions. While the United States’ tariffs have fostered protectionism across the globe, as countries respond with retaliatory tariffs, India is one of the few major economies that has actually moved closer to free trade policies.

The tariff rollback has been helpful to powerful incumbents like Tata Motors and Mahindra & Mahindra, which dominate the Indian automobile market alongside Japanese carmakers like Hyundai and Maruti Suzuki. These companies have invested millions in local electric vehicle manufacturing and have lobbied the Indian government to keep tariffs high. Another worry is that the US FTA for EVs could set a precedent for the EU and UK, giving even more stiff competition from automakers like Volkswagen, which is making strides in the EV space. For India, it also reduces the efficacy of its EV incentive programs, which run until 2029. 

Inda would like to make electric vehicles at least 30 percent of all car sales by 2030; currently, it accounts for just 2.5 percent of the 4.3 million vehicles sold in 2024.

Global Funds and Indians are Bullish on Bonds.

India’s bond market experienced its most significant rally in over two years following an unexpected move by the RBI to purchase a larger-than-anticipated amount of government debt. This development has fueled speculation that the central bank is preparing for a more accommodative monetary policy stance soon.  

The yield on India’s benchmark 10-year bond fell sharply by 10 basis points to 6.48 percent, marking the lowest level since January 2022 and the steepest drop since November of that year. This decline came in response to the RBI’s announcement of a $9.3 billion (₹800 billion) bond purchase, which adds to over $70 billion (₹6 trillion) in liquidity injections aimed at stabilizing the banking system.  

Market and rate views: The timing of this move is particularly significant. Traders returning from a two-day market holiday were greeted with data indicating that banking system liquidity had turned into a surplus for the first time in 2025. With improved liquidity conditions, analysts now expect bond yields to continue their downward trend, with projections ranging between 6.25 percent and 6.50 percent in the coming months. Traders at Nomura and Barclays in particular see yields hitting the bottom end of that range.

The RBI’s recent actions suggest that it is laying the groundwork for further monetary easing. While the central bank cut interest rates in February for the first time in nearly five years, it maintained a neutral policy stance. However, this latest round of liquidity support may enable the MPC to adopt a more explicitly accommodative position in its upcoming April 9 review.  

Market expectations for additional rate cuts have been further reinforced by the appointment of Poonam Gupta as the RBI’s new deputy governor. Gupta, a former World Bank economist, has been a vocal advocate for lower interest rates and structural reforms aimed at promoting economic growth. Her appointment signals a potential policy shift under the leadership of Governor Malhotra, who has been seen as more growth-oriented compared to his predecessor.  

Economic context: India’s economy is currently navigating a period of slower growth, with GDP expansion projected between 6.3 percent and 6.8 percent for the current financial year. In this context, Gupta’s prior remarks labeling the previous 6.5 percent repo rate as “unjustifiably high” have gained relevance. Analysts now believe that her presence within the MPC strengthens the case for a more aggressive easing cycle, potentially beginning with a 50-basis-point rate cut at the April policy review.  

In addition to interest rate policy, Gupta has advocated for adjustments to India’s inflation targeting framework. She has emphasized the need to reassess the weight of food prices in the inflation basket and has called for a more flexible exchange rate policy to better absorb external shocks. Her perspectives will be particularly influential as the RBI and the government review the inflation framework in March 2026. 

Air India Loses a Delivery Loophole with Boeing

Air India has benefited from an unusual supply chain dynamic that allowed it to rapidly expand its fleet with Boeing 737 Max aircraft originally built for Chinese carriers. Since September 2023, the airline has been receiving an average of two such aircraft per month, thanks to Chinese regulatory delays that prevented deliveries to airlines like Shanghai Airlines Co. However, this unexpected supply advantage is set to run out by June, leaving Air India uncertain about future deliveries.

While Air India has sought to mitigate these delays by leasing aircraft, such as 11 Boeing 777s from the market and six Airbus A350-900s originally intended for Russia’s Aeroflot, these moves are stopgap solutions rather than long-term growth enablers.  

This development puts the Tata Group-owned carrier at a competitive disadvantage against market leader IndiGo, which has a more predictable aircraft delivery schedule and plans to add more than one aircraft per week this year. While Air India has taken delivery of 41 out of the 50 white-tail (planes without a predefined airline) aircraft Boeing diverted from Chinese customers, future deliveries of its remaining 140 aircraft orders are not expected before March 2026.  

With Air India’s supply of white-tail aircraft drying up and new deliveries still far off, the airline faces a potential slowdown in its growth trajectory. IndiGo’s aggressive expansion strategy gives it a clear advantage in capturing market share, especially in India’s booming domestic aviation sector.  

Boeing had been operating a shadow factory to upgrade and repurpose white-tail 737 Max jets for Air India and other customers. However, this facility is expected to wind down by summer, further tightening supply. Meanwhile, Boeing is also ramping up production to 38 jets per month by mid-2025, but those deliveries will not immediately benefit Air India, whose backlog will take time to clear.  

Air India’s smaller competitor, Akasa Air, has also relied heavily on these white-tail aircraft to grow its fleet to 27 jets in just 30 months. However, Akasa is facing its own challenges with delivery delays, as only 27 of its 226 ordered aircraft have arrived on schedule.  

Message from our sponsor.

Reach out to [email protected] to sponsor the next newsletter!

Apple’s Starlink Update Sparks Huge Earning Opportunity

Apple just secretly added Starlink satellite support to iPhones through iOS 18.3.

One of the biggest potential winners? Mode Mobile.

Mode’s EarnPhone already reaches +45M users that have earned over $325M, and that’s before global satellite coverage. With SpaceX eliminating "dead zones" worldwide, Mode's earning technology can now reach billions more.

Mode is now gearing up for a possible Nasdaq listing (ticker: MODE) but you can still invest in their pre-IPO offering at $0.26/share.

Earn up to 100% bonus shares.

Gupshup.

Macro

• India's swap markets are pricing in sharper-than-expected rate cuts by the central bank in FY26, with OIS rates falling 10-15 basis points in March. Analysts now predict at least 75-100 bps of easing, citing weaker growth and inflation tracking below the Reserve Bank of India’s forecast.

• Indian stocks fell as profit-booking ended a seven-day rally, with the Nifty 50 dropping 0.77 percent and the Sensex losing 0.93 percent. Investors turned cautious ahead of potential U.S. tariff announcements, with financial stocks leading the decline and major players like HDFC Bank and Reliance Industries slipping.

• India’s export growth has slowed this fiscal year due to global tariff uncertainties, impacting trade flows and investment, the government said in its February economic report. Despite these risks, it maintained the country’s 2024/25 growth forecast at 6.5 percent, citing improved momentum in early 2025.

• Bank of America has raised its gold price forecasts to $3,063 per ounce for 2025 and $3,350 for 2026, citing uncertainty from U.S. trade policies. The bank noted that rising investment demand and central bank reserves could further drive prices higher, while fiscal tightening and easing geopolitical tensions remain potential risks.

• India expects strong domestic steel demand to offset the European Union's tighter import restrictions set to take effect in April. While India's exports to the EU make up a significant portion of its steel trade, local consumption remains far higher, minimizing the potential impact.

Equities

• Maruti Suzuki, India’s largest carmaker, will invest $864 million (₹74.1 billion) to build a third plant in Haryana, boosting its total capacity to 750,000 vehicles per year by 2029. The expansion aims to meet rising demand, including for exports, as Maruti maintains its position as India’s top car exporter.

• Bharti Airtel and its unit Bharti Hexacom prepaid $698.33 million (₹59.85 billion) to clear high-cost spectrum dues from the 2024 auctions, reducing their debt burden. This move lowers Airtel’s overall spectrum-related liabilities to 520 billion rupees and cuts its cost of debt to 7.22 percent.

• India’s Wipro secured a 10-year, $645 million deal with British insurer Phoenix Group to handle life and pension business administration, the company announced Wednesday. As part of the deal, Wipro will expand its UK presence with new tech and operations hubs, absorbing some Phoenix employees. 

Alts

• IndusInd Bank raised $2 billion through market deposits in March after revealing a $175 million accounting discrepancy in its derivatives portfolio. The bank’s reliance on higher-cost bulk deposits signals an effort to strengthen liquidity and reassure investors amid governance concerns.

Policy

• Maharashtra has scrapped its proposed 6 percent sales tax on electric vehicles over $35,000 to boost adoption in India’s growing EV market, the state’s chief minister announced Wednesday. The reversal comes as Tesla prepares to enter India, competing with local automakers like Mahindra and Tata, both of which already manufacture EVs in Maharashtra.

• A U.S. religious freedom panel has urged sanctions against India’s external intelligence agency, RAW, over alleged assassination plots targeting Sikh separatists. The panel also recommended designating India as a "country of particular concern" for worsening minority rights, but India dismissed the report as biased and politically motivated.

See you Thursday.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

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.