📰India’s New Budget Must Reassure Investors | Daily India Briefing

As global investors pull back and the rupee hits record lows, the Indian government’s annual budget must reassure investors while cementing a pathway to growth. Today, we explain more.

If you have any questions about India, fill out this form or reach out to Shreyas at [email protected]

Macro

• Goa's energy conference will carry the usual questions about Russian oil dependence. Investors are going to wonder if India can continue navigating international pressure to buy the cheapest crude possible. Cheap supplies from Iran are out of hand while Venezuelan flows have only just started to trickle in, mostly to the US.

• The RBI is adding $23.6 billion (₹2.2 trillion) of cash injections through bond purchases and selling rupees. The goal is to loosen banking liquidity that has tightened due to the RBI buying rupees to strengthen it. Banking liquidity was in a deficit right now compared to a $28.4 billion (₹2.6 trillion) surplus at the beginning of December.

Equities

• Apparel manufacturers just gained access to a $263 billion (₹24.1 trillion) textile market in the EU. Ready-made garments could increase in market share from 5 to 9 percent with the incremental export opportunity over the short-term being $4.5 billion (₹411.3 billion). KPR Mill, Welspun Living, and Kitex Garments all climbed 5+ percent.  

• Avanti Feeds rose 2.1 percent since seafood exports will climb. Preferential access to the EU includes shrimp, frozen fish, and value-added seafood products. Safeguards have also been retained to protect Indian farmers in poultry and dairy. 

• Sula Vineyards fell 3.5 percent while Kingfisher-brewer United Breweries dipped 1.2 percent on FTA news.Competitive intensity is expected to rise in the premium and luxury segment due to increased imports of Heineken, Carlberg, Budweiser, and Remy Cointreau.

Alts

• Jewelers are expecting bilateral EU trade to climb to $9.9 billion (₹910 billion), double from current amounts. This should happen in the next 3 years, helping jewelers who lost 44 percent of their export volume with 50 percent US tariffs.

• Adani and Embraer signed a deal to build aircraft in India.The pact is yet to announce what type of aircraft though this does boost regional air connectivity initiatives in the country. It’s also a new line of business for the Adani Group with a manufacturing facility soon to be announced by the conglomerate.

Policy

• Beneficiaries of the EU trade deal will likely be jewelers and apparel manufacturers. They will gain preferential access to the EU market though automakers and liquor companies have to contend with more competition. High-tech engineering will also benefit from growing collaboration. 

• The EU FTA also gives European financial firms easier access to Indian markets.Part of this is the ECB and RBI working closer but European banks can now also clear trades through India’s sovereign bond clearing house. The issue was a 2 year standing dispute between both central banks.  

India’s Tech Boom Is Here. Now, You Can Invest in Minutes.

Samosa Capital is excited to partner with The India Internet ETF (NYSE: INQQ), a U.S.-listed ETF that lets you invest in the tech companies driving India’s future in minutes: from Swiggy and Lenskart to Eternal and Nykaa.

In a single trade, you'll get access to a basket of innovative companies contributing to the future of the world’s most populous country, and gain exposure to India's long-term investment potential.

INQQ is available through most major online brokerages, giving you direct access to rigorously researched Indian tech giants.

Click for current holdings and to learn more.

Reach out to [email protected] to reach our audience and see your advertisement here.

India’s New Budget Must Reassure Investors

India is heading into new budget announcements with growth still hot but the room for error narrowing. Finance Minister Sitharaman’s main job on Sunday will be to reassure investors that New Delhi can sustain momentum at home while insulating the economy from an increasingly hostile global environment.

So far, India has weathered external shocks better than many peers. Growth is expected to reach 7.4 percent in the year ending March, supported by heavy public infrastructure spending and earlier cuts to income and consumption taxes that lifted household demand. That strategy, however, has come at a cost. Those tax reductions have eaten into revenues, leaving the government with far less flexibility to stimulate the economy again through fiscal largesse.

Economists expect that constraint to define the budget. With little scope for fresh consumption boosts, the emphasis is likely to shift toward regulatory simplification and structural reforms aimed at attracting private investment. That is particularly important as uncertainty over trade relations with Washington has rattled markets, pushed the rupee to record lows, and extended a selloff by foreign investors already uneasy about valuations and weak corporate earnings.

Fiscal discipline will be central to Sitharaman’s message. After losing an estimated $16.4 billion (₹1.5 trillion) a year from recent tax cuts, the government is expected to rein in overall spending to hit a fiscal deficit target near 4.2 percent of gross domestic product for 2026–27. Borrowing is still set to rise, limiting how much capital expenditure can increase beyond current levels. For global investors, the more important signal may be a renewed commitment to lowering the federal debt ratio over the rest of the decade.

Within those tight limits, the budget is expected to lean heavily on reforms. Recent moves to overhaul labor laws and open parts of the nuclear sector point to the direction of travel. Further steps to ease foreign investment, particularly in defense manufacturing, are widely anticipated, alongside a sharp increase in defense spending. After two mediocre attempts to jump-start manufacturing through past budgets, the government is likely to try once more to make India a more compelling destination for long-term capital.

See you tomorrow.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

Sponsor the next newsletter to reach tens of thousands of U.S.-based business-savvy professionals. Reach out to [email protected].

Could your business use expert insights to power growth in India? Reach out to [email protected] for a free introductory call.

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.