India’s ‘unspectacular’ budget overlooks needed reforms

India Business Briefing Indian economyAdd to myFTGet instant alerts for this topicManage your delivery channels hereRemove from myFTIndia’s ‘unspectacular’ budget overlooks needed reformsAlso in this newsletter: US litigation against Adani, and Uday Shankar’s mantraIn her budget speech, finance minister Nirmala Sitharaman said New Delhi would prioritise semiconductors, biopharma and renewables © APIndia’s ‘unspectacular’ budget overlooks needed reforms on x (opens in a new window)India’s ‘unspectacular’ budget overlooks needed reforms on facebook (opens in a new window)India’s ‘unspectacular’ budget overlooks needed reforms on linkedin (opens in a new window)India’s ‘unspectacular’ budget overlooks needed reforms on whatsapp (opens in a new window) Save India’s ‘unspectacular’ budget overlooks needed reforms on x (opens in a new window)India’s ‘unspectacular’ budget overlooks needed reforms on facebook (opens in a new window)India’s ‘unspectacular’ budget overlooks needed reforms on linkedin (opens in a new window)India’s ‘unspectacular’ budget overlooks needed reforms on whatsapp (opens in a new window) Save Chris KayPublishedFebruary 3 2026Jump to comments sectionPrint this pageThis article is an on-site version of the India Business Briefing newsletter. To receive it in your inbox regularly, sign up if you’re a premium subscriber, or upgrade your subscription here.Good morning. This is Chris Kay, the FT’s bureau chief in Mumbai, which is currently shrouded in construction dust. Fear not, readers, Veena is racing back to India following her sojourn in Australia. Normal service resumes later this week.Last night saw a sudden breakthrough in the standoff between Narendra Modi and Donald Trump. The two leaders finally spoke, and the US agreed to reduce its reciprocal tariff rate on India from 25 per cent to 18 per cent, after Trump said Modi had agreed to stop buying Russian crude and instead purchase “much more from the United States and, potentially, Venezuela”.Modi made no mention of his “dear friend” Trump’s comments on Russian oil, but described the news as a “wonderful announcement”. The details of the deal are thin, and it remains unclear whether the additional 25 per cent punitive rate imposed on India in August is still in force.For now, today’s newsletter will look at the revival of US litigation efforts against Gautam Adani, and chew over India’s budget. India’s ‘unspectacular’ budgetAfter ruining many weekends by announcing India’s union budget on a Sunday, and even allowing markets to open for a special session, finance minister Nirmala Sitharaman vindicated an earlier prediction by the FT’s Asia editor Robin Harding. This one, he said in advance in this newsletter, would be “boring”.He was not the only one to arrive at that view. My inbox was flooded with distinctly unexcited reactions to Sitharaman’s 85-minute speech. “Not much of a surprise,” said Madhavi Arora at Emkay Global. “A budget without ‘big bang’ measures,” bannered Nomura’s research note. Among the most generous was Shrikant Chouhan, head of equity research at Kotak Securities, who called it “an all-round, well balanced budget for a complex time”. Not exactly one to write home about, then, but we will try our best. Prime minister Modi’s government sought to push manufacturing to the forefront, which has barely budged as a share of GDP since he took office more than a decade ago. Sitharaman said New Delhi would prioritise semiconductors, biopharma and renewables, while keeping largely in line with fiscal consolidation aims. Tariffs on capital goods were cut. The budget for the production-linked incentive scheme for electronics was doubled to 400bn rupees ($4.3bn). Foreign companies such as Apple can now freely provide machines to contract manufacturers without tax risk. Capital spending was raised to 12.2tn rupees from a revised estimate of about 11tn rupees. But broader infrastructure spending, a Modi-era calling card, is projected to fall slightly as a share of GDP. Shilan Shah at Capital Economics pointed out that the “unspectacular” spending outlay was also focused on road, rail and rare-earth mining projects directed at election-bound states. Those, along with an “upskilling” of 10,000 guides across 20 tourist sites, amounted to “piecemeal measures” at a macro level, he wrote. In all, those plans stopped well short of bold shake-ups. Markets noticed. India’s benchmark Nifty 50 closed 2.3 per cent down at Sunday’s trading close, spooked in part by the absence of ambition and by an increase in transaction taxes on derivatives. As Robin pointed out, private and foreign direct investment remain weak spots for India. This budget mostly avoided laying out a roadmap that might dramatically change that picture.Attention now shifts to the Reserve Bank of India’s interest rate decision on Friday, which may prove just as uneventful with the central bank unwilling to rock the boat. Most economists expect the RBI to hold its benchmark repo rate at 5.25 per cent after a cut at the end of last year. Do you think India’s budget was a success or a missed opportunity? Hit reply or email us at indiabrief@ft.comRecommended storiesChina’s genius plan to win the AI race is already paying off.The FT Weekend edition’s lunch with actor Riz Ahmed.What was in the EU-India trade deal? The FT Economics Show podcast explores.Researchers are grappling with how to stop “AI slop”.New Delhi is opening up to overseas capital in the banking sector. Adani is lawyering upUS authorities allege Gautam Adani and his nephew helped orchestrate a bribery scheme © ReutersAfter more than a year of inertia and some comical efforts by India’s government to avoid serving court summons on one of its most powerful industrialists, US litigation against Gautam Adani has stirred back to life.There has been a recent flurry of activity on the court docket in the Securities and Exchange Commission case, which alleges the billionaire and his nephew Sagar helped orchestrate a bribery scheme linked to solar projects in India and failed to disclose this to US investors. Those charges, alongside a parallel criminal case brought by the Department of Justice, were unsealed in November 2024. What followed was New Delhi’s seemingly limited interest in helping the SEC formally serve the Adanis so the case could proceed. Those familiar with Indian officialdom will appreciate one hold-up, reportedly caused by something as prosaic as the absence of an ink signature on the SEC’s request.After the US regulator asked a New York court permission to sidestep India’s government, the two Adanis have now agreed to accept receipt of legal papers from the SEC. It was also revealed that Gautam retained top-level US attorney Robert Giuffra, co-chair of Sullivan & Cromwell, who has also represented Trump. Although the indictment focuses heavily on alleged bribery, the context behind the specific charges is Adani’s fundraising from US investors and American securities law.

The Adani Group and its eponymous chair have repeatedly denied any wrongdoing.As the FT reported last year, Adani Group executives had hoped that Trump’s election, and his dim view of America’s foreign bribery legislation, might cause the cases to wither. Instead, New Delhi’s relations with Washington have become incredibly icy and Adani appears to be headed for a potentially drawn-out legal battle. At the FT, we will be watching the court docket closely.Go figureAfter Sitharaman outlined that India’s fiscal deficit was expected to remain at 4.4 per cent of GDP and edge down to 4.3 per cent for the next fiscal year, Fitch Ratings warned that the slowing pace of consolidation showed it was “becoming more difficult without compromising more on GDP growth”. Some content could not load. Check your internet connection or browser settings.My mantra“Disrupt yourself, otherwise somebody will disrupt you.”Uday Shankar, founder of Bodhi Tree Systems and vice-chair of JioStar© BloombergEach week we invite a successful business leader to tell us their mantra for work and life. Want to know what your boss is thinking? Nominate them by replying to indiabrief@ft.com Quick questionTo what level should India raise the foreign direct investment cap in publicly owned banks? The government is considering pushing it to 49 per cent, up from the current 20 per cent. Let us know what you think the correct figure should be in the poll below.Some content could not load. Check your internet connection or browser settings.Buzzer roundLast Friday, we asked: Which filmmaker, comedian and composer, whose most famous character had a bowler hat, cane and a waddling walk, received the longest standing ovation in Oscar history?The answer is Charlie Chaplin!Aniruddha Dutta was first with the right answer, followed by Suvodeep Rakshit and Nitin Lall. Congratulations!Thank you for reading.

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