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AI Panic, Budget Shocks, And India’s High-Stakes Bet On The US

The biggest events of the last week were, of course, the 2026-27 Budget, the announcement of the long-awaited Indo-US trade deal, and the big tech sell-off, following Artificial Intelligence major Anthropic’s announcement of its switch from selling intelligence to selling work, in the form of Claude Cowork, and its speicalised plugins for legal, data processing and sales and customer relations work.

The plugins, fear investors, would make many software companies and their products and software as a service (SaaS) offerings redundant. This has induced large-scale selling of assorted tech company shares around the world, taking down Indian tech stocks along the way.

This, in all probability, is an overreaction. Indian IT-enabled operations might stand to be disrupted by Claude Cowork’s new capabilities, but nowhere has Anthropic claimed that it would be able to implement the adoption of a complex Enterprise Resource Planning software for a large business, do engineering R&D, or carry out consulting and digital transformation. 

Budget Tax Breaks 

The Budget offered a wholly avoidable 20-year tax holiday for foreign hyperscalers (those who build very large data centres that consume power in the range of gigawatts (GW)). Since Amazon, Microsoft and Google have already announced their plans to invest a combined $65 billion to set up data centres in India, without any hint at needing the incentive of tax breaks, why such tax breaks are being handed out is a vital question. 

There are hints from anonymous officials, who do not want to be named, that the tax break is on offer only for the global income of these hyperscalers.

Misplaced Outcry

The trade deal was announced by American President Donald Trump on his social media platform, Truth Social. It said the US is cutting tariffs on imports from India to 18%, as India has promised to stop importing Russian oil, to buy American produce in large quantities — $500 billion is the figure Trump announced, more than 10 times India’s imports from the US in 2024-25, and more than half of India’s total import bill for that fiscal — and that India would reduce import duties on American goods to zero. 

Subsequent clarifications from other officials have made it clear that these are goals to be met over a period of time, and the assorted sectors, particularly in agriculture, will stay outside the scope of imports from the US. That has not prevented many in India, particularly from the Opposition, raising charges of a sellout.

They raise the fear that Prime Minister Modi has sold India’s sovereignty short, compromised the interests of Indian farmers and workers, that Prime Minister Modi has said India would stop buying Russian crude and that agreeing to buy $500 billion worth of stuff from the US would make India’ other free trade agreements look hollow.

The outcry over India’s supposed surrender of sovereignty in accepting a trade deal with the US is misplaced. No government will compromise core interests of the nation in a trade deal, for reasons of political survival of the ruling party, if not on account of commitment to the national interest.

India’s trade deal with the US has to be seen in the overall context of India’s geopolitical compulsions.

Where the government should be faulted for betraying India’s strategic interests is in failing to develop an indigenous research and development ecosystem. The political leadership also betrays the national interest when it allows its leaders and footsoldiers to carry out attacks on India’s social cohesion.

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Designed for senior decision-makers, IFIF 2026 combines on-stage dialogue with curated networking, innovation labs, and collaborative working sessions. The focus is on understanding what is changing, what is working, and what comes next for India’s financial system.

18%

That is the scale of selloff faced by leading silver ETFs as precious metals lost momentum following a brief two-day rebound. While Kotak Silver ETF crashed 18%, others fell between 12% and 15%.

Overview: Gold ETFs also felt the pressure; major funds such as Motilal Oswal and SBI Gold declined approximately 5% as futures prices for both metals tumbled on the MCX. The slump was primarily driven by aggressive profit booking and a strengthening US dollar. Market sentiment shifted as investors reacted to the nomination of Kevin Warsh as the next Federal Reserve Chair.

Outlook: Despite the immediate volatility, analysts maintain a structurally bullish long-term view, citing record central bank buying and silver’s industrial supply deficit. However, experts currently advise caution, recommending that investors trim overallocation to precious metals.

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A Formal Trade Deal With The US Is At Least 6 Weeks Away

On Episode 792 of The Core Report, financial journalist Govindraj Ethiraj talks to Vaibhav Porwal, Co-founder at Dezerv as well as Dr Nipun Sharma, CEO at TeamLease Degree Apprenticeship.

• A formal trade deal with the US is at least 6 weeks away

• Middle east tensions are driving oil prices again

• What could drive markets in the next few months?

• How women apprentices are increasingly entering the workforce

• Why do some restaurants last a 100 years and others don’t?

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