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📰India Wants to Make it Easier for You to Invest | Daily India Briefing

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India’s retail inflation eased to 1.55 percent in July, opening the door for rate cuts. India’s state refiners lock in deals to hedge against Russian oil supply risk. SEBI is preparing to simplify rules for foreign portfolio investors.

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1. India’s Inflation Falls to 8-Year Low, Opening Door for RBI Rate Cuts

India’s retail inflation eased to 1.55 percent in July, dropping below the Reserve Bank of India’s 2 percent-6 percent target range for the first time in eight years and strengthening the case for potential rate cuts if growth falters under the weight of new U.S. tariffs.

The slowdown was driven largely by a steep fall in food prices, which make up nearly half of the consumer price index. Above-normal monsoon rains boosted crop output, pushing vegetable prices down 20.7 percent year-on-year, the sharpest drop since January 2019. Core inflation, which excludes food and fuel, also softened to 4.22 percent from June’s 4.53 percent.

Economists say the RBI now has room to cut its repo rate by 25-50 basis points should the economy show signs of slowing in response to President Donald Trump’s decision to double tariffs on Indian goods to 50 percent. Citigroup estimates the tariff hike could shave up to 0.8 percentage points off annual GDP growth.

The central bank held rates steady at its August meeting, citing global uncertainty, but noted it would closely monitor trade tensions. Bond yields ticked higher after the data, with the benchmark 10-year yield at 6.48 percent.

While the RBI’s full-year inflation forecast stands at 3.1 percent, analysts expect both growth and inflation to undershoot, raising the odds of a rate cut as early as October if tariff-related pressures deepen.

2. Indian State Refiners Lock in Term Deals to Hedge Russian Supply Risk

India’s state-owned refiners will lean on annual term contracts with diverse suppliers to safeguard energy security as uncertainty grows over the future of discounted Russian oil, the oil ministry told parliament on Tuesday.

The ministry said refiners are maintaining contracts with suppliers from multiple regions to hedge against market volatility and geopolitical disruptions. While India has become the largest buyer of Russian seaborne crude, accounting for more than one-third of its oil imports, officials cautioned that elevated Russian shipments “may not last forever.”

The shift comes amid narrowing discounts on Russian barrels and rising political risk after U.S. President Donald Trump imposed a 25 percent tariff on Indian goods last month and threatened further penalties over New Delhi’s purchases from Moscow.

State refiners, which make up over 60 percent of India’s 5.2 million barrels per day refining capacity, have paused spot purchases of Russian crude pending government guidance, while private refiners Reliance Industries, Nayara Energy, and HPCL-Mittal Energy continue buying.

By keeping term deals with Middle Eastern and other suppliers, the ministry said refiners can ensure both stable supply and “procurement of crude oil at optimal value,” taking into account international politics, trade relations, and price dynamics.

Trump is scheduled to meet Russian President Vladimir Putin in Alaska on Friday, as part of efforts to broker a Ukraine peace deal, a development that could reshape the global oil trade and India’s procurement strategy.

3. SEBI to Further Ease Regulations for Foreign Investors

India’s market regulator is preparing another round of simplified rules for foreign portfolio investors (FPIs) to encourage sustained capital inflows, according to the SEBI annual report released Tuesday.

The measures build on last week’s proposal for single-window clearance for low-risk overseas investors, including sovereign wealth funds, government-backed entities, and pooled retail vehicles, giving them streamlined access to Indian markets. SEBI says the changes could significantly boost participation from foreign institutions seeking long-term exposure.

The regulator is also launching a full review of its rulebook, aiming to prune outdated provisions and reduce compliance burdens. This includes rationalizing disclosure norms and easing shareholder approval requirements for low-value related-party transactions.

SEBI’s modernization push extends to cybersecurity upgrades and more sophisticated market surveillance, particularly after it banned U.S.-based Jane Street for alleged manipulation of stock indexes. The crackdown comes as regulators grow wary of the surge in expiry-day index options trading, where premiums are minimal but volumes spike sharply, with 90 percent of trades happening on expiry and nearly a third in the final hour.

By simplifying access while tightening oversight on speculative excesses, SEBI is signaling that it wants more patient, stable foreign capital, even as it reins in behaviors that could distort India’s rapidly growing derivatives market.

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

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