The Shapoorji Deal That Could Help Maintain Tata Trusts’ Stake

By Dev Chandrasekhar

What?

The Reserve Bank of India reportedly rejected Tata Sons' bid earlier this month to avoid a mandatory stock-market listing. A day later, another long-running Tata problem made headlines.

Shapoorji Pallonji Group, which has been trying for years to monetise its stake in Tata Sons, is now reportedly seeking Rs 25,000 crore from the conglomerate over two years, up from about Rs 10,000 crore reported in August.

Tata Sons and SP are reportedly discussing several ways to go about this, including a buyback, a swap of shares in listed Tata companies, a direct purchase financed by overseas banks and a sale to an external global investor. Neither side has confirmed the talks.

The timing and how Tata Sons buys the stake matters, as all the above options will have different consequences for the Tata Trusts.

Why?

If Tata Sons absorbs and cancels SP's shares, the Trusts' percentage ownership rises automatically. If an outside investor buys those shares, the Trusts' percentage does not change.

That makes the negotiations about more than how much SP gets paid. They could also determine how exposed the Trusts are to dilution when Tata Sons eventually has to bring outside shareholders into the company.

Once Tata Sons lists, SP could in principle sell its shares into the public float, but that would happen on the market’s timetable rather than SP’s, and would leave Tata Sons no say over who ends up holding the stake. Resolving it now lets both sides control the outcome instead.

A one-percentage-point shift in the Trusts' stake is worth roughly Rs 11,900 crore, based on the current sum-of-parts value of Tata Sons' 17 listed holdings of Rs 11.88 lakh crore.

In other words, a technical deal over SP's stake could have consequences worth thousands of crores.

How Will This Work? 

Tata Sons has been in talks over a buyback covering part of the stake held by the Shapoor Mistry branch of the Shapoorji Pallonji group. In August, the figure reported was around Rs 10,000 crore.

By 12 September, a day after the RBI's rejection letter was dated, the reported figure had risen to Rs 25,000 crore, to be paid over two years.

For years it has been the SP group's largest asset and its most useless one.

Tata Sons converted to a private limited company in 2017. Since then, its Articles of Association have required prior approval for any transfer of shares. When SP tried to pledge its stake as loan collateral in 2020, Tata Sons went to the Supreme Court to block it. When SP looked for an outside buyer, no deal could close without Tata Trusts' consent.

Unable to sell or pledge freely, SP has borrowed against its own balance sheet instead, at rising cost. 

When a company buys back its own shares, those shares are cancelled. 

Indian company law does not allow a firm to hold its own shares as treasury stock. 

So the total share count shrinks, and every shareholder who did not sell now owns a larger fraction of a smaller company.

That means a Tata Sons buyback of SP's shares would increase the Trusts' ownership without the Trusts buying anything.

The same would happen if Tata Sons directly purchased the shares. A swap would have the same effect if Tata Sons were the party absorbing SP's shares rather than simply arranging a trade with another buyer.

A sale to an external investor would be different.

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4.39 lakh units

That is how many passenger vehicles were dispatched in August as automakers stocked up for the festive season, marking a growth of 36.5% over 3.21 lakh units in August 2025, according to data released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday.

The Core recently reported that festive demand in the domestic market is set to lift passenger vehicle sales to cross 5 million units this year; however, global risks linger.

The Lead: Exports of passenger vehicles declined 17% year-on-year to 68,230 units from 82,246 units a year earlier. The export data does not include Tata Motors, as SIAM does not have its monthly numbers.

Setup: SIAM’s director general, Rajesh Menon, said the growth during August was aided by a lower base last year, but noted that the broader demand environment remains healthy, with festive demand expected to boost Q2 numbers further.

Overview: Three-wheeler sales stood at 93,764 units, up 22.8%, while two-wheeler sales rose 10.5% to 20.35 lakh units compared to August 2025.

UPI Charges Kick In

The National Payments Corporation of India (NPCI), that operates and manages several of India’s major retail payment systems, said on Tuesday that it would introduce a 0.4% fee on UPI payments to merchants above Rs 2,000, effective October 15, on the country's real-time payments network.

The move marks a major shift in India's largely fee-free UPI ecosystem.

Overview: The proposed Merchant Discount Rate (MDR) for higher-value merchant transactions is aimed at supporting the long-term sustainability and expansion of the UPI network.

For comparison, Brazil's PIX ecosystem charges merchants around 0.33%, while China's payment ecosystem charges about 0.40%.

The government has clarified that UPI and RuPay debit card payments of up to Rs 2,000 from individuals to merchants, as well as all person-to-person UPI transactions, will remain free.

Fast Facts: Finance Minister Nirmala Sitharaman has said future MDR would apply only to a limited category of merchant transactions above a prescribed threshold; the Congress has accused the government of quietly paving the way for UPI fees.

India’s Trade Gap Narrows

India’s merchandise trade deficit narrowed to $26.86 billion in August, beating economists’ forecast of around $32 billion, as gold imports fell sharply.

Fast Facts: Goods imports stood at $70.67 billion, down from $76.22 billion in July, while gold imports nearly halved to $2.3 billion. Merchandise exports slipped marginally from July to $43.81 billion, but rose 26.1% from a year earlier, marking their highest August level in at least a decade.

Services exports remained strong at $38.87 billion, taking total goods and services exports to $82.68 billion. That narrowed India’s overall trade deficit, including services, to $9.41 billion.

Future: However, rising oil prices could put pressure on the trade balance ahead. India’s crude basket averaged $90.19 a barrel in August, up from $82.04 in July, and has climbed above $100 in September amid Middle East tensions.

Apple Under Consumer Regulator Probe

The Central Consumer Protection Authority (CCPA), India's consumer regulator, is investigating Apple's software warranty terms after complaints that the iOS 18 update damaged iPhone functionality, including causing screen display and microphone problems, forcing users to pay "exorbitant" repair costs, Reuters reported.

Overview: The CCPA escalated the matter for a "detailed investigation" on July 29.

Apple is contesting the accusations, saying its software is provided without warranty in line with global industry standards and that iOS 18 had no systemic issues.

Apple said it identified no issues or safety concerns with iOS 18 in India.

Critical Moment: The investigation focuses on complaints that green, pink or white lines appeared on screens after iOS 18 upgrades. Apple says the case is based on 75 complaints and that only about 11% of iPhones still used iOS 18 by June 2026.

The CCPA says consumers had to pay for repairs despite the problems allegedly stemming from Apple's software upgrade. Servicing an iPhone 15 screen is estimated to cost Rs 27,900 ($291), more than a third of its retail price.

If found guilty, Apple could face fines, refunds or changes to its business practices.

AI Fears Boost IT

Indian IT stocks jumped after some of the world’s biggest AI leaders called for a slower pace of AI development. The Nifty IT index rose as much as 5.2%, putting it on track for its strongest session since July 2. HCLTech led the gains, rising 6.21%, while Infosys and TCS climbed 4.72% and 4.76%, respectively.

How We Got Here: The rally may seem counterintuitive. But investors have spent much of this year worrying that rapidly advancing AI could make parts of traditional IT services obsolete. Indian IT companies are particularly exposed because they have long relied on billing clients for employee hours.

The Turning Point: A slower pace of AI development could give these companies more time to adapt their businesses and reduce the need for constant spending on new technology. The rally followed calls from Anthropic CEO Dario Amodei to slow AI development, with OpenAI CEO Sam Altman and xAI's Elon Musk agreeing with him. Analysts called the gains a tactical bounce rather than a fundamental turnaround.

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Why Indian Markets Are Getting Battered Right Now

On Episode 980 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Rotti, Tax Expert and CEO of tax advisory firm Tax Compaas as well as Rajeswari Sengupta, Associate Professor of Economics at the Indira Gandhi Institute of Development Research (IGIDR).

• Why Indian Markets Are Getting Battered Right Now

• India’s Exports Are Up 26% In August

• UPI Will Not Be Free Any More, So You Will Have To Pay 0.4% On Transactions Above Rs 2,000.

• Tata Sons Is Set To Go To Court Against The RBI’s Move Asking It To Go Public, Does It Have A Case?

• Banks May See Additional Costs For FCNR B Deposits, What Are The Options Ahead?