Ever since US President Donald Trump imposed 50% tariffs on Indian goods in August last year and began a crackdown on H1B visas, there have been growing doubts about their impact and about the state of the Indian economy. But India’s growth story continues to be on the upside.
At a time when global growth is slowing and trade tensions are high, India’s economy is projected to clear a higher bar than expected. The National Statistics Office this week estimated that India will grow 7.4% in the financial year ending March, comfortably ahead of the government’s earlier projection of 6.3%-6.8%. That’s quite an achievement for a near $4-trillion economy navigating a difficult external backdrop.
Indeed, India’s ability to lean on itself has become its biggest economic strength. Strong domestic consumption, sustained public capital expenditure and a steady pipeline of reforms including GST cuts have helped cushion the impact of weaker global demand and Trump’s tariff tantrums.
On the flip side, the NSO projected nominal GDP growth at 8.0%, well below the 10.1% assumed in the Budget. Still, that won’t affect the government’s math as the projected fiscal deficit will still be 4.4% of GDP. This is because the government has also lifted the base-year GDP relative to the Budget projection.
Meanwhile, behind the headline number, a quieter and potentially more consequential conversation is unfolding—not about how fast India is growing but about how that growth should be measured.
The government is examining whether India should eventually shift its primary growth metric from Gross Domestic Product (GDP) to Net Domestic Product (NDP), in line with emerging global norms under the upcoming System of National Accounts 2025 (SNA 2025). Of course, GDP would continue to be calculated, but policymakers are weighing whether the NDP should take the centre stage.
Why does the distinction matter? GDP measures the total value of goods and services produced in the economy. What it does not capture is the cost of producing that output—that involves wear and tear on machinery, buildings, infrastructure, and other productive assets. NDP adjusts for this by subtracting depreciation, offering a closer approximation of the income that households and businesses can actually spend or reinvest.
In India’s case, that adjustment is far from marginal. In 2024-25, depreciation amounted to nearly Rs 37 trillion. As a result, NDP stood at about Rs 293.9 trillion, compared with a GDP estimate of Rs 330.7 trillion. Put simply, once the cost of sustaining growth is factored in, the headline number looks meaningfully different.
Adopting NDP as a headline metric could have three broad implications for India.
First, it would reset growth benchmarks. A shift to net measures would not change the economy’s underlying strength, but headline growth rates could appear lower once capital consumption is fully accounted for.
Second, it could sharpen policy incentives. Measuring growth net of depreciation implicitly rewards efficiency—better technology, longer-lasting assets, and lower environmental damage.
Third, it could reshape how India’s growth story is read abroad. Institutions such as the International Monetary Fund have, in recent years, raised questions around growth measurement methodologies. Moving towards globally aligned net indicators, alongside a revised GDP series, could strengthen India’s credibility.
That said, any such transition is not imminent. NDP is unlikely to replace GDP as the primary headline measure before 2029, potentially as part of a broader overhaul of national accounts. In the near term, attention is on a new GDP series scheduled for release in February 2026, which will update the base year to 2022–23 from 2011–12 and rely more heavily on high-frequency data such as digital payments and vehicle registrations.
So, for now, the 7.4% GDP estimate remains the number that markets, investors, and policymakers will track.
The price of (un)stability
While India’s growth story highlights the comfort of strong domestic buffers, events elsewhere are a reminder of how abruptly external risks can surface and how unevenly markets respond to them.
This week’s sudden US operation in Venezuela, which led to the removal and capture of President Nicolás Maduro and the installation of an interim transition, has ended one long-running standoff. But it has also introduced a fresh layer of uncertainty into Latin America and into how investors read American power in its near abroad.
At one level, the signal was unmistakable. The US demonstrated its willingness to act decisively and unilaterally in the Western Hemisphere. The timing, shortly after Maduro met a senior Chinese envoy, underlined that message, especially to non-regional powers with economic and strategic interests in the region. Yet, beyond the immediate display of force, the consequences are far from settled.
Across Latin America, reactions have been cautious. Several governments had long opposed Maduro’s rule but remained uneasy about regime change by force. Public criticism from countries such as Brazil, Mexico and Colombia reflects that discomfort. However, in practice, the response is likely to be more restrained – symbolic objections balanced by efforts to avoid friction with Washington on issues such as migration, trade and security cooperation.
For India, the direct impact is minimal. But for China and Russia, the episode cuts both ways. Neither was able to shield a political ally from US action, highlighting limits to their influence in the Western Hemisphere. At the same time, the move reinforces their argument that global rules are applied selectively—a narrative that may resonate across parts of the developing world, even if it does not immediately alter strategic alignments.
Markets, for now, appear largely unfazed. Venezuela’s oil production remains modest, and years of underinvestment have severely degraded capacity. While the country holds vast reserves, restoring output would require political stability, institutional rebuilding and sustained capital—a multi-year process at best. Any meaningful impact on global energy supply is therefore a long-term consideration, not an immediate one.
The Venezuela operation is less about a single country than about a broader shift in how power is exercised. For investors and policymakers, it serves as a reminder that geopolitical risk often re-enters the picture suddenly, and that while markets may stay calm initially, the real test lies in what follows once the headlines fade.
Steely Resolve
If Venezuela underscored how political risk can surface suddenly, developments at home this week offer a reminder that regulatory risk can be just as disruptive, even in sectors long seen as steady beneficiaries of policy and demand.
India’s steel industry has enjoyed a favourable backdrop for much of the past decade. Rising infrastructure spending, trade protection and strong domestic consumption have supported volumes and margins. That equilibrium was unsettled this week after reports emerged of a confidential investigation by the Competition Commission of India (CCI).
The CCI investigation suggests that several leading companies—including Tata Steel, JSW Steel and state-run Steel Authority of India, along with more than two dozen others—coordinated steel prices between 2015 and 2023. The CCI has also held dozens of senior executives personally liable over different periods, including top management at some of the country’s largest producers.
To be sure, this is not yet a final outcome. Companies and individuals will have the opportunity to contest the findings, and the process could stretch over several months before an order is issued. Still, the language of the regulator’s assessment suggests that, at least at this stage, it has found the conduct to be inconsistent with competition law.
The potential financial exposure is significant. Indian antitrust rules allow penalties of up to 10% of turnover or three times profits for each year of infringement, whichever is higher. For large producers operating at scale in a period of sustained demand, this introduces a meaningful downside scenario. Executives can also face individual fines.
Markets took note of this. Shares of JSW Steel, Tata Steel and SAIL edged lower, dragging the Nifty Metal index into negative territory, reflecting a reassessment of regulatory overhang rather than a judgement on long-term fundamentals.
The episode raises broader questions about how pricing power has operated in a protected and concentrated sector. India is the world’s second-largest crude steel producer, and public spending has provided a reliable demand floor. In such an environment, allegations of synchronised pricing and managed supply naturally attract closer scrutiny.
The CCI’s reliance on internal communications, including WhatsApp messages, also signals a more forensic approach. Even if penalties are diluted or delayed, there is a clear indication that in sectors where pricing power is strong, oversight is tightening.
Don’t breach the Chinese walls
The CCI isn’t the only regulator investigating alleged irregularities by top companies. India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), has been probing the conduct of Bank of America’s Indian investment banking unit in managing a Rs 1,500-crore share sale by Aditya Birla Sun Life Asset Management in March 2024.
SEBI has accused BoA of violating insider trading rules and breaking internal “Chinese walls” in the share sale. Now, SEBI hasn’t made its notice to BofA public nor has the bank made any comments in this regard. But media reports this week provided some details of the matter. So, here’s what essentially has happened thus far.
The case first came to light in 2024 through a whistleblower complaint. This led to an internal probe by BoA and the exit of senior executives. Subsequently, SEBI stepped in, too.
SEBI found that BofA’s deal team was holding unpublished price-sensitive information on the share sale. Then, at this team’s request, BofA’s broking arm, research team and Asia-Pacific syndicate team contacted investors and shared valuation reports and other confidential details, news agency Reuters reported. These investors include HDFC Life Insurance, investment firm Enam Holdings, and Norway’s central bank.
Basically, BoA’s deal team failed to maintain Chinese walls with its broking and research arms. This impacted the safekeeping of confidential information and internal controls.
This is not all. SEBI says BofA suppressed facts and lied during the probe. It said that BofA initially denied any meetings with investors regarding the share sale but admitted of conversations with potential investors after SEBI confronted it with responses from HDFC Life and Enam.
So, what’s the way forward? BofA will have to respond to the SEBI notice and will seek to settle the matter, likely by paying a fine. But what the case highlights is that the lapse was bad enough; lying to the regulator made it only worse.
Market Wrap
Indian stock market benchmarks slumped this week on concerns the US could increase tariffs on Indian goods. Both the Nifty 50 and the Sensex slipped about 2.5% each for the week, recording their worst weekly drop in over three months. Small-caps lost 3.1% and the mid-caps dropped 2.6%.
Fifteen of the 16 major sectors fell during the week as investors worried about the implications of US President Donald Trump backing a bill targeting countries doing business with Russia with up to 500% tariffs.
Heavyweight Reliance Industries, which had been importing crude oil from Russia, plunged 7.4% for the week. This is its steepest drop since October 2024.
HDFC Bank, India’s largest private-sector lender and the stock with the most weight in the Nifty and Sensex, lost 6.3% for the week, its biggest drop in about two years, amid concerns over slow deposit growth.
The biggest loser, however, was Zudio and Westside operator Trent. The retailer sank 9.9% during the week as its quarterly revenue growth remained tepid.
Adani Enterprises, IndiGo parent InterGlobe Enterprises, Jio Financial, and state-run companies NTPC and Power Grid were among the other major laggards this week.
Bharat Electronics was the top gainer this week. Tata Group’s jewellery and watch retailing arm Titan surged 3.7% on strong sales growth. ICICI Bank ranked third in the top gainers’ list. Eicher Motors, Asian Paints, Nestle and Apollo Hospitals were among the other major gainers.
Other Headlines
- Reliance Industries says to consider buying Venezuelan oil if allowed
- UN predicts world economic growth to slip to 2.7% in 2026 from 2.8% last year
- Hindustan Unilever gets income tax notice seeking Rs 1,560 crore
- India plans to scrap curbs on Chinese firms bidding for government contracts, reports Reuters
- Amagi Media cuts IPO size, sets price band at Rs 343-361, targets Rs 7,810 crore valuation
- Tata Steel’s India crude steel output rises 12% year-on-year to 6.34 million tonnes in Oct-Dec
- Chinese smartphone maker BBK Electronics to make Realme an Oppo sub-brand
- TPG Capital in talks to buy up to 20% stake in IIFL Capital Services
- Adani Enterprises’s Rs 1,000-crore bond issue oversubscribed on launch day
- HSBC India Services PMI drops to 11-month low of 58.0 in December from November’s 59.8
- Air India looking for new CEO to replace Campbell Wilson
That’s all for this week. Until next week, happy investing!
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