India's Crypto Blindspot

Good Morning. Even as US president Donald Trump continues his tariff announcements on social media platform Truth Social, the US Congress passed bills that will change how the country deals with cryptocurrencies. While America prepares for a crypto-led future, India still remains far behind.

In other news, aviation watchdog Directorate General of Civil Aviation (DGCA) has more warnings for Air India. Meanwhile, troubles mount for Anil Ambani's Reliance Group.

JANUS VIEW

India Should End Ambiguity Over Cryptocurrencies As US Legalises Stablecoins

What?

The US has taken concrete steps to shape its digital finance rules. The US Congress passed the Genius Act to legalise stablecoins — cryptocurrency whose value is linked to a regular fiat currency, mostly the dollar — and the Clarity Act, which places the trading of cryptocurrencies under the supervision of the Commodity Futures Trading Commission, rather than under the Securities and Exchange Commission.

US president Donald Trump, meanwhile, continued to announce tariff deals with other countries on his own social media platform, Truth Social. Indonesia and the Philippines have agreed to duties of 19% on their goods exported to the US and Japan, 15%. Auto exports from Japan will face a 15% duty in the US, instead of the sector-specific tariff of 25% that Trump had announced earlier.

Why Does It Matter?

Large US banks already use private digital currencies to move client funds across continents, bypassing the cumbersome SWIFT system. With the backing of the Genius Act, they would be able to issue stablecoins that can be used by third parties, as well.

A third bill prevents the US from issuing a central bank digital currency (CBDC), most curiously. As more and more cross-border capital flows take place on the blockchain, the absence of a digital dollar would constrain the US and help countries like China that have their own CBDCs.

The ability of the US to weaponise the dollar, for example, by denying countries access to New York’s dollar networks, would come down as the share of non-dollar digital currencies in cross-border payments rises.

The message is that India would be well-advised to end its ambiguity over the validity of cryptocurrency and legalise stablecoins, including the one issued by the central bank.

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CORE NUMBER

60.7

That’s the HSBC Flash India Composite Purchasing Managers' Index for July, compiled by S&P Global. The number indicates that India’s private sector is experiencing steady growth.

The Context: 

• It was a slight dip from June’s final reading of 61.0, but it stayed well above its long-run average of 54.8.

• The manufacturing PMI jumped to 59.2, a 17.5-year high.

• Business confidence fell to its lowest mark since March 2023 over concerns of competition and inflationary pressures.

• Job creation reached a 15-month low.

💬 Pranjul Bhandari, chief India economist at HSBC, said that the composite PMI was healthy, bolstered by growth in total sales, export orders, and output levels. “Indian manufacturers led the way… Meanwhile, inflationary pressures continue to heat up as both input costs and output charges rose in July.”

FROM THE PERIPHERY

India-UK Trade Deal Is Finally Here! India and the UK have finally signed the long-awaited free trade agreement (FTA) on Thursday. The UK won’t be charging tariffs on 99% of Indian exports including textiles, generic drugs and medical devices, leather products and agricultural and chemical goods. India will also cut duties on British goods like Scotch whiskey and electric vehicles.

By The Numbers: The deal will boost $34 billion worth of trade a year between the two countries and create thousands of jobs, according to a Business Standard report. 

Outcome: The deal also reduces health certificate requirements for Indian agri-food products; Indian professionals and firms won’t have to pay UK social security payments for up to three years either. This is the UK’s biggest post-Brexit trade deal, and India’s first major free trade agreement with a European nation. India is also negotiating FTAs with other EU countries as well as the US right now. 

Air India Faces Scrutiny. India’s aviation regulator has warned Air India of possible enforcement action for “systemic” lapses in crew fatigue management and training, according to notices reviewed by Reuters.

Backdrop: The Directorate General of Civil Aviation (DGCA) flagged 29 violations — including pilots flying without mandatory rest or proper simulator training, and understaffed international flights. The warnings follow the June crash of AI171, which killed 260 people.

Implications: The lapses increase pressure on Tata-owned Air India, already under global scrutiny. The airline said it self-reported the issues and remains committed to crew and passenger safety.

Flashpoint: The Enforcement Directorate (ED) conducted raids at over 50 locations linked to businessman Anil Ambani, including group firms, employees, and associates, as part of a loan fraud investigation, The Economic Times reported.

Backdrop: ED’s preliminary investigation found that Rs 3,000 crore in loans sanctioned by Yes Bank between 2017 and 2019 were allegedly diverted to shell companies and other group entities. Officials are also probing possible bribery of Yes Bank executives, including its former promoter.

Implications: The action comes days after State Bank of India labelled Reliance Communications and Ambani’s account as ‘fraud’, and signals mounting legal heat on the debt-laden Anil Ambani Group.

Ajay Seth Gets IRDAI Mandate. Former finance secretary Ajay Seth has been appointed chairman of the Insurance Regulatory and Development Authority of India (IRDAI) for a three-year term or until age 65, whichever comes earlier, Business Standard reported.

Backdrop: A 1987-batch IAS officer from the Karnataka cadre, Seth brings over three decades of experience in public finance, taxation, and social sector reform. He previously led India’s G20 finance track and spearheaded the country’s first sovereign green bond.

Implications: Seth takes charge at a time when India’s insurance sector is growing rapidly in value, but still struggles with penetration and regulatory complexity.

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THE SIGNAL DAILY

Everyone’s Learning AI—Should You?

If you haven’t heard of or used AI or Artificial Intelligence tools, you’re probably living under a rock. Still, according to an IIM-Ahmedabad study, even though Indian workers recognize how big AI is and will be, many don’t feel adequately prepared to deal with this shift. 

There’s several courses in the market that teach people AI skills. Traditional institutes like IIMs offer certificate courses; there’s also free classes on youtube, as well as low cost ones on coursera, udemy and linkedin. 

Which one should you choose? 

In the latest episode of The Signal Daily, we’ll learn about what these AI courses are. And, depending on your goals and your budget, what course should you go for? 

The Core produces The Signal Daily. To check out the rest of our work, go to www.thecore.in.

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas