&w=3840&q=100)
India widens global investor access to $639 bn corporate credit market
Bloomberg
By Saikat Das, Subhadip Sircar and Bhaskar Dutta
India has expanded the usage of a derivative product popular with foreign investors, according to people familiar with the matter, giving them wider access to the nation's $639 billion credit market.
The financial regulator for the special economic zone known as GIFT City has allowed global banks including HSBC Holdings Plc and Standard Chartered Plc to offer total return swaps for corporate bonds, the people said, asking not to be identified discussing a private matter.
The expansion of these swaps to corporate debt — in addition to government bonds — comes as India's credit market is booming. Indian companies have issued a record amount of local currency notes, while the high-yield private credit market is also growing. Construction conglomerate Shapoorji Pallonji Group raised $3.4 billion this year in the country's biggest private credit deal.
Total return swaps allow foreigners to get exposure to India without the need to open a domestic account. Under a swap, investors receive returns from an underlying asset without directly owning it, in exchange for fees to the other party. These instruments have become popular since the announcement of India's inclusion in global bond indexes, helping drive $22 billion of inflows into the nation's sovereign debt.
While the approvals for the swaps are only for onshore rupee debt, there is also demand from banks to offer these derivatives for dollar bonds from companies in GIFT City, according to the International Financial Services Centres Authority.
'We will soon be floating a consultation paper in this regard,' K Rajaraman, chairman of the regulator said in an earlier interview.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
27 minutes ago
- Hans India
TGCHE Chairman inaugurates national workshop to elevate standards in B-Schools
Hyderabad: In a significant move toward enhancing academic excellence in business education, Professor V. Balakista Reddy, Chairman of the Telangana Council of Higher Education (TGCHE), inaugurated a two-day National Workshop titled 'Building Excellence in B-Schools: Academic Leaders' Strategies for Institutional Development.' The workshop was organised by the Association of Indian Management Schools (AIMS) at their newly established Secretariat in Hyderabad. Speaking to an audience of over 50 Deans and Directors from top B-Schools across India, Professor Reddy emphasised the vital importance of human resource development in preparing the youth of India for emerging technologies and the demands of the global industry. He pointed out that in addition to academic leadership, clarity in policies related to tariffs and regulations is essential for sustained growth in both business and educational institutions. The workshop included interactive sessions led by distinguished resource persons from academia and industry, focusing on modern strategies for institutional development, innovation, and technology integration. Participants shared best practices aimed at enhancing the quality of teaching, research, administration, and leadership within Indian business schools. The event will continue on August 2 with panel discussions and collaborative planning sessions designed to foster long-term academic and industry connections across the country.
Hindustan Times
27 minutes ago
- Hindustan Times
Trump rattles markets again with new levies
US President Donald Trump formally imposed a 25% tariff on Indian exports late on Thursday in a sweeping executive order that hit dozens of trading partners with new levies, escalating his global trade war as the Friday deadline approached. US President Donald Trump (REUTERS) The Republican pressed ahead with a trade policy that initially sparked market sell-offs when announced in April. On Friday, global shares stumbled, with Europe's STOXX 600 down 1.8% and Wall Street opening sharply lower. Indian equity benchmark indices Sensex and Nifty fell 0.72% and 0.82% respectively. Goods from India face the 25% levy plus an unspecified penalty for Russian oil purchases after talks bogged down over access to India's agriculture and other sensitive sectors, with New Delhi refusing to open its labour-intensive farms to unfettered American imports. Trump's executive order also set punitive rates for 69 trading partners, including 35% duties on Canada, 50% for Brazil, 20% for Taiwan and 39% for Switzerland, as a previously announced 12.01am EDT August 1 deadline approached. Goods from unlisted countries face a 10% baseline tax. The new levies come into effect on August 7. India now faces higher tariff rates than regional competitors, with Thailand, Indonesia and Malaysia set for 19% duties while Bangladesh, Vietnam and Taiwan face 20% rates—potentially weakening India's position as a preferred sourcing destination for US companies. India exports $86.5 billion worth of goods to the US, with a surplus of $41 billion. However, industry experts estimate that a significant chunk of Indian goods may avoid the higher duties for now since the Trump administration has exempted electronics, pharmaceuticals, energy products and critical minerals from additional tariffs citing national interest. Nonetheless, analysts expect a significant impact for India's exports. Ratings agency ICRA has lowered its growth forecast for India's GDP from 6.2% to 6.0%, with further reductions possible if additional penalties are imposed. The Global Trade Research Institute estimates India's goods exports could decline by 30% to $60.6 billion in FY26. 'The tariff announced for India is higher than other Asian countries such as Vietnam (20%), Indonesia (19%), and Japan (15%), which can potentially weaken India's position as a preferred sourcing destination, particularly in sectors like textiles, cut and polished diamonds, tyres, metals, and auto components,' ICRA said in a report. Questions loom over India's purchases of discounted Russian energy, which have prompted threats of additional penalties as Washington seeks to restrict Moscow's export revenues to push President Putin into Ukraine peace talks. 'Several options exist for India to diversify its crude purchases as Russian crude accounted for less than 2% of Indian crude imports prior to FY2023. However, the potential impact of cutting off Russian oil from the international market would be a significant increase in international oil prices as Russian oil exports account for 7% of global liquids consumption,' said Prashant Vashisht, senior vice president at ICRA. 'A significant spike in crude prices could lead to higher crude import bill and under recoveries on sale of liquified petroleum gas, petrol and diesel for the oil marketing companies. A $10/barrel increase in crude oil prices would increase the oil import bill by about $13-14 billion,' Vashisht added. He warned that disrupting Russian energy exports could also make domestic gas and LNG imports more expensive for India. India's tariff rate could be reduced if New Delhi and Washington finalise a trade deal, which both countries have been negotiating since February. However, disagreements over market access—particularly in agriculture—as well as tariff reciprocity and ongoing WTO disputes have held up progress. 'A trade agreement will have a meaningful impact in accelerating our already-robust economic relationship. But an agreement would be more significant to further improve our larger strategic relationship. Not long ago, any type of trade agreement was seen as nearly-impossible, yet we are now on the verge,' said Rick Rossow, who holds the India chair at the Centre for Strategic and International Studies, a Washington DC-based think tank. Basant Sanghera, managing principal at the Asia Group and former US diplomat, warned of missed opportunities. 'It would be a missed opportunity if the trade deal doesn't go through. The interim trade package on the table is substantial, especially by the standards of the US-India economic relationship, and it provides a foundation for future engagement.' Sanghera argued there was a risk of problems worsening unless the leadership on both sides take on a more active role. The tariff announcement also drew criticism from Capitol Hill, with Indian-American Congressman Ami Bera telling HT: 'As negotiations between the United States and India continue, it is vital that we pursue outcomes that reflect the strength of our bilateral relationship and advance our shared strategic interests. India is a close friend and strategic partner. President Trump's misguided and erratic statements do not reflect the bipartisan commitment to strengthening ties between our two nations.'
Hindustan Times
27 minutes ago
- Hindustan Times
‘Ties survived many challenges': India amid Donald Trump's tariff threat
New Delhi : In the face of President Donald Trump's punitive tariffs on Indian goods and criticism of energy and defence purchases from Russia, India on Friday said its ties with the US had overcome several challenges and New Delhi is committed to taking the relationship forward. MEA spokesperson Randhir Jaiswal addresses a weekly media briefing in New Delhi on Friday.(ANI) Responding to the US's 25% reciprocal tariff that becomes effective on August 7 and an unspecified additional penalty for purchasing Russian oil, external affairs ministry spokesperson Randhir Jaiswal told a weekly media briefing that India remains focused on the 'substantive agenda' that the two sides have agreed on to drive the relationship. He also pointed to the potential for growing the 'strong defence partnership' with the US. At the same time, Jaiswal defended India's procurement of energy and defence hardware from Russia, saying New Delhi and Moscow have a 'steady and time-tested partnership'. He also made it clear that defence requirements are determined by India's national security imperatives and strategic assessments. 'India and the US share a comprehensive global strategic partnership anchored in shared interests, democratic values and robust people-to-people ties. This partnership has weathered several transitions and challenges,' Jaiswal said in response to several questions regarding Trump's tariff policy. 'We remain focused on the substantive agenda that our two countries have committed to and are confident that the relationship will continue to move forward,' he said. The India-US defence partnership has strengthened over the last several years and decades, he said. 'There is potential for this partnership to grow further under the India-US COMPACT for the 21st century,' he added, referring to the COMPACT or Catalyzing Opportunities for Military Partnership, Accelerated Commerce & Technology arrangement that was finalised when Prime Minister Narendra Modi met Trump in Washington in February. People familiar with the matter said the Indian side is drawing a distinction between the actions of Trump and the institutionalised relationship between India and the US, which is not limited to trade. At the same time, the Indian side is mindful of the whimsical and unpredictable nature of the American leader's decisions, the people said on condition of anonymity. 'The relationship is not just about trade. It is also about defence, technology, students, people-to-people ties, the mobility of professionals and shared interests in the Indo-Pacific,' one of the people said. 'We have endured worse patches in the past, such as after India's nuclear tests in 1998.' Jaiswal's remarks came a day after commerce minister Piyush Goyal told Parliament that India will take 'all necessary steps' to secure its national interest in the wake of the reciprocal tariff unveiled by Trump. Goyal said the government is examining the implications of the development and is engaged with all stakeholders, including exporters and industry, to assess the situation. In an initial response to Trump's punitive tariff on India, the commerce ministry said India and the US are engaged in negotiations for concluding a 'fair, balanced and mutually beneficial' trade deal and New Delhi remains committed to that objective. At the same time, the government pledged to protect the interests of Indian farmers, entrepreneurs and MSMEs. Trump has unleashed a barrage of social media posts this week, reiterating his claim that India's tariffs are among the world's highest and criticising India for having the 'most strenuous and obnoxious' trade barriers and for buying a majority of its military equipment and energy from Russia. 'I don't care what India does with Russia. They can take their dead economies down together, for all I care,' he said on social media. While announcing a trade deal with Islamabad, Trump mockingly suggested that Pakistan could sell oil to India once the neighbouring country's energy reserves are developed with US assistance. He has also continued repeating his claim that he brokered a ceasefire between India and Pakistan in May, when hostilities erupted after New Delhi launched a military operation to target terrorist infrastructure in territories controlled by Islamabad in retaliation for the Pahalgam terror attack. The Indian side has said no foreign country had a role in the stopping of military actions. In the context of India-Russia relations, Jaiswal said India's bilateral relationships with various countries 'stand on their own merit and should not be seen from the prism of a third country'. He added: 'India and Russia have a steady and time-tested partnership.' Jaiswal said the sourcing of India's defence requirements is 'determined solely by our national security imperatives and strategic assessments'. After US and its Western partners slapped wide-ranging sanctions on Russia over invasion of Ukraine, India ramped up purchase of Russian commodities, especially oil and fertilisers. Russia soon displaced Iraq and Saudi Arabia as the main suppliers of crude to India, the world's third largest oil importer.
