India’s Resilient Markets and the Coming Transformation of Its Exports

Here are edited transcripts of some of my responses as a studio guest to questions on headlines in the live radio programme, Market Mantra, on October 17, 2025. Market Mantra is a popular daily programme on business, economy, and stock markets at All India Radio (AIR). Trajectory of Indian Markets The bounce in the markets on October 17 can be attributed to increased FPI buying, especially major stocks, optimism in future corporate earnings, especially for those companies benefiting from the GST rate cut. This is in addition to a boost in the prospects of banks from the recent RBI announcements, such as those related to M&A activities. Further, among other influences are the signalling effect of reports of RBI shoring up the Rupee and prospects of future interest rate cuts by the US Federal Reserve in the remaining part of 2025. Future Path for Indian Exports 2025 will be a milestone year for Indian exports. Having learnt important lessons, expect a transformation in India’s approach to exports in the future. In the future, expect greater diversification of export markets or destinations. So, you will increasingly find us talking about India’s top 25 markets instead of top 10 export destination countries. Before any spike in manufacturing exports, expect more growth in India’s services exports. This would be especially so for higher-value services like those offered by Global Capability Centres and R&D centres. This would mean moving away from lower-value services such as customer support, which will increasingly get taken over by AI applications. Increasingly higher-value export items will also help India compete better and make it less vulnerable to developments like sudden tariff impositions. India’s Rare Earth Ambitions Rare earths have their own distinct economics. Prospecting and starting to mine rare earths takes ages. But you have to start at some point. It is good that we are putting plans in place though we should have got started “yesterday”. Indian Auto Sector’s Fortune Boost The small car segment is clearly benefiting from the GST rate cut, if we are to believe media reports. I believe this will get reflected in the data and financials of companies soon. I also expect evidence of replacement demand, especially for people graduating to higher car categories such as SUVs. Underappreciated Resilience of Indian Markets The impact of money from individual investors flowing into the markets from mutual funds, life insurance companies and even retirement funds such as those from provident funds, remains under-appreciated. This can be termed as evolution of Indian markets as, unlike in the past, investors remain committed to their market and market-linked investments. This has given Indian markets a level of resilience unthinkable even 10-15 years ago. US-China Trade Talks The US and Chinese economies are so intertwined that if one cares to look beyond the current rhetoric, it is obvious negotiations will happen and a deal is arrived at some point. Listeners may or may not be aware that China is one of the largest investors of US government securities. YouTube Link: https://youtu.be/5yRsnuV4Uus?si=1q6B55tKsldieRBM://youtu.be/5yRsnuV4Uus?si=1q6B55tKsldieRBM

Looking Beyond Moody Markets and Current Uncertainty

 Edited transcripts of some of my responses as a studio guest to questions on the day's headlines in the live radio programme, Market Mantra, on October 10, 2025. Market Mantra is a popular daily programme on business, economy, and stock markets at All India Radio (AIR).

Day’s Market Trajectory

At a time of uncertainty, markets react to whatever information they receive or what they perceive as information. This is often in the form of headlines and reports.

TCS Results and Market Reaction

Markets can behave like moody teenagers and act according to their prevailing mood. There is a narrative in certain sections of the market that Indian IT might have just missed sailing on the AI boom boat, though in the case of TCS, the company is talking of making large data centre investments.

PM Modi-President Donald Trump Phone Call: A Cause for Optimism?

The moment you see an Indo-US trade deal, even if it is a tranche covering low-hanging fruit, markets, especially FPIs, will react positively. You will witness a rush of foreign portfolio inflows, and pressure on the Rupee will ease.

It is worth pointing out that both countries are tough negotiators and have negotiated complex deals like the nuclear deal in the past. If you look beyond the rhetoric, both countries need each other economically. So, the question is not if, but when the Indo-US trade deal will happen.

Prospects of Indo-Australian Defence Partnerships

The key to the growth of the Indian defence sector, both in India and abroad will be how well the sector is opened to private players. This includes start-ups for drones, other aerospace areas, such as drones and satellite technologies.

Rising Inflows in Gold ETFs

This has been influenced by rising gold prices this year. This is similar to high inflows in high-risk sectoral and thematic funds when the stock markets were regularly scaling new highs.

Steady Growth of Inflows in SIPs of Mutual Funds

While looking at healthy mutual fund SIP (Systematic Investment Plans) inflows one needs to keep in mind that they have prevented deep correction of Indian markets in the recent past. They have also taken mutual funds to smaller towns and far-flung areas thanks to various online investment tools.

YouTube link: https://youtu.be/_47eexCxkc4?si=Jc3jYVX2uhaIlxNO

 6 Transformative Aspects of the Digital Rupee 

When it comes to banking and financial services (BFSI), one proposal in Budget 2022 with the most far-reaching impact is the watershed proposal to introduce the Digital Rupee. Various aspects of Central Bank Digital Currency (CBDC) are reasonably well-documented. At the same time, many transformative aspects of the Digital Rupee in the radically altering financial landscape, will only unravel over time. It’s certainly not too early to try and draw the broad contours of the coming transformation. Here are my thoughts on six important aspects.

The matter of acquisition The introduction of the Digital Rupee is likely to happen in phases and after pilot projects, possibly like the Digital Yuan in China. It may well take some years for it to effectively get implemented. An important question would be how easy will it be to acquire it. The key would be the details that would emerge from the RBI which would also influence the Digital Rupee’s adoption.  

Question of adoption Another question about the Digital Rupee would be how seamlessly Indians would be able to move from the physical to the Digital Rupee and vice-versa. While it is not practical, will there be any effective limitation of holding the Digital Rupee? If not, this is likely to have profound implications for banks. 

Issue of impact on banks For centuries, people parked money in banks as deposits. This was, in turn, lent by banks to business, trade, individuals, among others. Since Digital Rupee is going to be well, digital, safekeeping and its role as a credible store of value– which all currencies are supposed to be–will not be an issue. 

A significant amount of money being held in Digital Rupee, especially quantum of money if moving out of banks, will leave banks with lesser funds to lend. This could have an impact on their financial muscle besides their ability to carry out many of its fee-based activities that typically add to their profitability. In other words, can the Digital Rupee box up the size of Indian banks and their traditional role in finance? 

Monetary supervision Monetary authorities like the RBI, have monetary policies which typically operate though the levers of the banking system. If a significant amount of cash effectively lies outside the banking system, how does India’s money management evolve and adapt? And how does one get to ensure policy transmission for digital currency parked in non-banking financial companies (NBFCs) and in mobile apps of FinTech and digital finance companies?

Promise of financial inclusion  One popular argument put in favour of digital currency is that it is likely to foster greater financial inclusion. The question is how will the currently unbanked effectively get access to financial services? To put it another way, given the efforts already made towards financial inclusion, what new benefits will the Digital Rupee offer that will help the population excluded from banking and financial services to enter the fold? 

Question of privacy Would the government and other authorities be able to track the use of the Digital Rupee and if so, what would be the ticket size? My sense is that the greater the surveillance, the less popular it would be for those who regularly use cash such as those in the informal sector, many small businesses and trade, among others. Of course, it goes without saying that the security features of the Digital Rupee would need to be iron-clad since trust is the cornerstone of any currency.  

In the days to come, we will hear more and more about these and many other aspects of the Digital Rupee. The announcement of its introduction reminded me of Victor Hugo’s oft used quote: “Invasion of armies can be resisted, but not an idea whose time has come.” 

The Jagged Curve That We Will Ride As COVID-19 Curve Flattens

If it had been a human being would the COVID-19 virus been a crooked magician much like the Joker in the Batman series? As another turbulent week of humungous human suffering and loss ended, strangely I am kind of fixated on an incident last week involving a senior medical administrator in the US.

Overseeing the arrangements of antibody tests in her area, she decided to be the first to test. Her move to inspire confidence backfired as the test results indicated the presence of COVID-19 fighting antibodies in her. In short, she was infected with COVID-19 without every exhibiting any symptoms and her immune system delivered a knock out punch to the virus. The incident indicates just how contagious this infection is and just how difficult it will be to combat it without specific medicinal cures and vaccines. This is even as countries like India and many others try to slowly get out of their self-employed lockdowns to check the spread of the global pandemic.

As India starts its journey out of lockdown, there is no dearth of scenario building, forecasts and predictions. Many of them are dire and grave in content, with many them talking of a radically different world that we will begin living from now on. While there can be little doubt that the next 12 -15 months would be very painful, with major disruptions to our social and economic life, I find it a little difficult to agree to the “brave new world scenarios” painted by numerous bright minds. Even the next twelve months may turn out to be fairly different from what many of us envisage.

Combating ever weaker infection waves Without vaccines that prevent COVID-19 infections and medicines that cure them, all countries will continue to suffer from thousands of cases of infections that will come in waves from time to time in 2020. Some of us will remember how it is to throw a stone in a pond with still water. The ripples created get progressively smaller as waves progress. This will also be the likely fate of subsequent waves of infections. This is simply because people in different countries will now be better informed after the first long lockdown, be more alert and take precautions, seek treatment quickly since symptoms and dangers are well-known. Most importantly, the healthcare systems will be better equipped to deal with COVID-19 patients subsequently. If India manages to reduce the rate of infections and the absolute additional numbers even by May 15 or so, as it seems likely, it would have gained a very important upper hand in its war against COVID-19.

Jagged path to normalcy Despite gaining any upper hand, in India and elsewhere in the world, new bouts of infections will keep disrupting people’s lives. That is also the reason why even if governments gradually lift restrictions, companies and individuals will very carefully and slowly venture back to some of the activities they were involved in before lockdown. So, in the next twelve months only some employees maybe asked by their companies to come to office on some days of the week. There could be multiple shifts instead of fixed work hours. The numbers and durations may increase as people gain confidence.

Restaurants may only be allowed with very spacious seating to ensure social distancing with many of the outlets forced to up the scale up their take-out services. If and when theatres are re-opened, I am sure we will not be bothered by rude people seated nearby talking on their phones loudly. Of course, all this will be allowed with strict social distancing and sanitation guidelines. Non-essential travel, mass entertainment and opening up of secondary and higher education institutions may well be the last to see restrictions lifted even as age-based restrictions such as those for senior citizens are likely to remain.

At the same time, when new outbreaks happen, the areas and their residents, whether in India or abroad, will again go under lockdowns till the tracing and tracking processes get over. So, in the months ahead, we are likely to witness a life marked by fewer physical interactions with other people in our professional and personal networks than in pre-lockdown period. Yet, they will be much more than in the lockdown period. In fact, I feel that we are unlikely to witness the kind of severe lockdown we have are now undergoing in India. But how long would we have to battle the waves of COVID-19 infection?

When the tide turns This clearly depends on when the various efforts to make the COVID-19 vaccine succeeds and when the right drug is found to counter infection. While COVID-19 infection is a new affliction for human race, thanks to the SAARS outbreak in 2002, across the world, be it in the US, UK and Australia, a lot of research had already been done for a vaccine. Work has also been going on in India and China, among other countries. In fact, had it not been disruption in funding to one vaccine project in Texas, US, some years back, some experts in US think that we might have already had a vaccine by now. In any case, given the unusually speedy clearances being given by the notoriously sluggish medical establishments in various countries, one can reasonably expect a COVID-19 vaccine to be available to doctors, nurses, paramedics and other frontline personnel during October, 2020-January 2021. The public is likely to get access to the vaccine 3-4 months after that.

Unlike the experts who are sure of a “brave new world” after the current COVID-19, I am quite sure that a most people will go back to their good old ways once a medical remedy is found for COVID-19.  At the same time, it is likely to take various countries years to regain their economic growth. In any case, economic growth was on a downward slope even before the COVID-19 outbreak and the pandemic just gave a cruel push for the downhill journey.

If anybody has any doubts about my contention, then I suggest a search on the Internet for photos of the 1918 influenza pandemic that killed millions globally. You will find most frontline professionals wearing masks. That was gone in just about a year as nations in the West got into the heady 1920s with the flu behind them. Outbreak for SAARS, Swine Flu and other recent infectious outbreaks didn’t radically alter people’s social and economic interactions even in affected countries. Once danger is out of sight, human beings start feeling invincible. Isn’t that also the reason why funding organisations and governments stopped funding the research in some of the areas?

Does this mean that there will be no lasting legacy of this terrible period in human history? Of course, apart from the human loss, the plunging of millions into deprivation in such a short period of time, there will be lasting changes for many people. But this is not as widespread as experts seem to suggest. Like the Japanese and others in South East Asia, many people in India are likely to pay much more attention to personal hygiene and sanitization. The mask may not just appear during high pollution periods in metros or like the plague scare of 1994 but be part of essential accessories for many urban Indians. More so, for those travelling abroad. These people will also spend more on such products and also factor this in their financial planning by getting insurance coverage for such risks.

Like demonetization in 2016 made many Indians embrace digital payments, even as most Indians merrily continue using cash, large number of laid off people now may find it more convenient to be part of the gig economy and specialized manpower such as those in IT and human resources might insist on work from home options to simply kick out the dreadful time wastage in enduring through hours of traffic jams.

The 1990s hit TV series “X Files” that had two FBI agents investigating mysterious UFO episodes and had a tag line ‘’the truth is out there”. The aftermath of the mysterious COVID-19 pandemic seems to have a similar ring to it. The landscape of the future seems to have features that are familiar to us and yet set to unravel in ways that we can’t anticipate since we are weighed in so heavily by our present. But hey! That’s life, isn’t it?              

Topmost Action Point In India’s Exit From Covid-19 Lockdown: Its Farming

In some hours, we will get to know the next course of India’s self-imposed lockdown to protect itself from the Covid-19 pandemic. For more than three weeks, the lockdown brought to a standstill all economic activity in the country much like more than 100 other countries that have imposed the Covid-19 lockdown. But like any other country, for India too, the lockdown couldn’t have been an indefinite remedy to the Covid-19 malady. In the last 2-3 days, there have been plenty of media reports about how the staggered exit from the lockdown is likely to take place. Clearly, apart from surviving the virus, a country like India, where millions live on the margins, needs to quickly try and kickstart, what seems like a very long journey back to economic normalcy.

This is also coming at a time when some European countries have started to loosen up the lockdown conditions. Spain has announced that it has started relaxing the lockdown conditions, Denmark and Norway did it over the weekend. There has been a lot of talk about the sectors in India that need to be given the preference to restart their operations, albeit in a small scale. Interestingly, there is very little or no discussion about farming. To me, in case of a relaxation of the lockdown in districts without any Covid-19 case or threat, it is farming and activities related to it, that should get top most priority as this sector makes the most compelling case for relaxation.

Coming on the back of a period of broadly stagnating income, most farmers find themselves with good standing crops yet to be harvested. In some cases, this is the only crop for the year. Mess with this and you add to major mess created by the massive numbers of already unemployed migrant workers. To give you a sense of the numbers involved we are probably talking of more than 550 million who depend directly or indirectly on agriculture.

Not that just relaxing farm activities from the purview of the lockdown will be a silver bullet. Farmers are going to struggle to find agricultural workers where they are typically employed. There will also be the issue of supply of important machinery like harvesters which will be available in smaller-than-required numbers and will also need to negotiate border blockages across the country.

If the challenge of timely harvesting wasn’t daunting enough, the produce needs to be procured in the markets where social distancing norms and lack of manpower will again be an impediment. The Indian media has covered very little of the distress in the countryside. To get a sense of what the Covid-19 pandemic can do to agri economy on needs to look at the distressing footages of farmers throwing away their agri and dairy produce in countries like the US.

Clearly, supply of free foodgrains to the rural areas regardless of whether families and individuals have ration cards and other requirements, saving farmers from payouts like interest payments in times of income loss and restart their income flow with direct agri produce procurement, have to be among the critical points in any economic revival strategy in early part of the post-lockdown period. There hasn’t been much discussion on agri-related distress from Covid-19 lockdown because other sectors have been more vocal and typically get sympathetic ears. But make no mistake, if India is to record any kind of economic growth rate in 2020-21 after COVID-19 outbreak, agriculture may just about the best if not the only bet.

Why Nervousness of Rupee's Fate Will Continue for Many Months

Rupee's rollercoaster ride continues. Down yesterday, and today first up down, up... Well, I am sure people will get the drift. Of course, the fear that the rupee will plumb the depths it had some months back is still fresh in people's minds. I have been asked a couple of times in the last two months, especially in a popular radio show, whether I expect a major turnaround in the fortunes of the rupee. My reply has always been been that it is unlikely that it will appreciate beyond Rs 60 to a dollar in the best case and in most days till March-end it will probably hover closer to Rs 60 than Rs 65. I do still believe so. As we move ahead in the remaining part of the financial year, we can expect exports to perk up as US and some European economies recover. If the gold imports remain in control as they have (the unofficial imports i.e. smuggling must be going on), this should be a decent factor helping the rupee. Inflation is unlikely to spike internally (monsoon is behind us) though it can remain stubbornly high at the current levels.That leaves us with US Fed's so-called "Tapering". It is unlikely that anything drastic will be done by Fed real soon. History teaches us that economies recovering after recession triggered off by a financial crisis take long time to recover and do so slowly. The current global financial crisis is no different. It has been six years since 2008. Median wages today in the US are what existed about four decades back and public investment is at the same level as 1947. These are not the indicators of an economy out on a hundred metre dash in the next few months raising inflation and employment levels which the Fed will be eyeing before it begins the "Tapering". Of course, that will not stop people from getting nervous about the rupee since confidence in a currency is also about the confidence in the economy it represents. One has to admit that India's fundamentals need to be fixed. A critical milestone will be the fiscal deficit figure that will be mentioned in the next Union Budget on February 28. Once the world has known that the Government has been able to meet its target (by hook or crook) and also has been able to control the external deficit, which I think it will be able to meet, people will start feeling a little less nervous about the rupee. But that's more than three months away, isn't it? Well, till then, we can expect more of the same.    

Searching for the Bottom

Did people actually buy televisions and other appliances before the festive season began? If you take yesterday's industrial production figures seriously, you would probably conclude so. Consumer durable production has done badly. Whether anyone takes the figures seriously or not, the figures look quite serious with almost all sectors doing badly except electricity. One of the reasons one has to carefully look at industrial production data is because it often has quirks that are not immediately apparent. Thus, it is probably better to see something going on for some months before concluding something is actually happening. Of course, there can be no doubt in anybody's mind that industrial production and industry is doing badly. That has been going on for many months now. Even though people keep looking for signs of a turnaround, there just doesn't seem to be any evidence of it. Very clearly, manufacturers are making adjustments to their production levels, in many cases reducing production, sometimes even shutting down facilities periodically. Even as this happens, adjustment of inventories is also happening. Then, there is the prickly receivables issue where people down the line are grappling with outstanding payments thanks to the tight liquidity conditions. In such conditions, it is not unusual for smaller outfits to go belly-up. We all know that you can be asset rich and have sales going but working capital or shall we say, cash, is the king. It is the lifeblood of business. Suck that out and business first heads for the ICU and then to its grave. Much of all this happening at a pretty wide scale and I realised this during my short break last week as I interacted with various people from small scale entrepreneurs to shopkeepers on sidewalks .
 Of course, there are people who keep wondering when the investment cycle will kick off. I would say that it is a long way off. Biggies will wait for elections. Nobody likes dealing four-, ten-, twenty-headed authorities indulging in multiple speak about rules and giving them a hard time. For others, they will try to first get a  fix on what to do with their existing investments and capacities. That would go on for some time. As for me, I am really not expecting industrial scene to change any time soon.