📰The Supreme Court Just Closed Investing Tax Loopholes | Daily India Briefing

India’s Supreme Court dealt a significant tax blow to Tiger Global and strengthened domestic authorities’ power by increasing tax powers. Today, we explain more.

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Macro

• Indian exports rose 1.9 percent y-o-y to $38.5 billion (₹3.5 trillion) in December. Growth was led from other North American markets and the Middle East. Electronics, pharmaceuticals, and engineered products fared well; both electronics and pharma have managed to stay away from Trump’s 50 percent tariffs. 

• Expect Russian cargoes to float at sea with Indian import numbers staying steady or lowering.At least 12 tankers have been idled outside of Oman, some since December. Levels will likely stay flat at 1.2 million barrels per day.

Equities

• 33 percent of Tesla's initial stock to sell in India is sitting idle, prompting dealer discounts. The company is offering $2,200 (₹200,000) off of several models due to sluggish demand since each Tesla faces a 110 percent levy to be sold in the country. 

• Goldman (4th in India's ECM league tables) expects share sales to hit new records in 2026.The country had $22 billion (₹2 trillion) in new issuance last year but a rising GDP and more international subsidiaries launching in India should propel 2026 higher.

Alts

• A potential Netflix-Warner Bros deal would increase streaming costs to at least $5.50 (₹499). Ambani has offered Warner Bros content on JioHotstar at a limited price of just $2 (₹180) per month. Fracturing that platform would lead to higher costs for both. 

• Lighthouse Canton, a Singaporean wealth management firm, is expanding its operations in India with new hires. It poached 10 new wealth hires from Deutsche Bank with the sell side firm gearing to sell its Indian retail and wealth businesses. The company plans to double headcount and grow AUM to $10 billion (₹900 billion) by 2027.   

• Japan's JFE Steel is investing $2 billion (₹180 billion) with JSW as a partner.It expects India’s steel industry to outgrow China’s. The country wants to hit 300 million tons of production by 2030 and JFE wants to work with JSW to provide at least 15 million tons of that. It expects the ‘Make-in-India’ policy to protect from cheap Chinese imports.

Policy

• Modi's campaign in Mumbai was mostly focused on identity politics and fixing micro issues. While $30 billion (₹2.7 trillion) projects are often approved, smaller ones like fixing pollution and infrastructure management are being ignored. Modi campaigned on fixing those promises while appealing to a Hindu, nationalist crowd. 

• Indian foreign minister Jaishankar and his counterpart Rubio spoke as trade talks stalled.Both expressed interest in shared economic, defense, and nuclear cooperation but nothing else of note has leaked.

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The Supreme Court Just Closed Investing Tax Loopholes

India’s Supreme Court dealt a significant tax blow to Tiger Global and strengthened domestic authorities’ power by increasing tax powers. It ruled that Tiger’s capital gains from the 2018 sale of Flipkart shares to Walmart are taxable under Indian law. A previous Delhi High Court ruling had allowed the hedge fund to claim protection under the India-Mauritius Treaty. Tiger first invested $9 million (₹810 million) which scaled to $1 billion (₹90 billion) for 20 percent of the firm. It sold a 15 percent stake for billions to Walmart. Not only does Tiger face a billion dollar bill, but foreign capital just got an excuse to avoid investing in India.

At the heart of the dispute is the use of Mauritius-based entities, long favored by global investors for routing investments into India due to favorable treaty provisions. Tax officials argued that Tiger Global structured its Flipkart investment through Mauritius primarily to avoid paying capital gains tax in India. The Supreme Court agreed, holding that Tiger’s attempt to seek tax exemptions in both jurisdictions ran counter to the intent of double taxation avoidance agreements, which are designed to prevent being taxed twice, not to enable being taxed nowhere.

The ruling has implications well beyond one high-profile deal. Tiger’s exit, which began with a partial sale to SoftBank in 2017 and culminated in the Walmart transaction a year later, was emblematic of the kind of offshore exits that helped fuel India’s startup boom. By bringing that transaction squarely within the domestic tax net, the court has signaled a tougher stance on treaty shopping.

Legal experts warn that the judgment could embolden tax authorities to revisit other offshore exits structured through so-called safe haven jurisdictions. While this may be welcomed by policymakers seeking to curb aggressive tax planning, it risks reviving investor concerns about retrospective scrutiny and regulatory uncertainty. For foreign funds, the decision complicates exit planning at a time when clarity and predictability are already in short supply.

See you tomorrow.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

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