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In an enormous step to increase foreign investment, Today, we explain more.
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Macro
The rupee has enjoyed its best week against the dollar in 3 years. It jumped 3.3 percent due to the removal of an overhang placed since last April. The lack of uncertainty makes inflows for capital-intensive projects and equity markets more certain.
Indian imports of Russian oil are expected to drop by 50 percent settling at 500,000 barrels per day.All state-owned and private refiners save Nayara have not placed any new Russian orders since last week. Nayara, having been sanctioned due to its minority ownership by Rosneft, has no choice but to continue importing Russian crude.
Equities
Large garment exporters like Pearl Global Industries will shed a massive cost burden against US importers. Pearl was choosing to pay penalties to fulfill commitments to keep cash coming in. In particular, suppliers to firms like Walmart will see previous contracts get reinstated.
Aviation and auto components makers like Sona BLW and Samvardhana Motherson face 0 percent tariffs on many goods. The US excluded several parts since foreign companies imported $2 billion (₹181 billion) of aviation components last year from India. There were also $6.2 billion (₹561.1 billion) of auto components which is why elementary parts are fully excluded.
Motorcycle manufacturers face more competition due to Harley imports but auto companies stay resilient. Levies on motorcycles are being cut but EVs are being left out of all trade deals. High-end bike makers like Eicher Motors face more competition but Tata and Mahindra & Mahindra — both with EV plans — will be happy after the EU trade deal.
Earnings growth could still trail Asian peers causing India to continue being a shorting market for foreigners.Earnings are predicted to grow at 8 percent, dragged down by software services, which is lower than China’s 16 percent and Taiwan’s 30 percent. The Nifty is trading at 22x forward earnings which is still higher than other EM peers.
Alts
India redefined deep-tech startups as working in critical fields to receive government funding. Startups in artificial intelligence, biotechnology, quantum computing and advanced materials making up to $33.1 million (₹3 billion) are eligible for increased government grants. The policy change precedes the massive AI gathering in New Delhi coming up.
Policy
India has been negotiating a trade deal with the US since last September. Last year, spokespeople were sent to DC to calm US rhetoric on India. Small, hidden meetings between officials continued since then to make the 18 percent tariff deal a possibility. The secretiveness led to some officials being surprised at the announcement.
Samyukt Kisan Morcha, a farmer's association, is planning strikes February 12 and onwards against the US FTA.While buyers will see lower prices and more options at the grocery store, eliminating tariffs will directly hurt farmers. SKM previously got Modi to remove 3 contentious farm laws in 2021 due to year-long demonstrations.
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India Doubles Foreign Investment Limit
IIndia's Union Budget 2026 doubled the individual PROI investment limit in listed companies' equity from 5 percent to 10 percent of paid-up capital via the Portfolio Investment Scheme. PROI is a highly-broad term from India's FEMA regulations referring to non-Indian residents like NRIs, OCIs, foreign nationals, or foreign-owned entities (this includes most of our newsletter’s readers). The move is an enormous step towards India welcoming foreign investment.
Under existing rules, overseas Indian citizens can invest directly in domestic equities through the Portfolio Investment Scheme. Other non-resident individuals, however, typically need to route exposure through registered funds or obtain a foreign portfolio investor license, limiting flexibility and scale.
Foreign investors have been net sellers of Indian equities in recent months, creating a funding gap that domestic flows alone may struggle to offset. Even a modest $10 billion (₹905 billion) redirection of the $135 billion (₹12.2 trillion) annual remittances India receives would be a massive swing in the $19 billion (₹1.7 trillion) sold last year and $3 billion (₹271.5 billion) sold in January. A broader liberalization, meanwhile, would position India to tap into an expanding global wealth pool expected to grow sharply over the rest of the decade.
Market participants frame the proposal as an attempt to cultivate more stable, long-duration capital rather than rely solely on institutional portfolio flows that can reverse quickly during periods of volatility. Think everyday investors using their 401ks for decades versus a hedge fund looking to make a quicker trade. That durable long-term capital would deepen liquidity similar to the US and deliver cash to fund expansion. The final piece is regulatory execution with the RBI and SEBI. Both branches still have to define eligibility, risk limits, and operational mechanics.
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Written by Yash Tibrewal. Edited by Shreyas Sinha.
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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.