📰Strong Year Ahead | Daily India Briefing

A top Modi advisor projects that 2027 will be especially strong for India’s economy.

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Macro

• Modi provides a $5 billion (₹445 billion) relief package for exporters through loan programs. There are $2.3 billion (₹204.7 billion) worth of collateral free loans and the rest is in a six-year loan program. 

• ​​Citigroup sees the rupee rebounding to 87 based on a US FTA.While news of a trade deal is widespread, the actual reaction should propel the rupee upwards. Citi is expressing the trade with 3 month options bullish on the rupee.

Equities

• Singapore Air blames Air India for its profit dip due to SIA's 25 percent stake in Air India. Net income fell 82 percent to $40 million (₹3.6 billion) while operating profit (stripping out minority investments) rose 23 percent. Passengers flown was also the highest it's ever been, which provides credence to the idea that Air India has been lagging, especially after its fatal crash this year.

• SBI Funds, India's largest asset manager, is mulling a $1.2 billion (₹106.8 billion) IPO. The firm is likely valued at $12 billion (₹1.1 trillion); talks are in preliminary stages as of yet. 

• New age companies like Swiggy and Ola are underperforming legacy companies and the Nifty.A custom index of new companies has dropped 6 percent over the last month while the broader index rose 2 percent. Part of this is because new companies prioritize growth and R&D versus profits. That being said, new tech companies are facing stronger scrutiny now than ever before.

Alts

• Blackstone and Softbank are in talks for Indian cloud startup Neysa. The plans to buy minority/majority stakes values the firm at $300 million (₹26.7 billion). Neysa focuses on cloud-computing infrastructure to run AI models on demand. 

• India approved a change to royalty rates for mineral mining, making it a percent of amount mined not a fixed amount. This should help bidders submit rational bids in the market to help secure more critical minerals within the country. This also should attract more investments into the country, especially after Modi added another $1.9 billion (₹169.1 billion) subsidy program.

• Blackstone's AirTrunk (an Australian datacenter operator) will build out more in India.CEO Robin Khuda sees India as its next target due to the young, online population.

Policy

• Pakistani General Munir gets lifelong immunity to further strengthen his power over the country. Recent changes continue to erode civilian authority in the nation and deliver more towards the military. Currently, Munir has final say on diplomatic and internal policy making. 

• Indian politicians are stuck on whether to blame Pakistan or not for blasts. Initiating the blame game could lead to another skirmish while damaging relations with the US further. A sign that Modi could show restraint is the victory in Bihar. Winning without a nationalist conflict means that his image has persevered amid the crises occurring around and in India right now. 

• India says the New Delhi bombs were a terrorist attack though investigations are on local groups. The involvement of a home grown module is adding to pressure to find the perpetrators. Given April’s attack in Kashmir which prompted a battle with Pakistan, finding the source is important to limit chances of another war. 

• The US sanctioned firms across Europe and Asia accused of supporting Iran's weapons program.Specific details are still being released, but the brunt of firms and persons sanctioned were in the Middle East and China.

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Top Modi Advisor Sees a Strong Year Ahead for India

Neelkanth Mishra, chief economist at Axis Bank and member of Modi’s Economic Advisory Council, recently spoke to Bloomberg to speak about the tailwinds for India in 2026. He sees a cyclical recovery not powered by luck such as a removal of US tariffs but instead due to a decisive reversal in monetary and fiscal tightening. End of the hard fiscal-tightening phase with cuts to GST is driving a cyclical recovery in the Indian economy. Mishra forecasts GDP growth above 7 percent, the 10-year yield slipping below 6 percent next year, the rupee sliding to 90, and an explosive bull market. 

For Mishra, the turning point lies in how cheap money has become. In a non-crisis, India has not seen the cost of both debt and equity coming down to these levels. Keep in mind, rates are still elevated at 5.50 percent. Indian entrepreneurs are still seeing more opportunity than ever which should drive investment more than any trade deal or tariff negotiation. This is evident in the number of international IPOs occurring and constant investment plans being signed with American companies amid the 50 percent tariff regime. 

On the US-China front, Mishra urges perspective. The noise around Trump’s tariffs, he says, obscures the fact that their actual economic impact on India is “very, very, very small.” On the other hand, he envisions the Chinese relationship to be complicated but resourceful for both, similar to China and Japan. He sees Chinese technology as being way ahead of the US, meaning that India needs to partner with China over the US. 

Mishra also sees opportunity, not threat, in the current standoff with the US. He specifically brought up investments in South India with Google committing $15 billion (₹1.3 trillion) in Andhra Pradesh. He also had a message for policymakers about opening up. He wants to see India lowering import barriers, embracing competition, and letting farmers adopt GMO crops if it allows for GMO imports. 

The few challenges he sees are bubbles forming as credit growth continues to accelerate. Most bubbles form as asset values stretch due to leverage, not just a bull market. Fiscal consolidation also requires discipline with the government targeting lower debt levels by FY27. Finally, there is a risk of competitive debasement where currency volatility is an issue.

The strong point includes the fundamentals and urban infrastructure. Mishra sees India moving from a $4 trillion (₹356 trillion) economy to a $20 trillion (₹1.8 quadrillion) economy with $15 trillion (₹1.3 quadrillion) coming from domestic demand from housing, cities, and consumption. Additionally, the growth of balance-of-payments, buoyant capital markets, and venture capital returning there is steady resilience.

See you tomorrow.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

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