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‘If rupee continues to be under pressure, RBI may look at alternate measures’

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Rahul Singh, Senior Fund Manager � Fixed Income, LIC Mutual Fund Asset Management Ltd, said that if the rupee continues to be under pressure, the RBI may look at alternate measures. The recent fall in 10-year US yield and dollar index may also have provided some respite for the time being.

Excerpts from the interview:

Q. How much repo rate hike do you expect in the upcoming monetary policy and what will be the stance?

A: We expect 35-50 bps repo rate hike in the upcoming policy. The MPC stance however may not be changed from the last policy.

Q. What will be the inflation and growth outlook by the RBI?

A: The RBI may continue to maintain that they see inflation around 6 per cent mark by Q4 FY23. Inflation has softened considerably from the levels we have seen in the 1st quarter. Further global commodity prices have corrected to a great extent which is good news considering India is a big importer, Plus, monsoon till now has been good. All this may give comfort to the RBI maintaining its Inflation level of 6 per cent by end of this fiscal year. The RBI may also be positive on their growth numbers and would at least maintain (if not revise upwards) the numbers projected in the last policy. GST numbers, credit growth and PMI numbers have been encouraging.

Q. Will the RBI continue to support rupee on the near term?

A: The RBI has always maintained that they would not want too much volatility in INR and may continue to maintain the same stance, though there might be direct intervention, our reading says they may not be too comfortable in letting reserves slip. It has come down from 650 billion to 572 billion as per latest data. If Rupee continues to be under pressure, the RBI may look at alternate measures. The recent fall in 10-year US yield and dollar index may also have provided some respite for the time being.

Q. Where you see bond yields if the RBI hikes rate in the August policy?

A: Rate hike is a certainty which the market may have factored in. The movement will play on what RBI says on their inflation forecast and how much of the impact they see on rupee movement. If the statement is like last policy with no major deviations in the projected numbers from last policy, we may see 10-year G-Sec yield falling further to 7.20 levels.

Q. Now FII’s net investment turned positive after nearly 9 months and indices are rising, do you think this trend will sustain?

A: While it is difficult to predict the future FII flows, it is fair to assume that FIIs may not wish to remain away from India for a long time. Rising domestic demand, attractive valuations and favourable macroeconomic factors may catch FIIs interest.

Q. What are your views on US Fed hinting that they are looking to slow the pace of rate hikes in the upcoming meetings?

A: If FED is convinced that Inflation is cooling down going forward, then this statement certainly makes sense. It could have originated looking at certain statistics which shows softness in crude and other commodities prices, weakening Chinese economy, Q2 GDP numbers and the talks regarding recession going ahead. However, the question remains that if PCE price index is 6.8 per cent and core PCE is 4.8 per cent, then is inflation softening going ahead?. The weak GDP numbers majorly owe to lower US government spending and higher inventories rather than indicating falling demand. Similar dovish statements were made earlier as well when there were rumours of 75 bps rate hike, however we saw two back-to-back 75 bps hike. My understanding is that as long as Inflation shows a declining trend, FED needs to be aggressive in controlling that otherwise it may unnecessarily elongate the entire hike cycle impacting the growth cycle going ahead.

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Sugar Stocks Surge Up To 15% In Market Rally, Government Removes All Limits On Ethanol Production

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Mumbai: On September 1, 2025, the Indian government announced a major change: sugar mills and distilleries can now produce as much ethanol as they want from sugarcane juice, sugar syrup, and molasses. This rule will start from the new ethanol supply year beginning on November 1, 2025.

Earlier, during the 2023-24 ethanol supply year, there were restrictions because sugarcane output was low. But with good monsoon rains this year, sugarcane production is expected to rise. So, the government has removed all limits to support the industry and help reach India’s fuel blending goals.

Following the announcement, stocks of major sugar companies like Balrampur Chini, Avadh Sugar, Shree Renuka Sugars, Bajaj Hindusthan Sugar, and Dalmia Bharat Sugar jumped up to 15 percent during Tuesday’s stock market session. Investors see this as a big positive step for the sector.

India is the world’s second-largest sugar producer. But the industry has faced tough times due to falling sugarcane supply. With this new policy, sugar mills can now turn more of their cane juice and B-heavy molasses into ethanol. Ethanol sells at better prices than sugar, which can boost company earnings.

Also, the move helps India progress toward its goal of 20 percent ethanol blending in petrol by 2025, and even possibly 30 percent in the future.

As per the experts this is a big relief for sugar companies. The removal of production caps means mills can now use their full capacity to produce ethanol. This will improve their profits and help the sector grow.

While mills are now free to make more ethanol, the government will regularly check sugar availability in the market. This is to make sure there’s enough sugar left for domestic consumption.

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Private Corporate Investment To Cross From ₹2.2 To ₹2.67 Lakh Crore In 2025–26 Aided By RBI’s 100-Basis-Point Rate Cut

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Mumbai: Private corporate investment is expected to cross Rs 2.67 lakh crore in 2025–26 from Rs 2.2 lakh crore in 20254-25, aided by robust macroeconomic fundamentals, improved balance sheets, rising capacity utilisation, easy liquidity conditions, infrastructure push, and the 100-basis points policy rate cut starting from February 2025, according to the RBI’s latest monthly bulletin. Private corporate investment remained as one of the vital contributors to India’s long-term growth trajectory.

After a period of subdued activity during the pandemic years, the investment cycle is being rejuvenated by a confluence of supportive factors.In 2024–25, the macroeconomic backdrop is characterised by robust GDP growth, sustained disinflation, and a consequent conducive monetary policy stance, the article states.

Over the past few years, Indian corporates have undergone a phase of balance sheet repair, aided by deleveraging, improved cash flows, and strong profitability across several sectors.

The banking sector’s improved asset quality and abundant liquidity have further enhanced the credit environment, translating into easier access to financing for capacity expansion.Recent trends in high-frequency indicators — such as rising imports of capital goods, improved capacity utilisation, and increased flows in corporate bond markets — signal renewed investment appetite among firms.

Additionally, sector-specific policies, such as the Production-Linked Incentive (PLI) schemes, energy transition investments, and digital infrastructure expansion, are incentivising corporates to undertake fresh investments.The domestic economy continues to demonstrate resilience, with real GDP growth of 6.5 per cent in 2024–25, making India the fastest-growing major economy, underpinned by robust domestic demand, and steady progress on public infrastructure investments.

Investment in green field (new) projects accounted for the lion share of about 92 per cent in the total cost of projects financed by banks and financial institutions during 2024-25, in line with the trend seen in the past.

Greenfield investment generally brings new and additional resources and assets to the firms and leads to gross fixed capital formation (GFCF).Higher investment in green filed projects thus points to likely capacity expansion by private corporates going forward, according to the article.

The industry-wise distribution of projects sanctioned during 2024-25 indicates that the infrastructure sector remained the major sector accounting for 50.6 per cent share in the total cost of projects, primarily driven by investment in ‘Power’, followed by ‘Road & bridges’.Beside infrastructure, among the other major industries, chemicals and pesticides, construction, electrical equipment, and metal & metal products also accounted for the sizable share in the total cost of projects.

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India, Africa must double bilateral trade by 2030: Piyush Goyal

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New Delhi, Aug 29: India and Africa must work to double bilateral trade by 2030, focusing on value addition, technology-driven agriculture, renewable energy, and healthcare, Minister of Commerce and Industry Piyush Goyal said on Friday.

Delivering the keynote address at the valedictory session of the CII India Africa Business Conclave here, the minister pointed out that bilateral trade between India and Africa is already fairly balanced — with India’s exports at $42.7 billion and imports at $40 billion.

However, he underlined the untapped potential across regions: “This demonstrates the opportunity we have missed out on over the years, and the scope for expansion today.”

The Minister stressed that India and Africa need not compete in every sector, but rather explore complementarities.

He highlighted areas such as agriculture, food security, cooperative and self-help group movements, education, skill development, capacity building, research and development, innovation, start-ups, healthcare, pharmaceuticals, and renewable energy, which provide vast opportunities for mutual benefit.

Goyal highlighted the immense potential for collaboration in the automobile sector. He noted that while Africa imports nearly $20 billion worth of motor vehicles annually, India currently supplies only about $2 billion of this demand.

He underlined that Indian automobiles are globally competitive, both in terms of cost and quality, with manufacturing standards on par with the best in the world.

He said that Indian manufacturers can play a vital role in meeting Africa’s growing demand for passenger vehicles, commercial vehicles, two and three-wheelers, and affordable electric mobility solutions.

This opens up a wide delta of opportunity for African nations to access reliable, fuel-efficient, and environmentally sustainable vehicles at competitive prices, while India can, in return, benefit from greater imports of African resources such as critical minerals, petroleum products, and agricultural commodities.

This balanced exchange would help both regions expand trade, generate employment, and build long-term industrial partnerships, he added.

Highlighting complementarities, the Minister observed that Africa could support India in areas such as critical minerals and petroleum products, while India could support Africa in food security, technological upgradation, manufacturing, and services.

He mentioned that India is cost-competitive in services like architecture, engineering, IT, AI and telecom, while also offering potential in medical tourism.

Referring to India’s close bond with Mauritius, Goyal assured the Indian Ocean island nation continued support in addressing inflationary pressures in essentials such as milk products, edible oils, and rice.

“It is this spirit of friendship and cooperation that defines India’s engagement with Africa,” he said.

Goyal also recalled India’s support to Africa during the Covid-19 pandemic, when medicines, vaccines and pharmaceutical products were provided at affordable costs, unlike the highly-priced alternatives from developed nations.

He further said that India’s Unified Payments Interface (UPI) could help bring down transaction costs and strengthen Africa’s financial systems.

Calling the Global South the true voice of the developing world, Goyal urged African nations to work with India at multilateral platforms like the WTO to create common objectives and influence global decision-making.

He emphasised collaboration in agriculture technologies, renewable energy, generic medicines, critical minerals, and youth partnerships, noting that the young populations of India and Africa will define the future.

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