Will The Markets Get A Breather From The EU FTA?
The India-European Union free trade agreement has been touted as the mother of all deals by EU President Ursula von der Leyen
On Episode 784 of The Core Report, financial journalist Govindraj Ethiraj talks to Chakri Lokapriya, Chief Investment Officer at LGT Wealth Management as well as Ajay Rotti, Founder and CEO of Tax Compaas. We also feature an excerpt from our India Energy Week interview featuring Sanjay Khanna, Director (Refineries) with additional charge of Chairman and Managing Director at BPCL.
SHOW NOTES
(00:00) The Take
(04:02) Gold prices cross $5,100 as the relentless rise continues
(16:13) Will the markets get the breather they want from the EU FTA?
(18:23) Refining major BPCL’s safety push for consumers.
(24:09) Why tax changes in the Budget seem unlikely.
Energy Special with Sanjay Khanna, Director (Refineries) with charge of CMD at BPCL
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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.
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Good morning, it's Tuesday the 27th of January and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital and we are back from a Republic Day break.
The Take: Indian Politicians Should Trade Performance For Partnership
New Delhi is on the verge of a historic trade deal with the European Union but its regional leaders are still treating the Swiss Alps as a stage for domestic optics.
All the world's a stage, William Shakespeare famously wrote in As You Like It noting that men and women are merely players with their own exits and entrances. At the World Economic Forum in Davos, Switzerland last week, India's political class appeared to take the Bard's observations quite literally. While the global elite gathered in the snow, the truly significant news was happening or is happening elsewhere, at least from India's vantage point.
The only agreement capable of shifting global sentiment, the long awaited India-EU free trade agreement, is not being signed in a Swiss chalet. Instead, the final paperwork is being concluded in New Delhi, India following European Union President Ursula von der Leyen's visit, which also included Monday's Republic Day festivities. Prime Minister Narendra Modi skipped the Alpine trek, possibly recognising that the real exit and entrance of capital is currently in the Indian capital.
The Davos contingent this year was heavy on Indian chief ministers but light on global breakthrough. Leaders from states like Maharashtra, Madhya Pradesh and Andhra Pradesh were in attendance, yet they primarily made headlines for signing memoranda of understanding with domestic Indian companies, deals that could have been easily or just as easily executed in Mumbai or Bhopal. Their presence would have likely gone unnoticed by the international community, if not for the high decibel coverage by Indian media outlets who were omnipresent there.
Politicians appeared to give interviews almost exclusively to Indian reporters. One of them claimed these deals involved a fair amount of foreign investment and thus a Davos backdrop. But that is unconvincing.
Using an international forum to announce domestic partnerships feels less like a hunt for global capital and more like a taxpayer-funded campaign stop. Does this mean India's regional leaders should stay home? Quite the contrary. In a race for global capital, a state chief minister must be at Davos, but they must distinguish between a platform and a stage.
Davos remains a networking engine without parallel. For a politician competing not just with other Indian states but also with other nations, the time spent seeking out collaborations and on-the-run partnerships is invaluable. This year's sessions, covering everything from longevity to electric vehicles, offered a chance to immerse oneself in the trends of tomorrow.
The lesson is not that ministers should avoid Davos, but they should stop treating a global forum as a backdrop for a domestic audience. The last year has been amongst the most tumultuous in recent memory. There were some 65 heads of state and governments in Davos this year, including, of course, US President Donald Trump and Canadian leader Mark Carney, who famously signalled a rupture in the traditional world order.
Many attendees would have been there to enrich their understanding of this fragmenting global economy and see how the world's most influential political leaders were presenting their cases. Unfortunately, by prioritising performance over partnership, India's regional leaders reduced a potentially productive and useful summit to a farce. There are plenty of stages in India for political theatre.
When on the global stage, however, the world expects a different kind of player, one interested in the business of the future, not just the headlines of the morning.
And that brings us to the top stories and themes…
Will the markets get the breather they want from the India-EU FTA?
Gold prices now cross $5,100 as the relentless rise continues.
Why tax changes in the budget may be unlikely
And refining major BPCL’s safety push for consumers.
Hello, Brussels. See you later, Washington
The India-European Union free trade agreement has been touted as the mother of all deals by none other than EU President Ursula von der Leyen herself. Presumably, it's also going to be impactful for either or both parties. And the Europeans are pulling out all stops to not just sign the deal, but also make a good splash of it including by turning up in Delhi to sign and, of course, attend, as they did, India's annual Republic Day parade as special guests.
Could all of this be the break the stock markets are looking for? Partly yes, but the cloud of the United States 50% tariff, which signifies a breakdown in diplomatic relations as well, is still hanging quite visibly over India. Nevertheless, the deal should provide some breathing space to the markets who've been, of course, taking a fair bit of hammering. Of course, US Treasury Secretary Scott Besson said last week that there might be a pathway to reduction on some tariffs on India because India has cut back on oil imports from Russia, which was the ostensible reason for those 25% tariffs in any case.
But we will have to see whether that pathway converts into anything concrete. Meanwhile, there could be big wins on account of the India-EU FTA. The core report believes that what will be good for the consumer will eventually be good for the economy since we've been protectionist for too long and only got worse in recent years.
A Reuters report says that India may slash tariffs on cars imported from the European Union to 40% from as high as 110%, which could affect cars with an import price of more than €15,000 or about $17,700 or close to $18,000. This will be further lowered to 10% over time, according to that report, which means automakers like Volkswagen, Mercedes-Benz and BMW could be able to export their vehicles from elsewhere more cheaply. That's assuming it's not cheaper to manufacture in India, which might be the case, at least in some cases.
But more broadly, the agreement would help Indian exports of goods like textiles and jewellery, which have been hit by that 50% US tariff since late August and more on that deal coming up. Meanwhile, the Business Standard is reporting that Canadian Prime Minister Mark Carney could visit India in the first week of March and the two sides are looking at formally starting their negotiations on a free trade deal with both countries having resolved to double bilateral trade to $50 billion by 2030. They could also sign agreements on AI, critical minerals, energy, and a 10-year Canadian $2.8 billion uranium supply deal during that visit.
So the markets do need something to break out of their present stupor, which is also, by the way, induced by weaker earnings, as we've been discussing. Just to look back at the numbers, the benchmark indices, that's the Sensex and Nifty, have fallen over 4% this month, thanks also to relentless foreign fund outflows, which is over $3.5 billion, and which in turn has been pushed by a weak rupee, fresh tariff concerns, and of course, geopolitical risks. This month, the Sensex has fallen 3,680 points or 4.3%, and the Nifty has fallen about 1,080 points or about 4.13%, so both over 4%.
On Friday, the Sensex was down 769 points to 81,537, and the Nifty was also down about 241 points to 25,048. Remember, Friday was supposed to be the day the markets were going to stabilise, but they started somewhat strong, but then collapsed. The broader markets were also down on Friday with Nifty mid-cap 100 and Nifty small-cap 100 indices closing about 1.8% and 1.9% lower.
Meanwhile, gold prices have crossed $5,000 or $5,100 an ounce, which is quite staggering given that some brokerages had said this was the target for them in 2026 or rather late 2026. For instance, Goldman Sachs had projected gold to be at $4,900 in December 2026. Of course, Goldman Sachs has revised their target now to $5,400, but the way things are going, which is gold at almost $5,100 right now, you never know how soon we might hit it and you would know who to thank for it.
Meanwhile, other analysts are punting that gold will climb now to $6,000 per ounce. It's already up 17% this year and it was up 64% in 2025. Among other factors which are keeping gold prices up are central bank buying, which was also a big driver in 2025 as they de-dollarised or switched from dollars to gold for obvious geopolitical reasons.
Countries like China, India are amongst the many who are buying gold. Also, there have been a lot of inflows into gold-backed exchange-traded funds, including, of course, in India. The Reuters report says gold ETFs saw record inflows in 2025 led by North American funds, and this was sourced to the World Gold Council data.
According to World Gold Council data quoted by Reuters, gold ETFs saw record inflows in 2025 led by North American funds, with annual inflows rising to $89 billion. The rupee fell to a record low on Friday, posted its steepest weekly decline in six months thanks to sustained foreign outflows and hedging by importers. It came very close to Rs.92 to a dollar on Friday and fell to a low of Rs.91.96 on Friday, according to Reuters.
Moreover, the rupee's underperformance this week was more stark given that most Asian currencies managed to rise against a weakening dollar index amidst US President Donald Trump issuing threats over Greenland and then walking them back, according to that Reuters report. Now, the rupee has depreciated about 7% against the dollar in this year, that's in the current financial year, 2025-26, and is expected to trade around Rs.92.50 per dollar by the end of March, according to a poll run by Business Standard. And market participants attributed the sharp weakening of the rupee to a combination of factors, including, of course, that trade deal with the United States.
So the question, of course, as we move on, is whether the India-EU trade deal will flip some of this or buffer some of this. I reached out to Chakri Lokapriya, Chief Investment Officer, Equities at LGT Wealth Management, and I began by getting a temperature check from him on what was happening in the markets and his outlook, particularly given the weaker corporate earnings.
INTERVIEW TRANSCRIPT
Chakri Lokapriya: As we step into this week, I think one of the important things to keep in mind is the rupee has continued to weaken and it has reached an all-time low. And second, the foreign institutional investors continue to sell, and their selling has reached close to about 3 billion just in this calendar year so far, topping the 18.5 billion that they sold in 2025. So, it goes two ways from here.
If there is a tariff resolution fairly quickly, those flows will flip around and turn to be positive, which can take the market much higher. The longer the uncertainty continues, the longer the markets would be rage-bound.
Govindraj Ethiraj: Right. And one of the other things that was seen as a buffer of sorts was better third-quarter results and tending towards even better showing in the quarter ahead. Now, that has not happened, or at least from the sample set that we are seeing right now.
What is, in your mind, the reason for that?
Chakri Lokapriya: You know, going into the quarter as we exited 2025 calendar year, there was the expectation that earnings for corporate India will start turning up, and that the earnings growth, which ranged last year from anywhere between 6 to 8 percent, would accelerate. Going by the current trends, that trend has not yet occurred. Companies are reporting and guiding for about that same 6 to 8 percent kind of growth.
I guess companies are a bit hesitant, you know, waiting and watching the US-India tariff resolution before they commit further capital expansion plans, and I think that is weighing on corporate India.
Govindraj Ethiraj: And how are you seeing overall sentiment in the market as we go into 2026? We've also got a budget coming up, and I know there's nothing budget-specific right now on the horizon. Are there any trends that you're seeing in terms of capital flows or other small or large investor reactions?
Chakri Lokapriya: You know, if you recall, last year's budget was more about consumer. There was an income tax cut followed up by a GST rate cut, and both of it benefited the consumer. And the capital expenditures of the country, as a result, remain more or less in line with the 11 lakh pro.
So going into this budget, given that, you know, last year's consumer was properly addressed, now the focus of the government is likely and hopefully will shift towards increased capital expenditures and increased infrastructure spend, defence, railways. And I think that is the expectation. And many of these stocks in these industrial sectors have not done that well for the past year.
And maybe, you know, once the budget will give us new clues.
Govindraj Ethiraj: And what are the silver linings that you're seeing in this current market environment, if so?
Chakri Lokapriya: You know, the current silver lining is basically industrials as a segment while it has already underperformed. So the valuations are very much in their favour. So and as and when the tide turns, you know, there presents a significant uptick.
On the other hand, domestic sectors like financial services have remained very resilient. Their corporate credit growth remains at about 12-13%. Their balance sheets are strong, their NPAs are low.
So they're in an ability to fund corporate India's growth plans as and when that happens. And when you say financials, do you mean banks and non-banks? Indeed.
You know, across board, whether it's public banks, private banks, NBFCs, housing finance companies across board, financial services companies are well-placed and the fundamentals are very strong and the valuations are low.
Govindraj Ethiraj: Right. In terms of asset classes, we've been talking about equities. Now, the elephant in the room is clearly gold and silver or two elephants in the room.
And that's clearly playing on a lot of investor sentiment because they can see that gold is up almost 11% or more than 11% just this year. Silver is up more than 35% or close to that. How are investors looking at it and what are you advising them?
Chakri Lokapriya: You know, gold and silver as asset classes, I guess, need to be a part of everybody's asset allocation as an approach. And if you look at the current asset allocation into gold, silver is relatively new, of course. Gold still runs to be extremely low on a worldwide standard basis.
If you look at the U.S. as a country, you know, their allocation by their consumers to gold is less than 1%. The rest of it goes into housing, stock market and other things. So and then central banks are also beginning to buy gold.
And so as a result of that, I think, you know, as an asset class, it's worth having a fairly decent chunk of one's portfolio, given the fact that they also run up quite a lot.
Govindraj Ethiraj: Right. And you feel silver is not in the same basket or is it?
Chakri Lokapriya: You know, silver is a relatively smaller asset class. And increasingly, what is happening with the advent of new technologies, new electric vehicles, a new need for silver and industrial use of silver has come about, whereas production of silver has not kept up with the newfound demand. So whether this newfound demand will be a secular or a cyclical thing is still too early to say.
But right now, there is a big supply demand mismatch. And therefore, that points in favour of silver prices.
Govindraj Ethiraj: Right. Last question. So we've got the union budget coming up.
And of course, a lot of it is going to be about tax and other announcements to do with capital expenditure and maybe others as well. What's your sense? Is there something as the financial markets would look forward to or could benefit if they got any wish list from your side?
Chakri Lokapriya: You know, I think the most important aspect would be the government's focus and effort on infrastructure as a space. And if there is even a marginal increase over the previous year, that would be regarded very positively by the market. And it's also essential for long term growth of the country.
On the other hand, you know, India faces one of the highest capital market taxes in anywhere in the world, whether it's STT and various other government taxes. And if there is any kind of a reduction, but I doubt there will be because there is a chatter on that. If there is, then it would be a huge positive.
Govindraj Ethiraj: Right. That's a good note to end on, Chakri. Thank you so much for joining me.
Chakri Lokapriya: Thank you.
The Pact
The India-European Union free trade agreement could impact about $136 billion of trade, could benefit both sides as the two are not rivals but partners operating on different rungs of the value chain, according to a note from the Global Trade Research Initiative in Delhi. India imports labour-intensive downstream and processing-based goods. The European Union supplies capital goods, advanced technology, and industrial inputs.
This complementarity explains why an India-EU free trade agreement could lower costs and expand trade rather than threaten domestic industry, says that report. Tariff cuts would primarily reduce input costs, deepen value chain integration, and increase volumes, classic FTA gains that benefit producers and consumers on both sides. To break it down, and this is a little interesting and useful, though a lot of detail, India exports to the European Union smartphones, garments, footwear, tyres, pharmaceuticals, auto parts, refined fuels, and cut diamonds, whereas EU exports high-end machinery, aircraft, core electronic components, chemicals, quality medical devices, and metal scrap, interestingly enough, and they feed obviously Indian industry and consumers.
India's $60 billion of goods imports in the fiscal year 2024-2025 were mostly capital technology and input-intensive products, which also includes aircraft, and India's roughly $76 billion of exports are downstream and labour-intensive. By the way, refined petroleum products are at about $15 billion, and that includes diesel and aviation turbine fuel. Electronics are about $11 billion, including smartphones, and for those of you who are interested in terms of alcohol trading, India imported wines worth about $8 million and spirits worth about $88 million from Europe in the last year, and that shows where the dominance lies and where a reduction in duties could impact.
Of course, reduction in duties is not an easy thing. Remember that domestic industry pays local taxes and therefore is equalised with foreign imports. So domestic manufacturers, like in this case of spirits and alcohol, will also seek exemptions from local taxes.
The India Energy Week Segment
Oil prices were higher on Monday after climbing more than 2% in previous sessions thanks to output disruptions in major U.S. crude-producing regions because of winter storms and also tensions between the U.S. and Iran, which all lifted prices, according to Reuters, which added that Brent crude futures were at about $65.95, so about $66 a barrel on Monday. Back home, when we think of energy companies, we don't always think of the cooking gas that refineries like BPCL, HPCL, and IOC, among others, distribute to millions of households across India.
The cooking gas cylinder, which travels many, many miles before it reaches your destination or your home and then back to its refilling plant, must remain secure and safe at all times. Defining major, BPCL says the company is launching a new safety campaign backed by several on-ground changes, even as company chairman Sanjay Khanna talks about the last year at BPCL in this exclusive interview ahead of the India Energy Week with The Core Report.
INTERVIEW TRANSCRIPT
Sanjay Khanna: I can share the few key developments of the year 2025. Let's talk about upstream. So, we were in the business for a long time and two of our mega projects at Brazil and Mozambique, they were stuck up for various reasons.
But in 2025, in November, we got good news that Brazil is moving ahead now and FPSO, which is the requirement for processing the crude, that tender has been awarded and it is at the final stage. And similarly in the Mozambique, from February 2021, force majeure has halted all the activities. And again, in November 2025, it was removed and action has begun there.
So, the way it is going, I'm sure in the next couple of years, we'll be having product on those highly ambitious upstream projects of BPCL. Then coming to the refinery, I think the refinery has done pretty well. We continue to be the market leader in the capacity utilisation or GRM.
And credit goes to our international trade team, refinery team, and marketing team together, because it is such a well-oiled system is there working together in tandem for the maximisation of value for the company. For numbers sake, we had utilised almost 115% capacity utilisation was there, which was highest in the industry. Apart from that, on the energy reduction front, the refineries have put a lot of effort.
Coming to marketing, I must say that it was one of the best year for the marketing where the volume was all time high. But more than that, the several initiatives taken by each and every aspect of marketing and we are seeing the great result. Let me start with the retail in the field of digitalisation, customer convenience and trust.
I think they have put a lot of effort. Silent Voices was another initiative where they have rolled people with disability, they were appointed and the number is rising steadily. And today, as I'm talking to you, more than 1200 people are working at our retail outlet and they're serving the customer and the feedback from the customer is fantastic.
Similarly, our LPG business, I think customer safety was always top priority for BPCL and keeping that in mind, our LPG team had taken initiative of called Zero Ka Dum. That is basically thumping the table and telling that come what may, that no damaged cylinder will reach the customer premise. It is end to end from the bottling plant to the distributor, ensuring every safety aspect of the cylinder so that customer get value of it and there is no accident or incident because of cylinder from Bharat Petroleum.
So that was a big achievement and we are having 56 bottling plant and I'm proud to say that each and every bottling plant as of now is certified and which will be ensuring that come what may, because of any trouble at the cylinder, there will not be any accident or incident will be there.
Govindraj Ethiraj: And the materials will also change. Could they change? I mean, because I'm used to seeing old hot-rolled coil steel cylinders.
Sanjay Khanna: That also being talked about and the change of material of construction is also we are planning to do the pilot soon. That is another aspect of it. Then giving the facility so that customer can get the cylinder.
He can collect the cylinder at any point of time at his convenience. From LPG dispenser, the customer can take themselves as per their convenience. They can go and collect that also pilot we are operating it.
So these were the few things for LPG and coming to the lube, I think the team has again launched Mac lubricant where along with the mechanic, they have set up the shop where end-to-end facilities provided to the customer and the quality of the lube oil is ensured. In the field of aviation, they have taken the digital initiative where end-to-end quality and quantity will be ensured. So all in all, it was a great year, even for the gas business, which is one of the our future big bet.
I must say that even though per se the business 2025 was a tough year for the gas, but I am very happy to say that gas team has this period is utilised by them to explore the various options, be in front of the procurement or maybe the alternate uses of gases. So all in all, marketing had done a fantastic job for 2025.
The Budget
Ahead of the union budget 2026 to be presented on the 1st of February, that's later this week or on Sunday, a survey conducted by Grant Thornton Bharat on social media of over 200 respondents has highlighted a strong preference for predictability, simplification, and effective implementation.
With central government capital expenditure now more than three times its 2019-20 levels, businesses are assessing how the budget will sustain momentum while enabling private investment, the survey says, also pointing to a clear shift from headline announcements to policy direction, continuity, and execution. The survey says companies making long-term decisions on capacity, supply chains, and decarbonisation are seeking stable policy frameworks, practical incentives, and smoother execution rather than incremental or short-term measures. On tax, businesses are focused on minimising disruption during the transition to the new Income Tax Act.
I reached out to Ajay Rotti, Bangalore Based CEO and founder of Tax Compaas, and I began by asking him how he was seeing the likely announcements on the direct tax front and also whether he felt that long-term capital gains could be lowered to improve market sentiment.
INTERVIEW TRANSCRIPT
Ajay Rotti: I think on taxes, I personally am not expecting too many changes this time. Firstly, on the overall, in any case, indirect taxes is out of the purview of the FMN budget now with GST, and they've also done a lot of rationalisation on the GST recently. On income tax per se, you know, two things we have to remember.
One, on personal tax side, there was tremendous changes in rationalisation done last year, so they've just increased the I don't think they'll do anything there. On larger directionally on direct taxes, you know, we are at the cusp. There is a new income tax act which has been passed, which is enacted, comes into force on 1st April, 26.
And the old act, which is what is the current act running, will be repealed on that day. So, you know, when the FM is presenting the budget on 1st February, we'll be at a unique place where the new law is yet to come into force on that day, and the old law, which is in force, will be actually going away in about two months. So, I don't think there'll be too much tweaking on that also, because on direct taxes, you know, one, like I said, there's been tremendous changes last year.
And second, they've just done this mid-year exercise of revising the law, and the 2025 income tax act is expected to be a more stable regime, so they may not do too much tinkering again before it comes into force. There could be some small changes, which, you know, it was an elaborate exercise before the parliamentary committee, there were some interesting suggestions that people made. And at that time, the finance ministry had said, you know, we didn't want to make any policy changes by enacting the new law.
That was the reason, even though they thought that those changes were important. Some of those may come in. But I don't think there'll be too many changes on the tax side.
I will be surprised if there are too many things. In my view, I am expecting, from a pure tax perspective, a non-event on 1st February. And on long-term capital gains, Govind, yes, there's a lot of buzz.
I, again, personally don't think there'll be any change on the long-term capital gains side, though this is not something that will be very famous and well-liked by everybody. Our long-term capital gains rates are not too high at this point. And they were changed last year after much thought, and I don't think there's a need for them to be changing it.
The long-term capital gains, and in general capital gains, you know, rate rationalisation carried out last year on multiple things, were all well thought through. They were not a flippant decision for them to be going back in 12 months. And I don't think the FM's decision on what the tax rates have to be will be dependent by where the market is, and if it's tanked, and therefore, there needs to be some support.
I don't think any of that will happen.
Govindraj Ethiraj: Right. And if I can sort of supplement that, you know, there's been a lot of foreign portfolio investment that's been flowing out, and there has been a slowdown on foreign direct investment in. Now, obviously, tax is not the reason things come in or go out.
But do you see tax being an instrument of, I mean, instrument to help make things a little more attractive or lucrative at this point, particularly for overseas investors?
Ajay Rotti: I really don't think so, because I don't think tax is such an important factor in some of these decisions. You know, even if the tax is an attractive rate and a proposition, but the underlying assets and the underlying, for example, if it's equity investment, the underlying business, cash flow, etc., has to be much better. It's not just about taxes.
If you're looking at tax on debt and sovereign bonds, etc., the government has to be more stable in things like that. Those become very important, not 1 or 2 percent, 5 percent, 10 percent of tax rates. The reduction in FBI, there are multiple other global reasons.
Money moving out is also because of the number of listings that are happening and the number of foreign investors who are getting exit in those IPOs and OFS to offer for sale, etc. I think there are too many moving pieces there. But will tax be a sweetener in that sense for some immediate capital to move, etc.?
It could be. You know, we've heard multiple global fund managers, leaders of large investment houses, etc., making comments about how attractive India as a market is because of domestic consumption, multiple other things. Europe is struggling.
I think those are more important factors than purely tax, which is why I again believe that some of these may not really influence too much on the tax policy on capital gains taxation.
Govindraj Ethiraj: Right. If I may touch upon the indirect side, so some of the expectations are obviously around tariffs and there are at least two free trade agreements on the verge of being signed. The most immediate obviously is India-EU, which might get signed as soon as today, and the US, which is still hanging.
So do you think that we could be doing something on tariffs, we should be doing? And also, what could be the policy support for, let's say, small and medium enterprises who are affected?
Ajay Rotti: That is interesting and an important aspect. In my view, we should be doing something for tariffs. We've done a few things.
There have been some changes on, you know, the time limit for realisation of export receivables. These are small announcements made but have a high impact. RBI extended the period for which you can collect money, advances, etc.
I think there'll be more of those kind of things, which could be making it, you know, both ease of doing business, making capital cheaper for some of the exporters, basically to sort of, you know, cushion, provide them a cushion or a headroom to bear some of the tariff impact. Now, there is, again, enough and more discussion on who bears the tariff. There was a study which was done in the US when Trump introduced tariff the first time around, in his first round of administration.
And the study actually said most of it is borne, actually, in all cases by the consumers in the country of import. But I have seen businesses, actually, where probably the tariff impact is being split and some of it is actually being borne by the Indian exporters. So, therefore, that I expect some announcements there.
There could be something for the MSME, especially the impacted sector, textile, you know, seafood, shrimp farming, these kind of things. There could be some incentives. There could be certain things on duties and reduction, et cetera, on the inputs, if possible.
On custom duty per se, you know, like you rightly said, today, we should be hearing about the EU FTA. And that's going to be a big one, you know. And US, wherever it ends and, you know, how certain it will be, et cetera, we'll have to see.
But these two cover a huge aspect of the trade that we do. So, once those are covered, there'll be preferential rates, duties, et cetera, given. I don't think, again, there'll be significant custom duty tinkering on some of the other things.
And remember, after GST, our customs has actually become quite simple. We don't have those peak rates for everything. So, there could be some, because of the tariff, there will be some changes in the custom side.
But I would more keep my eyes open for what will be there on the policy side larger, certain fiscal incentives, something else being given for the exporters, et cetera.
Govindraj Ethiraj: Ajay, thank you so much for joining me.
Ajay Rotti: Thank you.
