The New Rules of Money in India

What happens when money, trade, and data all start shifting at once?

Foreign investors are pulling back even as domestic liquidity surges. Trade partners are rewriting the rules of engagement. And lenders are quietly rebuilding credit on the back of consented financial data.

Individually, these are sectoral stories. Together, they signal something bigger: India’s capital architecture is being stress-tested in real time.

This edition connects the dots.

WEEKEND EDITION

Can India Stop Global Capital From Walking Away?

India’s markets are not short of money. Domestic mutual fund inflows are at record highs. Retail participation has surged from 4 crore to over 14 crore investors. IPO pipelines are active. Liquidity, at least on the surface, looks abundant.

And yet, foreign portfolio investors are selling.

In this Weekend Edition of The Core Report, Govindraj Ethiraj speaks with Ananth Narayan Gopalakrishnan, former Whole Time Member of SEBI, to unpack a central tension: if India’s growth story is intact, why is global capital stepping back?

The answer isn’t a single villain. It’s structural.

There’s a demand–supply imbalance in equities. Domestic flows are strong, but high valuations in pockets make foreign investors wary. IPO supply hasn’t fully absorbed liquidity. Derivatives and index options dominate trading volumes, raising questions about the quality of liquidity. Retail participation is deep—but retail losses are real, with implications for financial stability.

Then there’s friction.
Tax complexity.
Capital gains structures.
Entry and exit processes.

And a larger question: should India move toward tax neutrality across asset classes—or even residence-based taxation—to reduce distortions?

Another provocative idea: allow more outward investment. If domestic capital can diversify globally, valuation pressure at home may ease. That, paradoxically, could make India more attractive to foreign investors.

India does not lack capital. What it may lack is capital architecture aligned with global flows.

Bottom line:
Foreign capital isn’t fleeing growth—it’s reacting to structure. If India wants long-term global participation, it must reduce friction, rebalance incentives, and let capital move both ways.

SPECIAL EDITION

India’s trade moment: Budget, tariffs, & the deals that will shape growth

At The Core’s third closed-door meet, the focus was on one key question: What happens when major policy forces collide?

We examined the intersection of three developments unfolding almost simultaneously—the Union Budget presented on February 1, the India–EU Free Trade Agreement, and the emerging India–US trade arrangement, which, while not an FTA, brings reciprocal tariffs and significant political weight.

None of these moves are frictionless. Trade deals involve negotiation, concessions, and conflict before consensus. In this discussion, panellists shared their perspectives—from manufacturing and macroeconomics to direct and indirect taxes—on how this convergence could shape India’s economy, businesses, and jobs.

The deal that isn’t quite a deal

At first glance, the India–US trade engagement looks reassuring. No dramatic trade war. No sudden breakdown. But beneath that calm is a shift that matters far more: reciprocal tariffs are no longer theoretical.

Ajay Rotti of Tax Compaas points out that the US is moving from exceptions to enforcement. Preferential treatment is being replaced with symmetry. If India protects, the US responds. That sounds fair—until you remember that India’s tariff structure is still used as a policy lever, not just a revenue tool.

For exporters, this changes the math. Margins that once absorbed minor tariff shocks may not survive sustained reciprocity. Compliance costs rise. Pricing power weakens. And for labour-intensive sectors, the pressure travels fast—from balance sheets to shop floors.

The EU door opens, but only halfway

If the US is becoming harder, Europe looks more promising. The India–EU FTA, still inching forward, could unlock genuine export upside—especially for manufacturing and value-added goods.

But Madhavi Arora of Emkay Global makes a crucial point: FTAs reward readiness. Without fixing logistics, GST friction, and factor costs, India risks signing access it cannot fully exploit. Trade policy can open doors; competitiveness decides who walks through.

Budget 2026: intent vs execution

The Union Budget 2026 gestures in the right direction—customs duty rationalisation, capex push, investment incentives. But Ritesh Kanodia flags a familiar gap: legal and procedural complexity.

In a tariff-sensitive world, ambiguity is expensive. Delays in refunds, litigation over classifications, and inconsistent GST enforcement quietly tax businesses more than headline rates ever do.

What this means for jobs—and careers

Trade policy isn’t abstract anymore. It shapes where factories expand, where capital flows, and which skills remain employable.

Reciprocal tariffs make low-productivity models fragile. They reward firms that invest in efficiency, compliance, and resilience. For professionals, that means careers tied to global trade—manufacturing, logistics, finance, policy—will increasingly favour those who understand regulation as strategy, not paperwork.

Bottom line

India isn’t losing the trade game. But it is playing a harder version of it.

The US is signalling discipline. Europe is offering conditional opportunity. And India must decide whether tariffs remain a political instrument—or become a competitive one.

Because in 2026, tariffs won’t just decide trade balances.
They’ll decide which businesses grow, which jobs endure, and which professionals stay relevant.

THE CORE QUIZ

MANTHAN

Can Data Becomes Collateral ?

Shriram Finance has spent decades lending to India’s credit-invisible—truck operators, small businesses, borrowers in tier 2 and tier 3 towns who rarely show up in formal datasets. Now, it’s betting that consented data—not just physical reach—will define the next phase of growth.

In this episode of Manthan, Vamsi Madhav of FINVU and Vinod Kumar, Chief Digital Officer at Shriram Finance, unpack how the Account Aggregator framework is shifting lending from paperwork-heavy judgment calls to real-time cash-flow visibility. This isn’t about flashy apps replacing feet on the street. It’s about arming field officers with sharper underwriting tools, tighter risk monitoring, and faster credit decisions—without diluting trust.

The promise is simple but consequential: if lenders can see verified financial behaviour with customer consent, they can price risk more accurately, expand MSME credit more confidently, and intervene earlier when stress builds.

Bottom line:
In India’s lending markets, distribution built the franchise. Data may now protect it.

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