• Samosa Capital
  • Posts
  • 📰RBI Open to More Rate Cuts, India’s Rice Glut Powers Ethanol Surge, India Defends Copper Import Curbs

📰RBI Open to More Rate Cuts, India’s Rice Glut Powers Ethanol Surge, India Defends Copper Import Curbs

Three stories on Indian markets that you can't miss.

June 26, 2025

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:

  • Monetary Policy Committee member says RBI open to more rate cuts soon,

  • India is pivoting from rice shortages to surplus management, using a record volume of rice for ethanol production,

  • and India’s government is pushing back against industry-led legal challenges to its new quality control measures on copper cathode imports.

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.

RBI Open to More Rate Cuts.

Despite the Reserve Bank of India’s recent policy pivot signaling a more neutral stance, further interest rate cuts remain a live option, according to Saugata Bhattacharya, a relatively hawkish member of the central bank’s Monetary Policy Committee. His comments suggest that India’s monetary strategy remains flexible in the face of cooling inflation and shifting global macroeconomic dynamics.

Bhattacharya emphasized that the RBI’s June shift from an ‘accommodative’ to ‘neutral’ stance does not rule out further easing. “If inflation allows a further cut in the policy repo rate, so be it,” he said in an interview, pointing to softening food prices, a strong monsoon, and declining edible oil costs as supportive of a benign inflation outlook. He was the lone member to favor a smaller, quarter-point cut in the last policy round, where the RBI surprised markets with a more aggressive rate reduction and liquidity easing.

The remarks align with the RBI’s recent balancing act: while it injected liquidity to spur credit growth, it also announced plans this week to withdraw $11.7 billion (₹1 trillion) via short-term operations to curb excess market liquidity and stabilize short-term rates.

From a macro perspective, Bhattacharya’s comments reflect India’s complex policy challenge, managing a still-fragile recovery while guarding against inflation flare-ups and capital outflows. He called attention to the difficulty of managing liquidity due to variables like currency in circulation, global capital flows, and the government’s cash position.

India’s FY26 growth forecast of 6.5 percent remains intact, but Bhattacharya warned that structural metrics like potential output need reassessment. “We are far from overheating,” he said, noting that subdued core inflation gives the RBI room to act. His comments reinforce the view that India’s monetary policy path remains contingent on incoming data, especially global trade dynamics and inflation trends.

India’s Rice Glut Powers Ethanol Surge.

India is pivoting from rice shortages to surplus management, using a record volume of rice for ethanol production in a move that highlights the country’s shifting food and energy priorities. This marks a strategic response to burgeoning stockpiles and supports India’s ambitious target of blending 20 percent ethanol into gasoline by 2025–26.

After poor monsoons in recent years forced New Delhi to restrict rice exports, this year’s ample rainfall has yielded a bumper harvest, creating inventory headaches for policymakers. As of June 1, the Food Corporation of India (FCI) held a record 59.5 million metric tons of rice—more than four times the government’s buffer norm for July. In response, the government has allocated 5.2 million tons of FCI rice for ethanol production in the current marketing year—up from just 3,000 tons last year and equivalent to nearly 9 percent of global rice exports.

This shift is also easing pressure on alternative ethanol feedstocks such as corn, which saw record-high prices and imports last year. India’s grain-based distilleries, which rotate between corn, rice, and damaged grains, now have a reliable fallback as sugarcane output falters due to drought.

The ethanol strategy not only relieves FCI’s bulging silos but aligns with broader energy security goals. As the world’s third-largest oil importer, India views ethanol blending as a critical step toward reducing fossil fuel dependence. The country hit a 19.8 percent ethanol blend last month—nearly meeting its target a year ahead of schedule.

Still, challenges remain. Ethanol makers say margins are tight unless rice prices fall or ethanol procurement rates rise. With another bumper crop expected in October, the government may need to ramp up rice-to-ethanol conversion further.

The policy underscores how India’s macro strategy is evolving—from food security to resource optimization, blending agriculture with energy resilience.

India Defends Copper Import Curbs.

India’s government is pushing back against industry-led legal challenges to its new quality control measures on copper cathode imports, arguing in court that the regulations are essential for consumer safety and do not restrict foreign competition. The defense comes amid growing scrutiny from trade associations who argue the curbs could lead to monopolistic practices and supply shortages.

In a 160-page legal filing, the Ministry of Mines stated that 10 foreign producers, mostly from Japan, along with Malaysia and Austria, have already secured compliance certification under the new Quality Control Order (QCO). The government asserted that concerns raised by the Bombay Metal Exchange and Bombay Non-Ferrous Metals Association are "misconceived and unfounded," and it urged the court to dismiss the challenge.

From a macroeconomic lens, the dispute highlights India’s increasing reliance on refined copper as it accelerates infrastructure development, renewable energy deployment, and electric vehicle production. With copper demand projected to double by 2030, securing both quality and supply chain resilience has become a strategic priority. Copper was designated a "critical mineral" by India in 2023.

Imports have surged since the 2018 shutdown of Vedanta’s Sterlite Copper smelter, making India the world’s second-largest copper importer. The current import structure is heavily reliant on Japan, followed by Tanzania and Mozambique. The government’s position aims to balance safety standards with supply diversification, and ensure long-term price stability.

With domestic copper output still lagging demand, led by Hindalco, Vedanta, Adani, and Hindustan Copper, the QCO is also part of a broader effort to develop domestic refining capacity and attract foreign investment. While the legal process continues, the case signals India’s intent to exert more regulatory oversight over key resource imports in line with its critical minerals strategy.

Want to sponsor our next newsletter?

Reach out to [email protected] to see your ad here.

Gupshup.

Macro

Equities

Alts

Policy

See you Friday.

Written by Eshaan Chanda & 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.