Good afternoon, friends, and a happy Monday. Today’s issue covers new highs and lows — from investments to energy.

The big story today: Foreign portfolio investors marked a record sell-off in Indian equities in 2025. We break down why foreigners are fleeing from Indian equities even as domestic investors remain bullish. FPI pullback is more about global cycles and valuations rather than a verdict on India’s growth story, Vaqarjaved Khan, a senior market analyst, told us in an exclusive interview.

ALSO- The Indian government is drafting policies that could force smartphone makers to reveal their source code, a move without global precedent. This is the latest battle that big tech firms will have to fight out in the closed rooms of New Delhi’s power corridors.

All of that and more, below.

POLICY — India is escalating a regulatory battle with big tech, proposing new security rules that would force smartphone giants like Apple and Samsung to hand over their proprietary source code to government labs for review, Reuters reports, citing anonymous sources.

The details: Apart from the source code disclosure, among the 83 security standards proposed is a requirement to notify the government before upcoming software updates and to store security logs on the device for a year. The draft rules also propose barring inactive apps from accessing the camera, location, and microphones in the background, as well as providing options to remove pre-installed apps, according to another Reuters report.

Pushback: Manufacturers argue the demands, which include a requirement to store 12 months of security logs locally on the device, are technically impossible and lack global precedent. Industry body MAIT has warned the government that requirements like continuous malware scanning would destroy battery life and hardware performance, while source code disclosure violates global privacy and secrecy policies..

Why it matters: This regulatory move shifts the goalpost from data localization to IP transparency (how the device works). If India succeeds in mandating source code review and government pre-approval for security patches, it sets a template for other security-conscious regulators, including those in the MENA region, to demand similar access to proprietary software.

What’s next: Consultations between tech companies and the government are ongoing, but the Indian government has in the past revoked regulatory proposals, including one to pre-install an undeletable government app on new smartphones, following public backlash and industry pushback.

MANUFACTURING — Reliance Industries has put the brakes on its plans to manufacture lithium-ion battery cells after failing to secure critical Chinese technology, Bloomberg reports, citing anonymous sources. The move underscores a widening reality for India’s green energy transition — while capital is available, the intellectual property in key industries remains locked in Beijing.

What happened: Reliance had been in talks with China’s Xiamen Hithium to license cell technology, but the deal collapsed amid Beijing’s tightening restrictions on overseas tech transfers. Without access to proven Chinese IP, Reliance concluded that domestic manufacturing would be too costly and risky.

Why it matters: This exposes the limits of the “Make in India” push for renewables. Despite government incentives — including a USD 2 bn Production Linked Incentive scheme that Reliance had initially tapped — Indian conglomerates are discovering that they cannot log substantial progress on independent supply chains without cooperation from China. With the world awash in cheap Chinese batteries, the economic logic currently favors buying from the incumbent rather than trying to beat them.

YOU’RE READING EnterpriseAM MENA <> India, your C-suite briefing on the movement of trade, investment, people, and ideas along one of the world’s most exciting corridors. Every Monday, Wednesday, and Friday at 9am UAE, we dive deep into the business, finance, economy, and policy headlines and trendlines that will move markets and set the tone for your day.

Were you forwarded this briefing? Tap or click here to sign up without charge for your owncopy.

Data point

4.8 mn tonnes — This was India’s finished-steel export volume between April and December, a 33% y-o-y increase that made the country a net exporter for the period, Reuters reports, citing provisional government data. Imports were slightly lower at 4.65 mn tonnes, while output reached 117.6 mn tonnes and consumption 119.3 mn tonnes.

Tariff context: India imposed a 12% import tariff on some steel products in December to limit the inflow of cheaper shipments, mainly from China. The levy will taper to 11.5% in 2025 and 11% in 2026, the newswire reports.

Why it matters:The pickup in Indian steel exports comes as infrastructure activity across the GCC remains elevated, with the region’s pre-execution project pipeline — led by construction and transport — estimated at about USD 1.78 tn.

Happening this week

Europe is at the top of India’s diplomatic agenda this week, with senior leaders from Germany, France, and Poland holding meetings with Indian officials in the run-up to the 27 January India-EU summit, Economic Times reports. German Chancellor Friedrich Merz is meeting with Prime Minister Narendra Modi in Ahmedabad today to review cooperation in trade, investment, mobility, defence, and clean energy.

France and Poland: France will dispatch diplomatic adviser Emmanuel Bonne to prepare for President Emmanuel Macron’s February visit, while Polish Foreign Minister Radosław Sikorski will discuss collaboration in electric vehicles, green hydrogen, renewables, mining, and urban infrastructure. These are sectors where Gulf sovereign wealth funds, including Adia, Mubadala, and Saudi Arabia’s PIF, have active investment pipelines in India alongside European institutions.

The big story abroad

Keep a close eye on how markets open this morning: US Federal Reserve Chair Jerome Powell is facing a criminal probe over the renovation of the Fed’s headquarters in Washington, DC, the New York Times reports in an exclusive, citing people briefed on the matter. Investigators are looking into whether he lied about the scope of the renovation, the costs of which had reached USD 2.5 bn this year, up from an initial estimate of USD 1.9 bn.

US President Donald Trump has long attacked Powell and pushed him to drive interest rates lower and has frequently complained about the renovations, including in a famous video (watch, runtime: 3:17) last year during his tour of the HQ.

Powell, in a video statement (watch, runtime: 2:55), claimed the renovation issue was a “pretext” and that the threat of criminal charges is a “consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” explaining that they come against the backdrop of wider threats and pressure from Trump against the Fed over the past months.

IN CONTEXT- This is the sharpest attack on the Fed’s independence in generations. Powell is leaving his post in May, and Trump has said he’s already chosen — but has not announced — the successor, widely expected to be Kevin Hassett, the director of the National Economic Council.

REMEMBER- Powell is leaving his post in May, and Trump has said he’s already chosen his successor, who’s widely expected to be Kevin Hassett, the director of the National Economic Council.

Meanwhile, in Iran, protests have intensified despite an ongoing crackdown by the police, leading to around 500 deaths. Trump has several times said he was ready to come to the “rescue” of Iranians, prompting Iran’s speaker of parliament Mohammad Baqer Ghalibaf to warn the US against any interference. “Let us be clear: in the case of an attack on Iran, the occupied territories [Israel] as well as all US bases and ships will be our legitimate target,” he told parliament.

The US currently has several bases in the Gulf, including in Abu Dhabi, Bahrain, Kuwait, and Qatar, which was targeted last year in retaliation for the US’ attack on Iranian nuclear plants during its brief intervention in Israel’s war against Iran.

^^The must-read on the topic: Iranians defy intensifying crackdown as Trump weighs options

Flights between Iran and the UAE, as well as Iran and Qatar, faced disruptions over the weekend, with around 20 flights between Iran and Dubai facing cancellation, though Emirates and flydubai’s flights seem to have departed on schedule yesterday, the National reports.

PLUS- The US could start easing sanctions on Venezuela as soon as next week as the US looks to begin receiving oil from the country, while India is once again getting into it with tech firms due to its proposal to make smartphone makers share their phones’ source code with the government for security testing.

Circle your calendar

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.