Trump, Modi tariff agreement with caveats

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WHAT WE’RE TRACKING TODAY

THIS AFTERNOON: ENBD’s RBL Bank acquisition faces regulatory review; Qatar rolls out 10-year residency program; Advent to buy 14.3% stake in ABHFL

Good afternoon, readers. Today’s issue covers updates across trade and investments, with the India-US trade agreement leading the pack.

Nine months after Donald Trump’s tariff shock to India, the US administration has agreed to reduce tariffs on Indian imports to 18% from a punitive rate of 50%. Like all things Trump, this has a cost for New Delhi. India is expected to cut Russian oil imports and increase trade with the US to USD 500 bn while removing tariff and non-tariff barriers on their exports.

The US agreement comes against the backdrop of growing trade with China, which has reached a record USD 155 bn. For MENA oil producers, sustained US pressure on Russian crude will open fresh avenues in India.

Plus: Fractal Analytics is gearing up for India’s first AI listing, targeting a valuation of USD 1.6 bn.

Watch this space

M&A — Emirates NBD’s bid to take a 60% majority stake in India’s RBL Bank for USD 3 bn hit a regulatory speed bump as the transaction triggered change-of-control reviews across the country’s capital markets infrastructure, according to a company statement. The requirement for fresh nods from the Securities and Exchange Board of India and the depositories shows that cross-border banking M&A in the India-MENA corridor is rarely a straight line. Just last month, ENBD became the first Middle Eastern investment bank to secure a category I merchant banking license from India’s securities regulator.

ICYMI- ENBD is acquiring majority control directly from the bank via a preferential issue for roughly INR 268.5 bn. Under Indian law, taking a majority stake triggers a mandatory open offer to buy up to an additional 26% from public shareholders at INR 280 per share. ENBD will cap its total holding at 74% to comply with India’s foreign ownership limits for private banks.

IMMIGRATION — Qatar will introduce a 10-year residency program for entrepreneurs and senior executives as it steps up efforts to attract skilled professionals and investors, Prime Minister Mohammed bin Abdulrahman Al Thani said. The move forms part of Qatar’s broader push to support business growth and economic diversification, following similar long-term residency initiatives introduced in other Gulf states.

Funding backdrop: Separately, state investor Qatar Investment Authority (QIA) will expand its venture capital fund-of-funds program by USD 2 bn — taking total commitments to USD 3 bn — to attract global venture capital firms and support the domestic entrepreneurship ecosystem. Growing numbers of Indian founders, senior executives, and India-focused venture firms operate from Gulf hubs and raise capital from regional investors.

The move comes as Indian startups are increasingly using the GCC — led by the UAE and Saudi Arabia — as an initial overseas expansion and fundraising base, supported by access to regional capital pools, government-backed entry programs, and stronger near-term revenue prospects in the Gulf markets.

M&A— Global private equity firm Advent International acquired a 14.3% stake in India’s Aditya Birla Housing Finance (ABHFL) for INR 27.5 bn (USD 304.1 mn), according to a company statement. Parent firm Aditya Birla Capital will retain an 85.7% stake in the housing finance unit after the transaction. The investment will be made through a primary capital infusion by an Advent entity and is subject to shareholder and regulatory approvals.

IN CONTEXT- The transaction values ABHFL at INR 192.5 bn, and the lender reported INR 422.04 bn in assets under management as of end-December. Advent was an investor in Aditya Birla Capital between 2020 and 2025.

A familiar GCC ground: Gulf sovereign and institutional investors have been active in India’s financial services sector in recent years, backing banks, insurers, and lending platforms. Recent investments by funds including Emirates NBD, Abu Dhabi’s Mubadala, and Saudi Arabia’s Public Investment Fund in Indian and India-linked financial services and lending platforms underline continued Gulf interest in the sector.

Bilateral trade between India and China reached a record USD 155.6 bn in 2025, growing 12% y-o-y, Times of India reports, citing Chinese ambassador to India Xu Feihong. Indian exports grew by 9.7%, but the surge was largely driven by Chinese inputs fueling India’s manufacturing engine.

Why this matters: The record confirms that India’s industrial sectors, particularly electronics, pharma, and renewables, remain structurally tied to Chinese supply chains. The growth suggests an easing of the informal investment freeze that followed a military clash in 2020.

Diplomatic thaw + multilateral alignment: Ties gained momentum after a meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping in Tianjin in August last year, Xu said, calling it a reset in relations. Beijing supports India’s BRICS presidency and is willing to enhance coordination on the development priorities of the global south, he added.

In context: We recently covered China arm twisting New Delhi to ease FDI restrictions, making it a condition for lifting export curbs on Indian rare earth minerals and auto component manufacturers.

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Data point

INR 363.3 bn (USD 3.97 bn) — That’s the amount foreign portfolio investors (FPIs) pulled out from Indian equities in January, extending a sustained selling streak amid global uncertainty, as per data from the National Securities Depository Limited.

The outflow follows a record USD 18.9 bn exit in 2025, driven by currency volatility, trade tensions, and valuation concerns. Looking ahead, a proposed hike in the securities transaction tax on futures and options in India’s national budget could further weigh on near-term FPI participation, especially among derivative-focused global funds.

Happening today

The Reserve Bank of India’s (RBI) three-day meeting of the Monetary Policy Committee begins today, with the policy decision due on Friday, Hindu Businessline reports. The deliberations come after a cumulative 125 basis point cut in the repo rate since February last year, as the central bank sought to support growth while anchoring inflation.

Expectations, in context: At its previous meeting in December, the RBI reduced the repo rate by 25 basis points to 5.25% and raised its growth forecast for FY26 to 7.3%. The RBI is widely expected to keep the unchanged repo rate at 5.25%, putting an end to the aggressive easing cycle of 2025. Inflation has remained benign, with Consumer Price Index inflation at 1.33% y-o-y in December 2025, staying below the RBI’s 4% target for an 11th straight month. Markets are watching for cues on the RBI’s next policy steps.

The big story abroad

US downs Iranian drone as negotiations continue: The simmering US-Iran situation saw a minor flare up after US forces shot down an Iranian drone approaching an aircraft carrier in the Arabian Sea yesterday. US military officials claim the strike was in self defense, as the drone approached the USS Abraham Lincoln aggressively. Diplomatic talks between Washington and Tehran, however, are still ongoing, US President Donald Trump confirmed.

The skirmish rattled oil markets, sending Brent crude up 1.6% to USD 68 a barrel. With markets anticipating escalations, Brent volatility has reached a peak since the last regional conflict.

MEANWHILE, IN MARKET NEWS- Analytics and software stocks fell sharply after Anthropic debuted AI tools that automate legal and analytical work, dragging down tech-heavy Nasdaq by 1.4% and S&P 500 by 0.8%. Analytics heavyweights Gartner and S&P Global saw 21% and 11% drops, respectively. Investors warned that the selloff could spill over to AI hyperscalers, since software companies are among their largest customers.

PLUS- Walmart made history as the first retailer to cross the USD 1 tn valuation mark yesterday, after rising roughly 26% in the past 12 months.

Circle your calendar

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

India, US strike tariff agreement tied to end of Russian oil purchases and increasing US imports

Following nine months of talks, India has secured a breakthrough trade agreement with Washington DC, slashing punitive tariffs to 18% from 50% in exchange for a total halt of Russian oil purchases and ramping up imports from the US, President Trump said on Truth Social. India is expected to “move forward to reduce their tariffs and non tariff barriers against the United States, to ZERO,” Trump said.

The announcement, widely welcomed by businesses, brought a cheer to the Indian markets with benchmark indices rising up to 2.5% yesterday. The INR gained 1.2%, rising to 90.27 to the USD from the record low of 92. “This move effectively erases the ‘underwhelming’ budget sentiment and targets a swift recovery toward psychological resistance levels,” Swiss wealth management firm Julius Baer said in a note.

Russia oil halt: India has committed to ending purchases of Russian crude and will instead expand oil and energy imports from the US, with Venezuela also being considered as an additional supply source, White House press secretary Karoline Leavitt told Fox News.

Why it matters: The cutback in Russian crude purchases is likely to expand India’s purchases from MENA. “For the Indian refining sector, there are ample avenues, including the US, to source crude, as Russian oil accounted for less than 2% of India’s crude imports prior to 2023,” Prashant Vashisht, vice president at rating agency ICRA, told EnterpriseAM.

Lukoil and Rosneft, which together accounted for around 60% of India’s Russian crude imports, are currently under US sanctions. “Given that such a large share of supply has effectively been removed for Indian refiners because of sanctions, this shift away from Russian crude is likely to continue. In that sense, the current change is structural,” Vashisht said.

Other terms: US officials said that India will step up purchases of American goods, including petroleum, defence equipment, and aircraft, while offering limited access to its highly protected agriculture sector, Reuters reports. While Trump claims Indian imports from the US will rise to USD 500 bn, Indian officials have maintained silence on the exact number.

Under the potential US-India trade agreement, India would eliminate duties on US agriculture while decreasing tariffs on manufactured items like chemicals and medical equipment, while maintaining protections for sensitive agricultural products like dairy, rice, beef, and sugar, US trade representative Jamieson Greer told CNBC.

Missing details: However, key operational details — including when the new tariff rate will take effect and the deadline for India to halt Russian oil purchases — have not yet been announced by the US administration or the Indian government.

Our take

Signals from the White House suggest that reductions in Russian oil purchases remain a persistent condition for tariff reductions. This position will make New Delhi’s balancing act between Moscow and Washington DC more precarious. More broadly, Donald Trump’s tariffs dealt a blow to India-US relations, which were otherwise immune to political changes in DC. The bottom line is that India is no longer immune from US pressure, sanctions, and arm-twisting — a significant departure from earlier US policy under both Republican and Democrat administrations.

Maersk, Hapag-Lloyd to restart India-Mediterranean shipping route via Suez

A critical shipping link between India’s west coast and the Mediterranean, the ME11 service, will resume Red Sea shipping services starting mid-February. Jointly run by Danish shipping firm Maersk and Germany-based Hapag-Lloyd, the ME11 service will transit the corridor under a naval escort, as per a press release.

Context: The move follows months of vessels rerouting around the Cape of Good Hope due to attacks in the Red Sea by Yemen’s Houthis starting late 2023. The diversions extended transit times and strained exporter margins.

A geopolitical caveat: The move “will remain dependent on the ongoing stability in the Red Sea area and the absence of any escalation in conflicts in the region.”

Why it matters: The Red Sea/Suez Canal route is critical for Indian exports to Europe and North Africa, particularly engineering goods, chemicals, textiles, and auto components. A partial resumption could ease disruptions, improve delivery timelines, and support India’s export competitiveness at a time when global demand remains uneven.

ICYMI: Shipping companies have been reluctant to make their return to the Red Sea — most recently CMA CGM rerouted three of its services back around the Cape of Good Hope, citing an “uncertain international context.” Maersk, however, appears to be more optimistic, rerouting its MECL service back through the canal only weeks after its Sebarok ship passed through the Red Sea for the first time in two years in December.

What’s next? While the use of naval escorts signals that the security environment remains managed rather than fully stable, the move is a structural bet on the corridor. If successful, Maersk’s AE12 and AE15 services are expected to follow, effectively restoring India’s primary maritime route to Europe.

Fractal Analytics USD 1.6 bn valuation cuts issue size by 40%

First AI IPO: Mumbai-based Fractal Analytics is targeting a valuation of about INR 144.5 bn (USD 1.6 bn) to raise INR 28.34 bn (USD 314 mn) through an IPO that will be India’s first AI listing.

Timeline: Anchor bidding is scheduled for 6 February, the public offer will run from 9-11 February, and the company is expected to list around 16 February.

Revised size: The offering marks a sharp revision from the earlier reported plan to raise INR 49 bn, marking a 40% cut in the listing size.

Listing structure: The offering comprises a fresh issue of INR 10.24 bn and an offer for sale of INR 18.10 bn by existing shareholders, including TPG Fett Holdings and Quinag Bidco, according to a regulatory filing. Proceeds from the fresh issue will be used mainly to repay debt at the company’s US subsidiary, open new offices in India, and conduct research and development focused on generative AI.

Advisers: Kotak Mahindra Capital, Morgan Stanley, Axis Capital, and Goldman Sachs are the book running lead managers for the IPO. The registrar to the issue is MUFG Intime India.

Why it matters: Gulf sovereign and institutional investors have remained active in India’s technology and digital services sector in recent years, and Fractal’s listing will be among the larger enterprise AI floats to test overseas institutional demand.

India’s manufacturing and services PMI edges up in January

India’s manufacturing + services activity picks up in January

India’s manufacturing activity edged up in January as demand modestly improved, though the recovery was insufficient to lift business sentiment or spur hiring, as per HSBC India’s Manufacturing Purchasing Managers’ Index. The PMI rose to 55.4 from December’s two-year low of 55.0 — remaining above the 50 mark that separates growth from contraction.

Factory output and new orders strengthened, largely driven by domestic demand, while export orders improved only marginally despite shipments to Asia, Europe, and the Middle East. Hiring rose to a three-month high but stayed subdued, and business confidence slipped to a three-and-a-half-year low.

The services sector also rebounded in January, after hitting an 11-month low in December, rising to 58.5 from 58.0, driven by stronger demand, though hiring remained muted, as per the index. New business grew at its fastest pace since November, supported by better online reach and higher overseas demand from South and Southeast Asia.

India in talks to link UPI with Alipay+ network

India is in talks with Singapore-based Ant International to link global wallet network Alipay+ with India’s instant payments rail, Unified Payments Interface (UPI), Reuters reports, citing two unnamed sources. The proposed link would allow Indian tourists to make payments using UPI in countries across Asia, Europe and Latin America connected to Alipay+.

Alipay+? The platform connects about 1.8 bn user accounts and more than 150 mn merchants across over 100 markets, including the Middle East.

Regulatory backdrop: Any decision will be taken after security considerations, given sensitivities around digital infrastructure, data, and Alipay’s China links — India has maintained tight scrutiny of Chinese-linked investment since the 2020 border standoff. The discussions fall under New Delhi’s broader push to expand UPI’s overseas reach for travelers and the Indian diaspora.

MSCI threatens Indonesia with frontier status over “deep-fried stocks”

The Indonesian stock market is facing a reckoning: Index provider MSCI warns of a potential downgrade to the ASEAN country’s status unless reforms are made by May, the Financial Times reports. The move comes amid growing alarm over the country’s “deep-fried stocks” — where concentrated ownership and opaque shareholding structures fuel extreme volatility and raise concerns about coordinated trading that distorts price formation.

The MSCI announcement triggered an immediate crisis in Jakarta, wiping more than USD 80 bn off the Jakarta Composite Index last week, followed by an additional 4.5% drop on Monday. The sell-off has alarmed regulators, who fear a downgrade could trigger bns of USD in capital outflows. Indonesia’s financial regulator and stock exchange chiefs have since resigned.

Just a blip, says the FinMin: Finance Minister Purbaya Yudhi Sadewa characterized the sell-off as a “temporary shock,” maintaining that the country’s economic fundamentals remain strong despite the market volatility.

Why it matters

The “emerging-market” classification, used by MSCI and FTSE Russell, ranks countries between frontier and developed markets, signaling investability while acknowledging some volatility. Indonesia’s status as an emerging market has attracted steady foreign investment, building Southeast Asia’s largest equity market. A downgrade to frontier could trigger up to USD 13 bn in forced outflows, weaken the IDR, raise borrowing costs, and slow growth and job creation, Goldman Sachs told Bloomberg.

Indonesia’s pain points-

The “deep-fried” problem: Investors have long flagged a disconnect between Indonesia’s blue-chip stocks and a group of closely-held companies owned by powerful tycoons. These “deep-fried” stocks often have restricted free-floats — the portion of shares available to the public — allowing prices to be easily manipulated or driven to surges on thin trading. Last year, the MSCI Indonesia index fell 3.6%, while the Jakarta Composite rose 20.7%, the widest gap on record.

IN CONTEXT- MSCI’s warning also lands amid broader investor unease over President Prabowo Subianto’s fiscal stance and institutional independence. Steps seen as weakening central bank autonomy and loosening long-standing fiscal discipline have raised concerns over inflation, currency stability, and governance standards.

Don’t hold your breath: A total downgrade to frontier status is unlikely given the sheer size of the Indonesian economy, James Johnstone, co-head of emerging and frontier markets at investment manager Redwheel, told the salmon-colored paper. Still, the MSCI threat is seen as a “bold and dramatic” catalyst for reform, piling pressure on regulators to address long-standing governance issues and boost transparency and liquidity ahead of the May deadline to avoid a major outflow of international capital, he added.

It seems to be working

Regulators have moved to contain the fallout, announcing plans to double the minimum free-float requirement to 15% to improve liquidity and curb volatility, though this is still well below the 25% standard seen in regional peers like India and Hong Kong. MSCI said it will continue engaging with Indonesian authorities and market participants before deciding on next steps.

MARKETS THIS MORNING-

Asia-Pacific markets were mixed this morning in early trading as investors reacted to the tech-led selloff on Wall Street. Markets are also closely following the results of Japan’s Lower House election, which are also expected to significantly impact the JPY.

Sensex	83,899	+0.2% (YTD: -1.7%)
NIFTY 50	25,813	+0.3% (YTD: -1.5%)
ADX	10,537	+0.6% (YTD: +5.4%)
DFM	6,645	+0.5% (YTD: +9.3%)
Tadawul	11,377	+0.4% (YTD: +8%)
EGX30	49,271	+0.6% (YTD: +17.7%)
Boursa Kuwait	8,143	-0.4% (YTD: -1.5%)
QSE	11,348	-0.6% (YTD: +6.1%)
S&P 500	6,917	-0.8% (YTD: +1%)
FTSE 100	10,364	+0.4% (YTD: +3.8%)
Euro Stoxx 50	5,976	-0.3% (YTD: +3.5%)
Brent crude	USD 67.22	-0.16%
Natural gas (Nymex)	USD 3.29	-0.5%
Gold	USD 5050	+2%
BTC	USD 76,065	-2.9%

The values in the table above are listed according to the market position as of 3:30pm IST / 2pm GST.

CALENDAR

FEBRUARY

2-8 February (Monday-Sunday): IndOman International Film Festival, Muscat.

3-6 February (Tuesday-Friday): ChemTECH World Expo, Jio World Convention Centre, Mumbai.

9-10 February (Monday-Tuesday): Pune International Business Summit (PIBS), SL Kirloskar Convention Center, JW Marriott, Pune.

14-18 February (Saturday-Wednesday): IHGF Delhi Fair (Spring), New Delhi.

16-20 February (Thursday-Friday): India-AI Impact Summit, Bharat Mandapam, New Delhi.

25 February (Wednesday): World Sustainable Development Summit, Taj Palace, New Delhi.

MARCH

4 March (Wednesday): Holi.

12 March (Thursday): ET Entrepreneur Summit & Awards, Bengaluru.

19-22 March (Thursday-Sunday): Bharat Urja Manthan – Global Energy Conclave, New Delhi.

20 March (Friday): Eid Ul-Fitr.

23-25 March (Monday-Wednesday): Indiasoft: International IT Exhibition & Conference, New Delhi

23-25 March (Monday-Wednesday): Smart Cities Expo, Bharat Mandapam, New Delhi.

23-25 March (Monday-Wednesday): Plastiworld India, Jio World Convention Centre, Mumbai.

31 March (Tuesday): Mahavir Jayanti.

Signposted to happen sometime in March 2026

Election Commission of India is expected to announce polling dates for elections in the states of Tamil Nadu, Kerala, West Bengal, Assam, and the union territory, Puducherry.
Canadian Prime Minister Mark Carney’s visit to India.

APRIL

3 April (Friday): Good Friday.

23-25 April (Thursday-Saturday): Rail & Metro Technology Conclave, Bharat Mandapam, New Delhi.

29 April-2 May (Wednesday-Saturday): Bharat Buildcon, Yashobhoomi, Dwarka, Delhi.

7-10 April (Tuesday-Friday), India Rubber Expo, ITPO, Pragati Maidan, Delhi.

MAY

1 May (Friday): Buddha Purnima.

26 May (Tuesday): Eid Ul-Adha.

JUNE

24-25 June (Wednesday-Thursday): India Homeland Security Expo, Bharat Mandapam, Pragati Maidan, New Delhi.

26 June (Friday): Muharram.

Signposted to happen sometime in 1H 2026:

Signing of India-Qatar FreeTrade Agreement (Details yet to be announced).
India-EU Trade and Technology Council Ministerial Meeting, Brussels, Belgium.

AUGUST

15 August (Saturday): Independence Day.

26 August (Wednesday): Prophet Mohammad’s Birthday.

OCTOBER

2 October (Friday): Gandhi Jayanti (Mahatma Gandhi’s Birthday).

20 October (Tuesday): Dussehra.

NOVEMBER

24 November (Tuesday): Guru Nanak Jayanti.

DECEMBER

8-11 December (Tuesday-Thursday), Expand North Star, Dubai.

25 December (Friday): Christmas Day.

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