Good afternoon, lovely people. We are kicking off the week with updates spanning startups, investments, and major firms announcing strategic moves across the MENA<>India corridor.

Lulu Group is exploring expansion in its favorite market with partnerships in Indian E-commerce platforms, leveraging the success of its omni-channel online retail strategy in the Gulf region. Lulu will also increase its sourcing from India to diversify its supply chain amid global uncertainties.

We continue tracking Gulf SWF investments in India. In today’s edition, we bring you a story on declining participation of Gulf allocators in Indian startups with data sourced exclusively from market intelligence firm Tracxn.

Meanwhile, India’s central bank made its latest move to challenge the USD’s supremacy — Donald Trump won’t like this one.

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Watch this space

The Reserve Bank of India (RBI) is proposing linking the official digital currencies of BRICS nations to ease cross-border trade and tourism payments, Reuters reports. With the UAE, Egypt, and Iran now in the bloc, this creates a potential payment channel across the MENA<>India corridor. The RBI will make the proposal at the 2026 BRICS summit, which India will host.

Building bridges: The plan would, for the first time, explore interoperability among BRICS central bank digital currencies, building on a 2025 declaration to streamline cross-border payments. As US tariff threats loom, the proposal signals India’s attempt to set up an alternative payment system among the corridor’s major economies to shield trade flows from policy shifts in the West.

Hurdles: The initiative may draw flak from Washington, with President Donald Trump previously warning against BRICS-led alternatives to the USD, the newswire said. India has stressed that boosting the global use of the e-INR is not aimed at de-dollarization. The primary hurdle remains achieving technical and regulatory consensus among often-competing members.

IN CONTEXT- We recently covered how India’s push to internationalize the INR has had mixed results so far, including its effort to settle oil trade with the UAE in INR failing to gain scale.

DEFENCE — India plans to relax foreign-investment rules for defence manufacturers in the coming months, a shift that could influence defence partnerships with Gulf states such as Saudi Arabia, UAE and Oman, Reuters reports, citing government sources.

What’s changing? The government is preparing to raise the foreign-ownership limit under the automatic route — where no prior government approval is required — to 74% from 49% for companies that already hold defence licences. Currently, only firms applying for new licenses can have up to 74% foreign investments.

Regulatory conditions removed: A condition that allows investments above 74% only if they bring “results in access to modern technology” is set to be removed. Another rule requiring export-oriented manufacturers to set up in-country maintenance and support facilities is also likely to be dropped, allowing these functions to be outsourced.

Paltry numbers: Foreign direct investment (FDI) in India’s defence sector amounted to only USD 26.5 mn between April 2000 and September 2025, a small fraction of the country’s total foreign inflows of USD 765 bn over the same period, according to government data.

Why it matters: India and Gulf states maintain growing defence cooperation. Looser FDI rules would make it easier for foreign investors — including those from the UAE, Saudi Arabia, and Oman — to take larger stakes in Indian ventures, supporting joint manufacturing and capability-building programs.

AVIATION — The Directorate General of Civil Aviation (DGCA), India’s aviation regulator, has fined IndiGo Airlines INR 203 mn (USD 2.45 mn) following some 4.5k flight cancellations and delays last month. Indigo is India’s largest airline with 65% of the domestic market and runs flights to all GCC countries — 111 flights on the Abu Dhabi route and 108 to Dubai.

The DGCA issued warnings to senior executives of the airline, directing its management to relieve Jason Herter, senior vice president, from operational duties, as per a statement.

Driving the news: A DGCA probe found multiple operational deficiencies at IndiGo after new pilot rest and duty-time rules came into effect last year. “The airline’s management failed to adequately identify planning deficiencies, maintain sufficient operational buffers, and effectively implement the revised Flight Duty Time Limitation (FDTL) provisions,” the regulator said.

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Data point

USD 2.04 bn — This was the value of India’s exports to China in December, a 67.35% y-o-y increase, driven by higher shipments of oil meals, marine products, telecom instruments, electronics, and spices, according to Commerce Ministry data. Imports from China rose 20% y-o-y to USD 11.7 bn in December.

Happening today

UAE President Mohamed bin Zayed Al Nahyan is in India today as part of a working visit where he will meet with Indian Prime Minister Narendra Modi, according to India’s External Affairs Ministry. Discussions will focus on strengthening bilateral economic ties and look into new windows to deploy their comprehensive economic partnership agreement.

Last year ended on a strong note for bilateral investments, with a raft of agreements inked between Emirati and Indian entities last November, and the UAE committing up to USD 2 bn to invest in India’s logistics sector.

Apart from regional issues, the upcoming visit is expected to secure the UAE’s support for the AI Impact Summit to be held in India next month. India will host the next BRICS summit, the agenda for which is also slated for discussion during bin Zayed’s visit.

The big story abroad

A showdown between the US and the EU is set to take over Davos, as the EU readies a package of retaliatory tariffs — potentially EUR 93 bn’s worth — or restrict some US firms from the bloc’s market in response to US President Donald Trump’s 10% tariff threat to European countries over their opposition to his campaign to take over Greenland. Plans are being drawn up now to give EU countries leverage during talks that are set to take place at Davos this week, the Financial Times reports.

In other Trump-causing-anxiety-for-geopolitical-leaders news… the US has started inviting heads of states to join the US’ new “Board of Peace,” which is being touted as an “international organization that seeks to promote stability, restore dependable and lawful governance, and secure enduring peace in areas affected or threatened by conflict.” The board — which would initially focus on rebuilding Gaza and then address other global conflicts — would become official once three member states agree to the draft charter for the proposed group.

Trump has already invited several European nations to join the board, along with Egypt, India, and Turkey, while Argentina’s Javier Milei and Canada’s Mark Carney were also invited to be part of the Board of Peace for Gaza. Diplomats have raised concerns that this would be a “Trump United Nations” given Trump’s criticisms of the UN in the past.

The so-called board would also allow countries who pay a USD 1 bn fee a permanent spot on the board — otherwise, countries would join on a three-year term basis, Bloomberg reports.

MEANWHILE- Senegal clinched its second Afcon title after a dramatic game that saw it beat Morocco 1-0, even after players had walked off in protest over a controversial penalty that was awarded to Morocco in stoppage time. The penalty ended up being an easy save as Morocco’s star player Brahim Diaz attempted a Panenka-style chip, giving Senegal’s Papa Gueye a chance to score in extra time.

PLUS- The Syrian government and Kurdish-dominated Syrian Democratic Forces militia have reached a ceasefire agreement after Syrian troops seized towns controlled by the SDF this week as Syrian President Ahmad al Sharaa attempts to extend his rule in the north. (Reuters)

Circle your calendar

India will host the second India-Arab Foreign Ministers’ Meeting from Friday, 30 January until Saturday, 31 January in New Delhi. The grouping brings together foreign ministers from 22 Arab League nations in India. Syria’s Foreign Minister Asaad Hassa may attend, which would make this New Delhi’s first ministerial-level interaction with Damascus since the ouster of president Bashar al-Assad.

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