Good morning, it's Tuesday the 27th of January and this is Govindarja Thiraj Broadcasting and streaming weekdays from Mumbai, India's financial capital and we are back from a Republic Day break. The take Indian politicians should trade performance for partnership. New Delhi is on the verge of a historic trade deal with the European Union but its regional leaders are still treating the Swiss as a stage for domestic optics. While the world's stage, William Shakespeare famously wrote in as you'd like it noting that men and women are merely players with their own exits and entrances. At the world economic forum in Tavao Switzerland last week, India's political class appeared to take the bird's observations quite literally. While the global elite gathered in the snow, the truly significant news was happening or is happening elsewhere, at least from India's vantage point. The only agreement capable of shifting global sentiment, the long awaited India EU free trade agreement, is not being signed in a Swiss chalet. Instead, the final paperwork is being concluded in New Delhi India, following European Union President Ursula Von Deer Lane's visit, which also included Monday's Republic Day festivities. Prime Minister Narendra Modi skipped the alpine trek, possibly recognising that the real exit and entrance of capital is currently in the Indian capital. The devours contingent this year was heavy on an Indian chief ministers but light on global breakthrough. Just from states like Maharashtra, Madhya Pradesh and Andhra Pradesh were in attendance, yet they primarily made headlines for signing Memoranda of Understanding with domestic Indian companies, deals that could have been easily or just as easily executed in Mumbai or Bhopal. The presence would have likely gone unnoticed by the international community, if not for the high decibel coverage by Indian media outlets who were omnipresent there. Politicians appeared to give interviews almost exclusively to Indian reporters. One of them claimed these deals involved a fair amount of foreign investment and thus a Davos backdrop. But that is unconvincing. Using an international forum to announce domestic partnerships feels less like a hunt for global capital and more like a taxpayer funded campaign stop. Does this mean India's regional leaders should stay home? Quite the contrary, in a race for global capital, a state chief minister must be at Davos, that they must distinguish between a platform and a stage. Davos remains a networking engine without parallel. For a politician competing not just with other Indian states, but also with other nations, the time spent seeking out collaborations and on-the-run partnerships is invaluable. This year's sessions covering everything from longevity to electric vehicles offered a chance to immerse oneself in the trends of tomorrow. The lesson is not that ministers should avoid Davos, but they should stop treating a global forum as a backdrop for a domestic audience. The last year has been amongst the most tumultuous in recent memory. There were some 65 heads of state and governments in Davos this year, including of course, US President Donald Trump and Canadian leader Mark Karney, who famously signaled a rupture in the traditional world order. Many attendees would have been there to enrich their understanding of this fragmenting global economy and see how the world's most influential political leaders were presenting their cases. Unfortunately by prioritizing performance over partnership India's regional leaders reduced a potentially productive and useful summit to a fast. There are plenty of stages in India for political theatre. When on the global stage, however the world expects a different kind of player, one interested in the business of the future, not just the headlines of the morning. And that brings us to the top stories and themes will the markets get the breather they want from the India EU FTA or Free Trade Agreement. Gold prices now cross $5,100 as the relentless rise continues. High tax changes in the budget may be unlikely and refining major BPCL safety push for consumers. This is a call report with Gowin Raj at Iraj. Hello Brussels, see you later Washington. The India European Union Free Trade Agreement has been touted as the mother of all deals by none other than EU President Ursula Von Der Leon herself. Presumably it's also going to be impactful for either of both parties and the Europeans are pulling out all stops to not just sign the deal but also make a good splash of it as well, including by turning up in Delhi to sign and of course attend as they did India's annual Republic Day parade as special guests. Could all of this be the break the stock markets are looking for partly yes but the cloud of the United States 50% tariff which signifies a breakdown in diplomatic relations as well is still hanging quite visibly over India. Nevertheless, the deal should provide some breathing space to the markets who've been of course taking a fair bit of hammering. Of course US Treasury Secretary Scott Besson said last week that they might be a pathway to reduction on some tariffs on India because India has cut back on oil imports from Russia which was the ostensible reason for those 25% tariffs in any case. But we will have to see whether that pathway converts into anything concrete. Meanwhile there could be big wins on account of the India EU FDA. The core report believes that what will be good for the consumer will eventually be good for the economy since we've been protectionist for too long and only got worse in recent years. A Reuters report says that India may slash tariffs on cars imported from the European Union to 40% from as high as 110% which could affect cars with an import price of more than 15,000 euros or about 17,700 dollars or close to 18,000 dollars. This will be further lowered to 10% over time according to that report which means automakers like Volkswagen, Mercedes, Benz and BMW could be able to export their vehicles from elsewhere more cheaply. That's assuming it's not cheaper to manufacture in India which might be the case at least in some cases. But more broadly the agreement would help Indian exports of goods like textiles and jewelry which have been hit by that 50% US tariffs since late August and more on that deal coming up. Meanwhile, the business standard is reporting that Canadian Prime Minister Mark Karni could visit India in the first week of March and the two sides are looking at formally starting their negotiations on a free trade deal with both countries having resolved to double bilateral trade to 50 billion dollars by 2030. They could also sign agreements on AI, critical minerals, energy and a 10 year Canadian 2.8 billion dollar Uranium supply deal during that visit. So the markets do need something to break out of their present stupeore which is also by the way induced by weaker earnings as we've been discussing. Just to look back at the numbers, the benchmark indices that the Sensex and Nifty have fallen over 4% this month, thanks also to relentless foreign fund outflows which is over 3.5 billion dollars and which in turn has been pushed by a weak rupee fresh tariff concerns and of course geopolitical risks. This month the Sensex has fallen 3,680 points or 4.3% and the Nifty has fallen about 1,080 points or about 4.13% so both over 4%. On Friday the Sensex was down 769 points to 81,537 and the Nifty was also down about 241 points to 25,048. Remember Friday was supposed to be the day the markets were going to stabilize but they started somewhat strong but then collapsed. The broader markets were also down on Friday with the Nifty Mitcap 100 and Nifty small cap 100 indices closing about 1.8 and 1.9% lower. Meanwhile gold prices have crossed 5,000 dollars or 5,100 dollars in ounce which is quite staggering given that some brokerages had said this was the target for them in 2026 or the late 2026, for instance, Goldman Sachs had projected gold to be at $4,900 in December 2026. Of course Goldman Sachs has revised their target now to $5,400 but the way things are going which is gold at almost $5,100 right now you never know how soon we might hit it and you would know who to thank for it. Meanwhile other analysts are punting that gold will climb now to $6,000 per ounce. It's already up 17% this year and it was up 64% in 2025. Among other factors which are keeping gold prices up are central bank buying which was also a big driver in 2025 as they de-dollar rise or switch from dollars to gold for obvious geopolitical reasons. Countries like China, India amongst the many who are buying gold also they have been a lot of inflows into gold backed exchange traded funds including of course in India. The Reuters report says gold ETF saw record inflows in 2025 led by North American funds and this was source to the world gold council data. According to world gold council data quoted by Reuters gold ETF saw record inflows in 2025 led by North American funds with annual inflows rising to $89 billion. And the rupee fell to a record loan Friday posted its steepest weekly decline in six months thanks to sustained foreign outflows and hedging by importers. It came very close to 92 rupees to a dollar on Friday and fell to a low of 91 rupees 96 per se on Friday according to Reuters. Moreover the rupees under performance this week was more stark given that most Asian currencies managed to rise against a weakening dollar index amidst US President Donald Trump be showing threats over Greenland and then walking them back according to the Reuters report. Now the rupee has depreciated about 7% against the dollar in this year that's in the current financial year 2526 and expected to trade around 92 rupees 50 per se per dollar by the end of March according to a poll run by business standard and market participants attributed the shop weakening of the rupee to a combination of factors including of course that trade deal with the United States. So the question of course as we move on is whether the India EU trade deal will flip some of this or buffer some of this. I reached out to Chakri Lokapriya chief investment officer equities at LGT wealth management and I began by getting a temperature check from him on what was happening in the markets and his outlook particularly given the weaker corporate earnings. As we step into this week I think one of the important things to keep in mind is the rupee has continued to weaken and it has reached an all time low and second the foreign institutional investors continue to sell and the selling has reached close to about 3 billion just in the calendar so far topping the 18.5 billion that they sold in 2025. So it goes two ways from here if there is a tariff resolution fairly quickly you know this flows will flip around and turn to be positive which can take the market much higher. The longer the uncertainty continues the longer the markets would be rage bar. And one of the other things that was seen as a buffer of sorts was better third quarter results and tending towards even sort of better showing in the quarter ahead. Now that has not happened or at least from the sample set that we are seeing right now what is in your mind the reason for that. You know going into the quarter as we existed 2025 calendar year even there was the expectation that you know earnings for corporate India will start turning up and that the earnings growth which ranged last year from around the anyway between 6 to 8% would accelerate. Going for the current trends that trend has not yet occurred companies are reporting and guiding for about that same 6 to 8% kind of a growth. I guess companies are a bit hesitant you know waiting and watching the US India tariff resolution before they come it for the capital expansion plans and I think that is weighing on corporate India. And how are you seeing overall sentiment in the market as we go into 2026 directly we've also got a budget coming up and I know there's nothing budget specific right now on the horizon. Are there any trends that you're seeing in terms of capital flows or other small or large investor reactions. You know if you recall the last year's budget was more about consumer there was an income tax cut followed up by a GST rate cut and both of it benefited the consumer and the capital expenditures of the country as a result of remain more or less in line with the 11 lakh pro. So the going into this budget given that you know last year's consumer was properly at risk now the focus of the government is likely to hopefully will shift towards increase capital in expenditures and increase in infrastructure spend defense railways. And I think that is the expectation and many of these stocks in these industrial sectors have not conducted well for the past year and maybe you know once the budget will give us new clues and what are the silver linings that you're seeing in this current market environment if so. You know the current silver lining is basically industrials as a segment while it has already underperformed so the valuations are very much in their favor. So as and when the tide turns you know there presents a significant object on the other hand domestic sectors like financial services have remained very resilient their corporate credit growth remains at about 12-13% their value sheets are strong their NP is a low. So they're an ability to fund corporate India's growth plans as and when that happens. And when you say financials do you mean banks and non banks indeed you know across board whether it's public banks private banks NBFCs housing finance companies across port financial services companies are well placed and the fundamentals are very strong in the valuations all right in terms of asset classes we've been talking about equities now the elephant in the room is clearly gold and silver or two elephants in the room and that's clearly playing on a lot of investor sentiment because they can see that gold is up almost 11% or more than 11% just this year silver is up more than 35% or close to that how are investors looking at it and what are you advising them. Gold and silver as asset classes I guess need to be part of everybody's asset allocation as an approach and if you look at the current asset allocation into gold silver is relatively near of course gold still runs to be extremely low on a worldwide standard basis if you look at the U.S. as a country you know their allocation by their consumers to gold is less than 1% the rest of it goes into housing stock market and other things so and then central banks are also beginning to buy gold and so as a result of that I think you know as an asset class it's worth having a fairly decent chunk of one's portfolio given the fact that they've also run up quite a lot right and you feel silver is not in the same basket or is it you know silver is a relatively smaller asset class and increasingly what is happening with the advent of new technology is new electric vehicles a new need for silver and industrial use of silver has come about whereas production of silver has not kept up with the new found demand so whether this new found demand will be a secular or a cyclical thing is still too early to say but right now there is a big supply demand mismatch and therefore that points in favor of silver prices right last question so we've got a union budget coming up and of course a lot of it is going to be about tax and other announcements to do with capital expenditure and maybe others as well what's your sense is there something as the financial markets would look forward to or could benefit if they got any wish list from your side you know I think the most important aspect would be the government's focus and effort on infrastructure as a space and even if there is even a marginal increase over the previous year that would be regarded very night possibly by the market and it's also essential for long term growth of the country on the other hand you know India faces one of the highest capital market taxes anywhere in the world whether it's a CT and various other government taxes and if there is any kind of a reduction but I doubt there will be because there is a chatter on that if there is then it would be a huge positive right that's a good note to end on checkery thank you so much for joining me thank you the PACT the India European Union free trade agreement could impact about 136 billion dollars of trade could benefit both sides as the two are not rivals but partners operating on different rungs of the value chain according to a note from the global trade research initiative in Delhi India imports labor intensive downstream and processing base goods the European Union supplies capital goods advanced technology and industrial inputs this complementarity explains why in India you free trade agreements could lower costs and expand trade rather than threaten domestic industry says that report tariff cuts would primarily reduce input costs deep in value chain integration and increase volumes classic FDA gains that benefit producers and consumers on both sides to break it down and this is a little interesting and useful though a lot of detail India exports to the European Union smart phones garments footwear tires pharmaceuticals auto parts refine fuels and cut diamonds whereas EU exports high-end machinery aircraft core electronic components chemicals quality medical devices and metals scrap interestingly enough and they feed obviously Indian industry and consumers India's 60 billion dollars of goods imports in the fiscal year 24 25 were mostly capital technology and input intensive products which also includes aircraft and India's roughly 76 billion dollars of exports are downstream and labor intensive by the way refined petroleum products are at about 15 billion dollars and that includes diesel and aviation turbine fuel electronics at about 11 billion dollars including smart phones and for those of you who are interested in terms of alcohol trade India imported wines worth about 8 million dollars and spirits worth about 88 million dollars from Europe in the last year and that shows where the dominance lies and where a reduction in duties could impact of course reduction in duties is not an easy thing remember that domestic industry pays local taxes and therefore is equalized with foreign imports so domestic manufacturers like in this case of spirits and alcohol will also seek exemptions from local taxes the IEW segment oil prices were higher on Monday after climbing more than 2% in previous sessions thanks to output disruptions in major US crude producing regions because of winter storms and also tensions between the US and Iran which all lifted prices according to writers which added that rent crude futures were at about 65 dollars 95 cents so about 66 dollars a barrel on Monday back home when we think of energy companies we don't always think of the cooking gas that refined these like BPCL HBCL and IOC among others distributed millions of households across India the cooking gas cylinder which travels many many miles before it reaches your destination or your home and then back to its refilling plant must remain secure and safe at all times defining major BPCL says the company is launching a new safety campaign backed by several on-ground changes even as company chairman Sanjay Khanda talks about the last year at BPCL in this exclusive interview ahead of the India Energy Week with the core report I can share the few key development of the year 2025 let's talk about upstream so we went in the business for long time and two of our mega project at Brazil and Mozambique they were stuck up for various reasons but in 2025 November we got good news that Brazil is moving ahead now and FPS so which is the requirement for processing the crude that tender has been awarded and it is at the final stage and similarly in the Mozambique from February 2021 forced measure has halted all the activities and again in November 2025 it was removed and action has begun there so the way it is going I'm sure in next couple of years we'll be having product on those highly ambitious upstream project of BPCL then coming to the refinery I think refinery had done pretty well we continue to be the market leader in the capacity utilization or GRM and credit goes to our international trade team refinery team and marketing team together because it is such a well oil system is there working together in tandem for the maximization of value for the company for number sake we had utilized almost 115 percent capacity utilization was there which was highest in the industry apart from that on the energy reduction front the refinery have put a lot of effort coming to marketing I must say that it was one of the best year for the marketing where the volume was all time high but more than that the several initiative taken by each and every aspect of marketing and we are seeing the great result let me start with a detail in the field of digitalization customer convenience and trust I think they had put a lot of effort silent voices was another initiative where they have rolled people with disability they were appointed and the number is rising steadily and today as I'm talking to you more than 1200 people are working at our retail outlet and they're serving the customer and the feedback from the customer is fantastic similarly our LPG business I think customer safety was always top priority for BPCL and keeping that in mind our LPG team had taken initiative of called zero cadam that is basically thumping the table and telling that come what may that no damage cylinder will reach the customer premise it is end to end from the bottling plant to the distributor issuing every safety aspect of the cylinder so that customer get value of it and there is no accident or incident because of cylinder from Bharat Petroleum so that was a big achievement and we are having 56 bottling plant and I'm proud to say that each and every bottling plant as of now is certified and which will be sureing that come what may because of any trouble at the cylinder they will not be any accident or incident will be there and the materials will also change could they change I mean because I'm used to seeing old hot-rolled coil steel cylinders that also being talked about and the change of material of construction is also we are planning to do the pilot soon that is another aspect of it then giving the facility so that customer can get the cylinder he can collect the cylinder at any point of time at its convenience from LPG dispenser the customer can take their self as per their convenience they can go and collect that also pilot we are operating it so these were the few things for LPG and coming to the lube I think the team has again launched a MAC lubricant where along with the mechanic they have set up the shop where end-to-end facilities provided to the customer and the quality of the lube oil is ensured in the field of aviation they have taken the digital initiative where end-to-end quality and quantity will be ensured so all in all it was a great year even for the gas business which is one of the our future big-bet I must say that even though per say the business 2025 was a tough year for the gas but I am very happy to say that gas team has this period is utilized by them to explore the various option be in the front of the procurement or maybe the alternate uses of gases so all in all marketing had done a fantastic job for 2025 and this segment was supported by India Energy Week 2026 to be held from January 27 to January 30, 2026 in Goa you can register for the same using the link in the show notes the budget ahead of the union budget 2026 to be presented on the 1st of february that's later this week or on sunday a survey conducted by Grand Thornton Bharath on social media of over 200 respondents has highlighted a strong preference for predictability simplification and effective implementation with central government capital expenditure now more than three times its 2019-20 levels businesses are assessing how the budget will sustain momentum while enabling private investment the survey says also pointing to a clear shift from headline announcements to policy direction continuity and execution the survey says companies making long-term decisions on capacity supply chains and decarbonization are seeking stable policy frameworks practical incentives and smoother execution rather than incremental or short-term measures on tax businesses are focused on minimizing disruption during the transition to the new income tax act I reached out to Ajay Roti Bangalore based CEO and founder of tax compass and I began by asking him how he was seeing the likely announcements on the direct tax run and also whether he felt that long-term capital gains could be lowered to improve market sentiment I think when taxes I personally am not expecting too many changes this time firstly on the overall being any case indirect taxes is out of the purview of the FM and budget now with GST and there was also done a lot of rationalization on the GSTD sinking on income tax per se you know two things we have to remember one on personal tax side there was tremendous changes in rationalization done last year so they have just increased the limits so I don't think they'll do anything there on larger directionally on direct taxes you know we are at the cusp there is a new income tax act which has been passed which is enacted comes into force on 1st April 26th and the old act which is what is the current act running will be repealed on that day so you know when the FM is presenting the budget on February will be at a unique place where the new law is yet to come into force on that day and the old law which is in force will be actually going away in about two months so I don't think there will be too much tweaking on that also because on direct taxes you know one like I said there's been tremendous changes last year and second they've just done this media exercise of revising the law and the 2025 income tax act is expected to be a more stable regime so they may not do too much tinkering again before it comes into force there could be some small changes which you know it was a elaborate exercise before the parliamentary committee there was some interesting suggestions that people made and at that time the finance ministry had said you know we didn't want to make any policy changes while enacting the new law that was a reason given though they thought that those changes were important some of those may come in but I don't think there'll be too many changes on the tax side I will be surprised if there are too many things in my view I am expecting from a pure tax perspective or non event on 1st February and on long term capital gains going yes there's a lot of bus I again personally don't think there'll be any change on the long term capital gains side though this is not something that will be very famous and well like everybody where long term capital gains rates are not too high at this point and they were changed last year after much thought and I don't think there's a need for them to be changing it the long term capital gains and in general capital gains you know rate rationalization carried out last year on multiple things were all well thought through they were not flippant decision for them to be going back in 12 months and I don't think the FM's decision on what the tax rates have to be will be dependent by where the market is and if it's tanked and therefore then usually some support I don't think any of that will happen right and if I can sort of supplement that you know there's been a lot of foreign portfolio investment that's been flowing out and there has been a slow down and foreign direct investment in now obviously tax is not the reason things come in or go out but do you see tax being an instrument of I mean instrument to help make things a little more attractive or lucrative at this point particularly for overseas investors I really don't think so because I don't think taxes such a important factor in some of these decisions you know even if the tax is a attractive rate and a proposition but the underlying assets and the underlying for example if it's equity investment the underlying business cash flow etc has to be much better it's not just about taxes if you're looking at tax on debt and sovereign bonds etc the government has to be more stable in things like that those become very important not one or two percent five percent ten percent of tax rates the reduction in FBI there are multiple other global reasons money moving out is also because of the number of listings that are happening and the number of foreign investors who's getting exit in those IPOs and OFS to offer for sale etc I think there are too many moving pieces there but will tax be a sweetener in that sense for some immediate capital to move etc it could be you know we've heard multiple global fund managers leaders of large investment houses etc making comments about how attractive India as a market is because of domestic consumption multiple other things yes you're up a struggling I think those are more important factors than purely tax which is why I again believe that some of these may not really influence too much on the tax policy on capital gains taxation right if I may touch upon the indirect side so some of the expectations are obviously around tariffs and there are at least two free trade agreements on the verge of being signed the most immediate obviously is India EU which might get signed as soon as today and the US which is still hanging so do you think that we could be doing something on tariffs we should be doing and also what could be the policy support for let's say small and medium enterprises were affected that is interesting and an important aspect in my view we should be doing something for tariff we've done a few things there been some changes on you know the time limit for realization of export receivables is a small announcement made but have a high impact RBI extended the period for which you can collect money advances etc I think there'll be more of those kind of things which could be making it you know both ease of doing business making capital cheaper for some of the exporters basically to sort of you know cushion provide them a cushion or a headroom to bear some of the tariff impact now there is again enough and more discussion on who bears the tariff there was a study which was done in the US when Trump introduced tariff the first time around in his first round of administration and the study actually said most of it is born actually in all cases by the consumers in the country of import but I have seen businesses actually where probably the tariff impact is being split and the midget and some of it is actually being born by the Indian exporters so therefore that I expect some announcements there there could be something for the MSME especially the impacted sector textile you know seafood shrimp farming these kind of things there could be some fiscal incentives there could be certain things on duties and reduction etc on the inputs if possible on custom duty per se you know like you rightly said today we should be hearing about the U FDA and that's going to be a big one you know and US wherever it ends and you know how certain it will be etc we'll have to see but these two cover shoes aspect of the trade that we do so once those are covered there will be preferential rates new piece etc given I don't think again there'll be significant custom duty entering on some of the other things and remember after GSTR customs has actually become quite simple we don't have those egrades for everything so there could be some because of the tariff there will be some changes in the custom side but I would more keep my eyes open for what will be there on the policy side larger certain fiscal incentive something else being given for the exporters etc. right Ajay thank you so much for joining me thank you this finance segment is presented by India Finance and Innovation Forum 2026 happening on february 23rd to 25th at the World Trade Center cuff parade in Mumbai you can find the link below to register in the show notes that was the core report with me govindraj ethi raj do stay connected with more of our coverage at the core you can check out our website or sign up to our newsletter for our exclusive stories one in-depth feature a day on www.thecore.in do also track us on LinkedIn where we usually post synopsis or extracts of our top stories and interviews we would love your feedback on how we can make business more interesting and relevant including of course India's vibrant manufacturing sector so write to us at
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