On Episode 932 of The Core Report, financial journalist Govindraj Ethiraj talks to Sanjay Lazar, Aviation Expert.

SHOW NOTES

(00:00) The Take

(05:29) Tariffs Are Firmly On US Agenda, Fuelling Fresh Trade Uncertainty

(07:26) Markets Could Be More Stable This Week Following Pause In The War

(08:44) Govt Proposes Allowing Foreign-Funded E-Commerce Firms To Own Inventory And Sell Products Directly For Exports

(10:36) Should An Airport Owner Also Run An Airline?

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Monday the 27th of July and this is Govindraj Ethiraj, usually broadcasting and streaming weekdays from Mumbai, India's financial capital, but in transit right now.

The Take

India's education minister has resigned. A key demand of student demonstrators across India who called for his head after widespread paper leaks forced the postponement of a key medical entrance exam and far more tragically drove many young applicants to suicide.

Unconfirmed reports put the death toll between 10 and 20 students who died by suicide. But even if a single student has died by suicide in this context, it should make those directing education policy hang their heads in shame because there is profound cruelty in a system where a teenager feels a lifetime of opportunity has been destroyed by missing or being unable to sit for one entrance exam. Indeed, why must a single test carry stakes so high that young lives hang in the balance? The odds are never favourable.

Some 2.2 million students sat for the National Eligibility Come Entrance Test or NEET for medical seats in the month of May, only for the government to cancel the results after it transpired that the papers had leaked. Students who endured the agonising preparation for the first exam were forced to pick up their textbooks once again for a retake in the month of June. Of the 2 million or so who appeared, only about 5% were selected for some 140,000 medical seats.

Some 35,000 typically every year head overseas, mostly to former Soviet republics and countries like Bangladesh and Philippines. Even to return and work as doctors in India, they must clear the NEET cut-off, the print editor Shekhar Gupta pointed out in his National Interest column, underlining the severe supply-side problem. Millions of others endure similar panics for engineering colleges and the Common University Entrance Test or CUET, a standardised exam designed to level the field across state and national school boards.

The question that's worth asking now is really for what? Setting medicine aside, what does a student who beats the odds and hits the jackpot actually achieve compared to someone who misses out? Now this is a perennial question but it commands far greater weight in 2026 at a time when artificial intelligence is rewriting the very rules of the job market. The leaks and street protests of course reflect a much larger set of anxieties and disillusionment, including a lack of visibility into future careers and proper jobs, and the sense that the government of the day was not being accountable on the system's failures. The solutions offered right now are predictably bureaucratic, including harsher punishments for test leakers, new oversight committees, and more state nominees to run them.

Or go back to the old ways, which is to leave it to the states to run admissions, which has its own set of problems. But creating new laws, bodies, or penalties to stop leaks appears to be obfuscating the key issue. It also distracts from the central question and a clearer definition of the problem, at least from my point of view.

If the state's objective is to give young citizens a clear tangible path to a bright future rather than subject them to endless promises funnelled via social media, then these daily are not the solutions. I do not pretend to have all the answers but a recent momentary encounter with Anna Novosad, Ukraine's former minister for education and science, highlighted what is possible when imagination is put to work. Novosad, who spent two years in her role as minister, returned to the capital Kiev from an overseas fellowship when Russia launched its full-scale invasion in February 2022.

In response to the devastation of schools in her country, which she noted the Russians tend to target to inflict civilisational damage on her society, she co-founded a non-profit called Save Ed. Acknowledging that children in war-torn communities lose the shared spaces critical for in-person learning and human connections, Save Ed came up with interesting interventions. To start, it conducted engineering assessments and began rebuilding damaged schools.

More fascinatingly, it began renovating bomb shelters and basements into mostly underground learning centres equipped with ventilation, heating generators, and books, and more importantly, with the look and colourful feel that a child's classroom should have. Save Ed is also constructing modular classrooms inside clinics and cultural centres as a fast response alternative, and operates something like 160 such centres across today. An initiative like Save Ed stands out for its sheer imagination and clarity of purpose, which is to protect Ukraine's children and preserve their learning journeys at a time of war and incessant shelling.

Are we clear about what and how we want to protect the future of our youth? Maybe, but more in a general sense it would appear. India needs far greater imagination and clarity in approach when it comes to writing education policies for the youth of this era. The old ways clearly will not work and appear more to buy time than bring about meaningful change.

And for those who do not remember, over 18,000 Indian students were studying medicine in Ukraine when the invasion began in 2022 and were evacuated back home. Many have returned since.

And that brings us to the top stories and themes…

Markets could be more stable this week following a pause in the war.

Tariffs are firmly on U.S. agenda, fuelling fresh trade uncertainty.

The government proposes allowing foreign-funded e-commerce firms to own inventory

And should an airport owner also run an airline in India?

Markets, The War, Rupee and Central Banks

Last week saw a battery of new tariffs being announced by the United States.

Whether all of them will eventually hold or not, since among other things the lawsuits have already begun that's within the United States, is a matter for another day. For now it reminds us that tariffs are firmly on the Trump agenda, as is uncertainty across the global trade spectrum, and thus for every business that is part of it. So almost a year and a half on, the game is still on.

A sample. The White House announced a 50% tariff on about $20 billion worth of Canadian imports, equivalent to about 5% of total coming across the border from Canada, according to Bloomberg. Trump also last week gave generic drug manufacturers two years to move production to the U.S. or face 100% duty starting August 2028.

This, of course, potentially hits many large Indian generic manufacturers and would also append a global supply chain that keeps generic medicines affordable for Americans. Another 25% tariff on imports from Brazil also took effect under Section 301 of the Trade Act of 1974. What all of these rounds of tariffs mean for India in general and specific is not clear right now, because there are negotiations still going on for a bilateral trade treaty, and it does appear that the lack of knowledge extends to all parties, including the negotiators concerned.

And the Iran-U.S. conflict has paused again, with public threats and private outreaches continuing, going by reports. What the would like to see, it appears, or for that matter anyone, is obviously the opposite and more diplomatic moves. Speaking of diplomacy, crude oil futures prices were more than 4% lower on Friday after sources said China had initiated a push to resume stalled peace talks between the United States and Iran, according to Reuters.

Last week, crude oil prices jumped after traffic through the state of Hormuz again fell and Yemen's Houthis attacked shipping in the Red Sea, being the other route. According to Reuters, Brent futures were about $96.78 or just under $97 a barrel, having gone above $100 a barrel in a previous session for the first time since May. Overall, oil prices were still up 10% last week.

With all of this in the background, on Friday, Indian stocks fell again, boasting weekly losses as crude crossed that $100 mark. HDFC Bank, which has the highest exposure to the benchmarks, was down about 9.5%, which was also its steepest weekly decline in two and a half years on concerns over margins, while Axis Bank lost 7.5%, according to Reuters. The 30-stock BSE Sensex was down 331 points after a choppy day to close at 76,059, and the NSE Nifty 50 was down 102 points to close at 23,767.

So the latest developments, including the U.S. pause on a possible attack or a possible major attack on or against Iran, does suggest that the markets will be a little more stable this week, or would at least open stable. Meanwhile, the rupee also recovered 18 paise to close at about 96 rupees 55 paise against the U.S. dollar on Friday. This week will also be interesting to see how things shape up from a monetary policy point of view.

From Washington to London to Tokyo, central bankers are about to reveal how worried they are about a return of oil to about $100 a barrel, according to Bloomberg. Signals from the Federal Reserve on Wednesday, followed by central banks, which is the Bank of England and Bank of Japan, will be watched closely, according to Bloomberg.

Relaxation of a restriction on foreign investment in e-commerce

The government is set to relax a longstanding restriction on foreign investment in e-commerce, a move that's expected to benefit large global e-commerce players like Amazon and could lead to a wider opening of India's online retail sector.

Through Press Note 3, the 2026 series issued on July 23, the Department of Promotion of Industry and Internal Trade, that's DPIIT, has proposed allowing foreign-funded e-commerce companies to own inventory and sell products directly for exports. Until now, foreign-funded e-commerce firms were allowed to operate only as marketplaces where they connected buyers and sellers without owning the products. The new policy allows them to purchase, store, and export goods directly from their own inventory.

A note from the Global Trade Research Initiative based in New Delhi points out that India has maintained this distinction for nearly a decade. Under the marketplace model, the platform acted only as a digital intermediary earning commissions while independent sellers owned the goods. Under the inventory-based model, the platform owns the goods and sells them directly like an online retailer, and this could, of course, affect sellers too.

Earlier, India had permitted 100% foreign direct investment in the marketplace model but prohibited foreign investment in the inventory model because, by extension, that would effectively allow foreign companies to enter multi-brand retail, a sector which has been closed off to FDI. Now, the reasoning behind this, as also articulated by the GTRI, was to protect millions of small retailers from the market power of e-commerce giants. According to the GTRI, permitting inventory-based e-commerce for exports is unlikely to remain a exception and could extend the same model to domestic sales, a demand global e-commerce companies have pursued for years.

Also, there's a physical challenge maintaining separate inventories for exports and domestic sales could be or will be difficult to monitor.

Should Adani Start an Airline?

A Reuters report last week, hotly denied by the Adani Group, said the Ahmedabad-headquartered conglomerate was considering launching an airline. The report pointed out that the planned signals had changed the strategy for the Ports to Cement Group, which operates eight airports in India, including two in Mumbai, and also has a $11 billion expansion strategy, but also said earlier that it was not looking to enter the airline business.

The Economic Times also followed up with a similar report saying the group had specifically written to the aviation regulator seeking waiver of a clause that prevents an entity operating Mumbai airport from holding more than a 10% stake in any scheduled carrier and the removal of any such restrictions from future airport concession agreements, according to a letter reviewed by the newspaper. More interestingly, the Reuters report said the Indian government had privately nudged business groups, including Adani, to consider starting an airline due to scrutiny of Air India since its fatal crash in Ahmedabad last year and market leader Indigo's operational challenges that caused widespread disruptions in December last year. Sources told Reuters that the Adani Group acknowledged it was a difficult business, which is airlines, but did want to consider it in the national interest, and also that the government should realise that Air India's struggles and Indigo crisis meant another major airline was needed.

The national interest line of thought may not be a surprise and could also mean that other large business groups in India have been similarly nudged, and that of course leads to a separate line of debate. But the specific question I put to aviation expert Sanjay Lazar is what are the pitfalls of an airport operator also running an airline and why should we be concerned?

INTERVIEW TRANSCRIPT

Sanjay Lazar: The question is, is actually rather moot, given the fact that Adani Enterprises has written to the stock exchanges saying that they have no interest in starting an airline. However, that being said, there was a query from, as media had reported, from a section of a subsidiary, which was Adani Aerospace, and you know Embraer, they are tying up with Embraer, to look at waiving this for future contracts. Now, let's go into the history of this.

First of all, to answer the question, I'm against airports currently getting into airlines, simply because it's a huge conflict of interest. Number two, it's never been done in the world before. You know, those that speak of Singapore and Dubai are missing the wood for the trees, and I'll explain why.

And number three, that you know, you can't have the vendor and the supplier being the same. It just defeats the entire purpose. We go back in history, and we look at 10-15 years ago, the Tatas were taking a stake in GMR, during this very government actually, NDA.

And they had reached an understanding for 49% of GMR, which means GMR today controls 24.6% of all airports in India, and all traffic, which means the Tatas would have owned half of a quarter percent of 25% of all our airports in this country. They were stopped by various lobbies, obviously. When you say all our airports, you mean GMR airports, right?

GMR owned and run? GMR, they would have owned 50% of GMR, basically. Today, in the plethora of airports across India, it's divided into three companies, GMR, Adani, and of course, Brookfield, that owns Bangalore.

GMR has roughly 25%, Adani has roughly 25%. Okay, and you know, 1% is of course Bangalore. But the other airports lie with the Airport Authority of India, and they're supposed to go for privatisation, they've been pending for the last two years.

Hopefully, the government will find that, you know, in the future, there's a large tranche of Chennai, Amritsar, Chandigarh, lots of those airports are likely to get privatised. So that is where this letter or this principle policy was going to be. And government at that stage, and I believe it was 2009, if my memory serves me right, forced the Tata's to get out of that arrangement and drop from 49%, the Tata's voluntary went to 15 odd percent.

That was not satisfactory for the government, they made them go to under 10%. I think eventually the Tata's just gave up, because they already had owned AirAsia, and they were getting into, you know, and Vistara, of course, with Singapore Airlines. So they didn't want this conflict.

Now, nothing, you know, earth shattering has happened since then, to now, except, of course, Indigo has grown stronger. And now it's more or less a duopoly. Rather than question the structural irregularities in Indian aviation, why 50 odd airlines and aircraft manufacture aircraft companies have shut down in the last 20 years, the government is actually putting the cart before the horse.

And this is where I have a huge issue with.

Govindraj Ethiraj: Right. So I think the way this seems to be framed is that there is a need for a few more airlines. And in keeping with the way, I guess the government has been approaching some of these large investment issues, the government has potentially reached out to large business groups.

We know of Adani, they may have reached out to others saying that, you know, we need more airlines, so could you invest and Adani seems to be a logical thing. So I guess the question is, in a sector where people are hesitant to enter, and the government wants to do something to adjust the duopoly, then what are the other options open to it?

Sanjay Lazar: So very good point there, Kovan. Very, very good point. Now let's just address it on two levels.

One is the structural deformities in Indian aviation. Two is the airport issue. I'll tackle the airport issue.

If you were to allow airport companies, for example, for argument's sake, let's just say they allowed an Adani and a GMR to start an airline. You must put in protections if at all I am against it, but if it does, for the sake of breaking the duopoly, one is make them operate purely regional airports, make the airline fly to airports that they do not own. So therefore, if GMR were to start an airline, they cannot fly between Delhi and Hyderabad, because both are their own assets.

Adani could not fly between, you know, Mumbai and Navi Mumbai or any other airport that Adani did put up, you know, owned. That would be fair to the airlines. Number two is for a period of five years, let them purely operate in the regional space, which needs growth, which needs Udaan, which has other things.

The third thing is, allow airlines to then compulsorily get a stake in all these airports. Would the government be willing to do that? Would the airports be willing to do that?

That's as far as the airport and the issue of, you know, having conflict of interest with airlines. The second part is what to structure in the airline space. You know, the structure of aviation has been very weak for many years.

It's not something that we know now. We go back from 1992, you know, when the first private air taxi operators came, we saw changes, 94, the repeal of the Air Corporations Act. Thereafter, we've had Damania, we've had JET closed down, we've had Modulu.

I can give a list of, you know, it's been a graveyard of airlines, NEPC. The government has never gone in structurally. They've had reports.

You've had a number of reports by the expert committees that have recommended certain things. The government makes it so expensive for airlines to operate. First of all, there should be kind of some kind of subsidy for newer airlines coming.

Number two, ATF is the killer. I mean, every state does its own number. So therefore, what they are paying in Kerala is vastly different from Maharashtra, is vastly different from Calcutta, is, you know, it's crazy.

We have one country, we need one level. And third is government has to support, you know, this Cape Town bill, put us back, leasing is so expensive. These are three or four steps I think they need to do.

Govindraj Ethiraj: Right. So just to sort of, for those who may not fully understand or appreciate, what are the operational challenges or what are the operational issues that emerge if an airport operator were also to run an airline? I mean, what's the conflict of interest and how could it play out on ground?

Sanjay Lazar: You know, Govind, before I answer that, I just want to go back to the days of, you know, the old jet airways. If you remember, there were huge hue and cry that jet used to get favoured slots. They would land and their aircrafts would get the jetties first.

Air India, Indian Airlines would not get them. All this happens when you have a cosy relationship with an airport operator or the airport owner or the, you know, ATC, etc. This is what would happen if the airport owner owned the airline.

His airline would get priority to come in, his airline would get the favoured slots, his airline would get the favoured departures, his airline would get, you know, parking bays over the other privately held airline companies. And that is where I think safeguards will never be adequate enough, whatever the government wants to put. And we've seen that even in the current circumstance.

The second danger for the passenger, mind you, I'm not looking out for the interest of the airline. I'm looking out for the interest of the travelling passenger. You've already seen PSF and, you know, the taxes that you pay out of, say, Mumbai or Navi Mumbai.

Navi Mumbai has hit the roof. It's a new airport. There's a lot of cost that Adani has put into it.

Obviously, they're going to charge a higher slab. Now, add to that, he owns the airline, assuming. Or add, let's say, Delhi.

If the Delhi airport owned and they're growing that airport into a massive, massive mega hub, they owned an airline as well, then the cost of the travel becomes so much more expensive for the passenger. Therefore, this puts the passenger at a disadvantage. I do not see an airport operating an airline as a step to reduce airfares.

I see it as a step to consolidating airfares. You know, we all know, we go back to the old story of, you know, the famous late Dhirubhai Amani started. He had fabric and he went backwards into petrol.

And, you know, the garments didn't become cheaper. The yarn didn't become cheaper. He started controlling it.

And this is what will happen. You will have a monopoly of the entire business. Now, please analyse from an aviation perspective.

What does the Adani group own? They own training, FSTC. They own MROs.

They own Airworks India. They have flying schools. They have airports.

They have literally everything. They have aircraft manufacturing now. And if they were to get into airlines, they'd own the cake, the baker, the bakery, and the people who account it.

Really, of course, it's good. It's a great thing as an Adani shareholder. And disclaimer, I am Adani shareholder.

But look at the bigger picture. If we want to expand aviation, then somebody's got to either be at arm's length or there's got to be an independent ombudsman. We have failed in this country to protect the passenger for the last 30 years.

This government, all before that, have failed. There is no passenger charter worth writing home about. There's nothing.

We've seen that in the crisis in December. So that's my fear, big fear.

Govindraj Ethiraj: Okay, so and you're referring to the Indigo operational breakdown in December last year. Okay, last question. So you did touch upon the examples of Singapore Airlines and Emirates and Dubai Airport, all of which are owned by either the same company or subsidiaries of the company or the state as it might be.

And they seem to manage it efficiently. So what's the lesson if so?

Sanjay Lazar: Okay, now let's look at both these examples. In Dubai, the king owns everything. The Emir, Sheikh Maktoum.

He's got separate holding companies for the airports and the Emirates. They're separate. Now, Dinata, as a lot of people have believed, Dinata doesn't own the airport.

Dinata is only a handling agent, ground agent. That is a subsidiary of Emirates. The Dubai International Airport Company is completely different.

They're owned at arm's length by separate people with separate boards. It's just the chairman who is the Sheikh is common. So it's not a comparison.

Let's look at, you know, does Dubai have many airlines? No, it's got one. Does the UAE have many airlines?

Yes, it's got two. Literally, it's got, you know, Emirates and Etihad. Okay, Gulf Air is from Bahrain.

So there's no problem. In India, we've had a huge number of things. So you can't compare.

Singapore, the Singapore Finance Minister is the head of Temasek, literally. Okay, the government of Singapore owns Temasek. Temasek is a big investor with the sovereign fund in many companies.

They own Singapore Airlines, and it's listed on the stock market. And they also own Changi. Now, they're different companies.

It's not the same company. One of the investors is common in both. You can't say that Singapore Airlines owns Singapore Airport, or vice versa.

It's a distinction. It's like Heathrow Airport were to start an airline, there would be chaos. Imagine, you know, you'd have British Airways up in arms, first of all.

So I think it's right that Indigo made a noise, and everybody should actually, and ask for a level playing field first, before they get into all this.

Govindraj Ethiraj: Right, good note to end on. Sanjay, thank you so much for joining me.

Sanjay Lazar: Thank you.