{"id":39670,"date":"2026-01-16T20:57:38","date_gmt":"2026-01-16T15:27:38","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=39670"},"modified":"2026-01-16T20:57:38","modified_gmt":"2026-01-16T15:27:38","slug":"taming-the-tiger","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/taming-the-tiger\/","title":{"rendered":"Taming the Tiger"},"content":{"rendered":"

Tax cases often feel boring and rarely dramatic. Unless you are in India, of course. And like a couple of old cases long forgotten, the new one that made headlines this week also had everything: offshore entities, millions of dollars flowing in and out of the country, and a long-running argument over who controlled the money.<\/span><\/p>\n

So, here\u2019s a blow-by-blow account of what happened and why it\u2019s important.<\/span><\/p>\n

A Supreme Court\u2019s ruling this week implies that Tiger Global, a New York-based investment firm, may be liable to pay capital gains tax on its 2018 stake sale in ecommerce company Flipkart to US retail giant Walmart.<\/span><\/p>\n

But the court didn\u2019t merely settle a dispute over capital gains. It has also drawn a line that will upend the era of comforting assumptions in cross-border investing.<\/span><\/p>\n

The transaction itself is familiar to anyone who has tracked India\u2019s startup boom over the past decade. Tiger Global, which began investing in Flipkart in 2009-2010 when it was just a fledgling startup selling books and music CDs, sold most of its stake in 2018 to Walmart for $1.6 billion.<\/span><\/p>\n

Here things get a little more complicated, so stay with us for a second. Tiger Global, via some entities registered in Mauritius, held shares in a company incorporated in Singapore that eventually owned Flipkart in India. When Walmart acquired a 77% stake in Flipkart in 2018 for $16 billion, those Mauritius vehicles sold shares in the Singapore entity and booked gains. This is when India\u2019s tax department made its entry.<\/span><\/p>\n

Before we go any further, a word about Mauritius. Global investors have used the island nation 5,000 km away from India for decades to skip taxes, relying on the India-Mauritius double taxation avoidance agreement. While the treaty was tightened in 2017 to plug some loopholes, it included a so-called \u2018grandfathering\u2019 clause to protect investments before that year.\u00a0<\/span><\/p>\n

This is exactly what Tiger argued\u2014the sellers were Mauritius residents, the treaty applied, the investments were older than 2017, and India had no taxing rights. The tax department, however, saw an investor exiting through a carefully layered structure with decision-making power located well away from Mauritius.<\/span><\/p>\n

The Authority for Advance Rulings initially held that the transaction was designed to avoid tax. The Delhi High Court later disagreed and granted Tiger relief, reinforcing the belief that grandfathering under the treaty still offered strong protection. The Supreme Court has now undone that comfort.\u00a0<\/span><\/p>\n

The court has held that, when facts establish an impermissible avoidance arrangement, India\u2019s general anti-avoidance rule (GAAR) applies, even if the investment itself predates the formal introduction of GAAR. In effect, the court refused to treat grandfathering as a time-stamped immunity certificate.\u00a0<\/span><\/p>\n

This is a significant recalibration of how tax treaties are interpreted. For decades, a tax residency certificate from Mauritius was sufficient to avoid paying tax in India. This will no longer be the case, as the court held that those entities were actually controlled from the US.<\/span><\/p>\n

The court order is important for a couple of other reasons. One, it asserts the government\u2019s right to tax a business whose value comes from Indian assets even though holding companies might be based elsewhere. Two, it\u2019s a dramatic about-turn from the Vodafone and Cairn tax cases where the court took sides with the companies and quashed tax notices. But perhaps most significantly, global investors, private equity and venture capital firms as well as Indian startups and other companies will have to rework their entire math.<\/span><\/p>\n

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\"SIP_Kuvera\"<\/b><\/strong><\/span><\/p>\n

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What\u2019s The Hurry?<\/b><\/h3>\n

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From tax frictions to domestic market regulations, the tension between growth and guardrails is becoming difficult to ignore. India\u2019s ability to balance is now being tested in its fast-growing quick-commerce sector.<\/span><\/p>\n

The Indian government has asked quick-commerce companies to drop the \u201c10-minute delivery\u201d promise from branding and marketing, citing concerns over worker safety. The request follows closed-door discussions between the labour ministry and company officials after a nationwide strike by delivery riders protesting dangerous working conditions.<\/span><\/p>\n

Platforms such as Eternal Ltd\u2019s Blinkit, Swiggy Ltd\u2019s Instamart, Amazon, Flipkart and Zepto have built massive urban demand by promising groceries, electronics and household supplies within minutes. That convenience has reshaped shopping habits in India\u2019s largest cities. But critics argue it has also transferred risk down the supply chain, placing intense pressure on gig workers to meet unrealistic timelines.<\/span><\/p>\n

Last month\u2019s strike by thousands of delivery riders brought those concerns into the open. While customer disruption was limited, the protest forced a broader debate about the human cost of ultra-fast delivery.<\/span><\/p>\n

How much will it hurt consumers? Survey data suggests the impact may be limited. A study by the LocalCircles online community platform, which received over 90,000 responses across districts where quick commerce operates, found that 74% of users support the government\u2019s move. Nearly 38% said they never want 10-minute delivery at all, while among those who do value speed, medicines emerged as the top use case, followed by essential items.<\/span><\/p>\n

This matters in a country where the gig economy is expanding rapidly. According to the government\u2019s think tank NITI Aayog, the number of gig workers is projected to rise from 7.7 million in 2021 to 23.5 million by 2030. As competition intensified over the last few years, faster delivery became a marketing arms race. Removing the 10-minute promise may slow the optics of convenience. But if consumer preferences are already shifting toward reliability over recklessness, the reset could prove less disruptive than feared, and more sustainable in the long run.<\/span><\/p>\n

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Gold On The Run<\/b><\/h3>\n

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If the quick-commerce reset reflects regulators pushing back against excess speed, financial markets are responding to a different anxiety altogether \u2013 one where caution, not convenience, is being priced in.<\/span><\/p>\n

Gold has opened 2026 at a pace few anticipated, marking a sharp continuation of last year\u2019s momentum with prices in India already crossing Rs 1.45 lakh (about $1,605) per 10 grams.<\/span><\/p>\n

Global prices have crossed $4,600 per ounce and major brokerages now expect gold to potentially cross the $5,000 level this year, driven by a combination of geopolitical risk, expectations of US monetary easing, strong investment inflows and sustained central-bank buying.<\/span><\/p>\n

Political uncertainty has been a key catalyst. Prices surged after US Federal Reserve Chair Jerome Powell said the Fed had faced threats of criminal indictment from the Trump administration, raising concerns about central-bank independence. Lower expected US interest rates have further boosted gold\u2019s appeal by reducing the opportunity cost of holding non-yielding assets.\u00a0<\/span><\/p>\n

Investment flows have reinforced the move. Annual inflows into physically backed gold exchange-traded funds reached a record $89 billion in 2025, according to the World Gold Council.\u00a0Central-bank demand has also remained elevated, with China extending its gold-buying streak into a 14<\/span>th<\/span> consecutive month.<\/span><\/p>\n

Silver, meanwhile, has outpaced gold. After a 147% rise last year, analysts see further upside driven by tight supply, investment demand and its growing role in critical industries. Some banks, including HSBC, have warned that volatility \u2013 and the risk of a correction \u2013 could emerge later in the year.<\/span><\/p>\n

Taken together, the moves in gold and silver point to a market recalibrating risk. With geopolitical uncertainty unresolved, expectations of US rate cuts intact and central bank demand showing little sign of easing, investors are positioning for a period in which policy visibility remains limited, even if price momentum proves uneven.<\/span><\/p>\n

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Signs Of Life<\/b><\/h3>\n
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If gold\u2019s surge reflects investors hedging against uncertainty, corporate earnings are beginning to show where risk appetite may be quietly returning.<\/span><\/p>\n

Third-quarter results from India\u2019s top IT exporters point to a tentative, AI-led stabilisation after a prolonged slowdown, even as profits remain under pressure and visibility stays uneven.<\/span><\/p>\n

Tata Consultancy Services reported third-quarter revenue that edged past expectations, rising 4.9% to Rs 67,087 crore in the three months ended December, slightly above analysts\u2019 estimates. Growth was driven by AI-led spending in a seasonally weak quarter, with the company saying AI services now generate $1.8 billion in annualised revenue, or about 5.8% of total sales.\u00a0<\/span><\/p>\n

North America, which is nearly half of TCS\u2019s revenue base, grew for the first time since mid-2023. Still, net profit fell 14% to Rs 10,657 crore, hurt by one-time restructuring costs, legal expenses and the impact of India\u2019s new labour codes. The company\u2019s order book declined to $9.3 billion from $10.2 billion a year earlier.<\/span><\/p>\n

At HCL Technologies, revenue rose 13.3% year-on-year to Rs 33,872 crore, beating estimates, supported by $3 billion in new deal wins. The firm narrowed its full-year growth forecast to 4%-4.5%, citing improving visibility around AI-related spending, even as clients remain cautious on discretionary outlays. Profit fell 11.2%, largely due to a one-time labour-code charge.<\/span><\/p>\n

The clearest signal came from Infosys, which unexpectedly raised its FY26 revenue growth forecast to 3%-3.5%, up from 2%-3%. Third-quarter revenue rose 8.9%, while large-deal bookings climbed to $4.8 billion, pointing to renewed momentum in financial services and AI-linked projects. Net profit, however, slipped 2.2% on a one-time charge tied to labour reforms.<\/span><\/p>\n

Taken together, the results suggest India\u2019s $283-billion IT sector may be entering a gradual recovery phase, led by AI demand and selective deal activity. But it remains constrained by global uncertainty, cost pressures and cautious client spending.<\/span><\/p>\n

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Hold On, I\u2019m Comin<\/b><\/h3>\n

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In August 2025, US President Donald Trump imposed tariffs of up to 50% on Indian goods, among the highest applied to any major trading partner. It included a 25% penalty explicitly linked to India\u2019s continued purchase of Russian oil. The move came at a time when negotiations on a long-discussed India-US free trade agreement were ongoing. Shortly after, the talks stalled altogether.<\/span><\/p>\n

Political ties between Trump and Prime Minister Narendra Modi, once publicly warm, appeared to cool. India defended its energy purchases from Russia as essential to domestic needs and price stability. Differences also surfaced over Trump\u2019s claims and India\u2019s denials of his role in a ceasefire with Pakistan.<\/span><\/p>\n

Negotiations resumed in mid-September 2025 and, since then, there have been multiple rounds of visits by US delegations to Delhi and Indian officials to Washington. But, despite earlier statements targeting completion by fall 2025, neither side has offered a firm deadline.<\/span><\/p>\n

Nevertheless, two developments this week have rekindled hope that a trade deal will be signed soon.<\/span><\/p>\n

First, Washington\u2019s newly appointed ambassador to India, Sergio Gor, said that both sides continue to actively engage. Speaking in New Delhi on Monday as he formally took charge (walking up to the podium to take the oath of office on the 1966 soul classic ‘Hold On, I’m Comin\u2019 played in the background), Gor acknowledged that failure to secure a deal had \u201croiled\u201d bilateral ties and contributed to financial stress.<\/span><\/p>\n

The second signal came from India\u2019s external affairs minister S Jaishankar, who said that he held talks with US Secretary of State Marco Rubio covering trade, critical minerals and energy.\u00a0<\/span><\/p>\n

Taken together, these moves do not guarantee a breakthrough. But they do suggest that talks are no longer frozen. And, after months of drift, that can be seen as the first necessary step towards an agreement.<\/span><\/p>\n

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Market Wrap<\/b><\/h3>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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Indian stock market benchmarks were largely flat this week as gains in technology companies on Friday offset declines in the previous sessions due to concerns about the lack of a US trade deal and foreign fund outflows.<\/span><\/p>\n

The Nifty 50 ended 0.04% higher while the Sensex slipped about 0.01% during the holiday-truncated week; markets were closed on Thursday for municipal elections in Maharashtra.<\/span><\/p>\n

In the broader markets, small-caps rose 0.5% and the mid-caps inched 0.2% higher.<\/span><\/p>\n

IT stocks were the standout performers thanks to strong earnings reports. Tech Mahindra jumped 5.6% and Infosys climbed 4.7%. HCL Tech and Wipro were up over 2% each.<\/span><\/p>\n

Public-sector companies ONGC, NTPC and Coal India as well as State Bank of India were also among the major gainers, as were metal stocks Tata Steel, Hindalco and JSW Steel.<\/span><\/p>\n

Drugmakers were the top losers. Cipla lost 4.65%, Sun Pharma skid 3.5% and Dr Reddy\u2019s Labs fell 2.9%. Larsen & Toubro, Maruti Suzuki, Eicher, Jio Financial, Asian Paints and ITC were the other major laggards. Heavyweights HDFC Bank and Reliance Industries also ended in the red.<\/span><\/p>\n

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\"FD_Kuvera\"<\/p>\n

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Earnings Snapshot<\/b><\/h3>\n

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