📰Musk Sues Indian Government

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:

• Elon Musk is suing the Indian government,

• The UK and India are on the verge of finalizing a long-awaited FTA,

• and Jio Financial, led by Ambani, has reached a preliminary agreement with Allianz to establish an insurance business in India.

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

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—Shreyas, [email protected]

Market Update.

Another Twist: Musk Sues the Indian Government.

Elon Musk has launched a legal battle against the Indian government over its content takedown orders on X, a surprising move given his ongoing negotiations to expand Tesla and Starlink into the country. Takedown orders say that some form of posting or content is illegal and must be removed, which X has called “unrestrained censorship of information in India.” The social media platform has repeatedly denied orders from the Indian government to remove political content, such as anti-government content during the 2024 widespread farmers’ protest.

Pressure on India: The lawsuit, filed in the Karnataka High Court, accuses the Indian government of issuing arbitrary and inconsistent takedown orders that violate the country’s laws. The case highlights growing tensions between internet firms and India's government, which has implemented strict social media regulations affecting global tech giants like Meta and Google. The lawsuit also comes at a time of rising US-India trade tensions, with President Donald Trump planning to impose retaliatory tariffs on Indian imports starting April 2.

Personal gain: Despite the legal dispute, Musk is actively seeking regulatory approvals for his Starlink satellite internet service, which aims to serve rural India. The Indian telecom minister recently acknowledged the need for satellite internet in the country, signaling potential government support for Starlink. Additionally, Tesla is preparing to ship its first batch of vehicles to India, marking the EV maker’s long-anticipated entry into the market.  

This is not the first time X has clashed with Indian authorities. In 2023, before Musk’s Twitter takeover, the Karnataka High Court had fined the company and ordered it to comply with takedown directives. India’s home ministry and tech ministry have yet to respond to Musk’s latest lawsuit.

UK-India Free Trade Agreement May Come Sooner Than Expected.

The UK and India are on the verge of finalizing a long-awaited FTA, with officials from both sides expressing optimism about a deal that could transform economic relations between the two nations.

Indian and British sources are positive. "We are very close, and this agreement is going to be a game-changer for both of us," said Nidhi Tripathi, economic minister at India’s High Commission in London. The recent British Chambers of Commerce trade conference saw positive views from both British and Indian officials. Tripathi emphasized that the deal would provide greater predictability for service suppliers and create a more stable trading environment. 

Internal sources indicate that negotiations have significantly accelerated following the recent visit of UK Business and Trade Secretary Jonathan Reynolds to India. This visit, which followed a period of stalled talks due to elections in both countries, reportedly helped foster a strong working relationship between Reynolds and his Indian counterpart, Piyush Goyal. A UK official close to the talks described the latest progress as more positive than at any time before, marking a potential turning point after over three years of negotiations.  

Discussions over the UK-India FTA began in January 2022, with multiple rounds of talks under the leadership of former UK Prime Ministers Boris Johnson and Rishi Sunak. However, several self-imposed deadlines were missed, including Sunak’s hope of signing the deal before the July 2024 UK general election.  

Now, under the new Labour government, there is renewed urgency to finalize the agreement, which is expected to boost bilateral trade and strengthen economic ties between two of the world’s largest economies.

Allianz Has Already Found a New Partner.

Several industries are shaping modern India’s economic transformation, each presenting distinct investment opportunities. The Global Capability Centers sector is expected to double in market value to $110 billion (₹9.6 trillion) by 2030, with companies like JPM and BlackRock investing heavily. India’s highly skilled workforce is turning former back-office functions into innovation hubs, with companies such as Verizon leveraging their India-based teams to drive AI and 5G developments.

The Aerospace and Defense industry is another sector experiencing steady growth, projected at 6.8 percent annually until 2030. India’s deepening ties with the US and a growing talent gap in Western defense industries have positioned Indian firms as key players in global supply chains. Hyderabad-based JEH Aerospace, founded just two years ago, has already secured over $100 million (₹8.7 billion) in orders, supporting the likes of General Electric’s aero engines.  

India’s consumer goods market is also transforming, with spending growth of 300 percent over the past decade. Rising incomes and urbanization are driving demand for branded products. Eyewear retailer Lenskart, for example, has expanded aggressively, now operating in nearly 20 countries with over 2,500 stores, of which 2,000 are in India. Investors see this as one of the biggest opportunities in India’s growing retail sector, with IPOs offering a potential entry point.  

The digital economy is projected to account for 20 percent of India’s GDP by 2026, with fintech firms and cybersecurity companies playing a pivotal role. Mumbai-based IDfy, for instance, started as a background verification company and evolved into a key player in regulatory compliance and fraud prevention for financial institutions. India ranks third in total fintech and unicorn companies, with banking-focused fintech firms projected to capture over 20 percent of banking revenue by 2030, far exceeding the global average.  

Infrastructure remains a critical area for investment, particularly in renewable energy, where green investments are expected to surge 500 percent by 2030. Companies like Greenko Group are leading the charge in decarbonization, growing from a 21 MW biomass plant to nearly 10,000 MW of renewable energy projects across 15 Indian states. The government has introduced investment instruments such as InvITs, allowing institutional and individual investors to participate in revenue-generating infrastructure projects.

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Gupshup.

Macro

• Companies are shying away from coal to the detriment of India. The country is only going to hit half of the 15 gigawatts of thermal energy it wanted by March 2025. Only L&T and Bharat Heavy Electricals have the capacity to continue adding coal energy since other companies started dismantling equipment. The Indian push for green energy manufacturing has left the coal space, which was once competitive, now barren.

Equities

• Birla's Hindalco is spending $5.2 billion (₹450 billion) across aluminum, copper, and alumina businesses in upstream play. The goal is to offer more solutions in EV creation, green energy, and semiconductors, all recent global trends. Hindalco has historically been a traditional metals manufacturing company but Birla wants to transform it into a new age provider. 

• Steel stocks are seeing a brighter future from duties. The country will likely levy 12 percent import duties boosting local prices higher — they have climbed 5 percent since the beginning of the year. The Nifty Metal index is already trading above historical values at 14x one-year forward earnings.

• Lower oil prices could save LPG companies from a lack of government subsidy. LPG is cooking gas that has been sold at below-market rates by companies at the behest of the Indian government. They now fear that the once-promised $4.6 billion (₹400 billion) subsidy will not be as large as expected. Lower gas prices give a buffer against that, with LPG shares rallying anywhere from 1 to 7 percent.

Alts

• Eli Lilly is a first mover to weight loss drugs in India. The country has the third-most obese people in the world. The vial costs $40.50 (₹3,500), far lower than US pricing. Spokespeople commented that the Indian pricing is a commitment to entering the Indian market stronger. Demand is expected to be strong: 100 million people have diabetes and obesity with many resorting to illegal anti-obesity drugs on the grey market.  

• Adani is looking to buy the Indian unit of Emaar for $1.4 billion (₹121.1 billion). Emaar is a developer based in Dubai which would allow Adani to dip his toes into real estate from infra. The deal could have an equity infusion near $400 million (₹34.6 billion) but it is uncertain as of now. Emaar primarily functions in north India, the hub of Adani’s operations.  

Policy

• Even with all the Indian effort, Trump says India will be hit with reciprocal tariffs. He commented that India still has some of the highest tariffs of any nation. Interestingly, Indian officials still have a more bullish tone on the direction of tariffs. In the past, tariffs have been removed as fast as they were put on which could signal weakness in US tariff policy. 

• India approved grants for $6 billion (₹540 billion) worth of arms and equipment. Highlights are Russian battle tanks, anti-submarine torpedoes, and aircraft warning systems for the Air Force. 

See you Friday.

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.