Trump blinks, RBI Moves

DECODE THE NEWS

Trade War Tensions Hit Home: RBI Cuts Forecast, Loosens Credit Rules

What?

Reserve Bank of India (RBI) governor Sanjay Malhotra opened the central bank’s first monetary policy review of FY26 with a stark warning: global trade tensions, particularly the US’s newly imposed 26% tariff on Indian exports, pose a serious risk to India’s domestic growth. 

“Trade frictions will impede global growth,” Malhotra said, adding that this will directly affect India’s net exports. He particularly explained that merchandise exports are likely to take a hit, while services exports are expected to remain resilient. 

The governor also stressed that uncertainty in global trade is itself a drag on the economy, as it dampens growth by affecting investment and spending decisions of both businesses and households. This could potentially slow activity across the manufacturing and services sectors.

"Merchandise exports will be weighed down by global uncertainties, while services exports are expected to remain resilient. Headwinds from global trade disruptions continue to pose downward risks,” Malhotra added. 

To sustain growth amid mounting global headwinds, the RBI’s Monetary Policy Committee (MPC) unanimously voted to cut the repo rate by 25 basis points to 6% — the second cut in two months. The RBI also signalled that this may not be a one-off move, since it has changed its policy stance from “neutral” to “accommodative”

The move comes as the RBI expects Consumer Price Inflation (CPI) to be within a 4% target, down from 4.2% in February, as crude prices continue to soften, giving the central bank room to ease policy without stoking price pressures.

Beyond the macro signals, the RBI also announced a set of regulatory measures that fintech lenders and payments players are calling game-changing. One of the most notable was the decision to extend co-lending guidelines to all regulated entities, not just Non-Banking Financial Companies (NBFCs). This is particularly significant for fintechs like Slice and BharatPe, which have so far stuck to co-branded credit cards and unsecured personal loans, largely due to capital constraints and operational complexity.

Experts TheCore spoke with said that with the new framework, these players can now partner with banks to offer larger-ticket credit products — including auto loans, home loans, and even B2B financing — without having to build full-scale lending operations themselves.

CORE NUMBER

Rs 63,000 crore

That’s how much India is paying France for 26 Rafale Marine Jets, according to Business Standard. France will begin delivering the aircraft within the next four years and complete the process by 2031. Last month, Chief Marshal AP Singh spoke about the Indian Army’s ageing fleet at the Chanakya Dialogues conclave in New Delhi. Given that context, acquiring these jets is a welcome move toward modernising the country’s military. The Rafales come equipped with 13 India-specific enhancements, like advanced radar modes and low-band jammers, all of which will improve and optimize their performance in the country.

—✈️ Flying In Style! Indian carrier IndiGo has become the world’s most valuable airline by market cap, overtaking US-based Delta Air Lines, Business Standard reported. On Wednesday by 2:30 pm, its share price peaked at Rs 5,262.5, pushing its valuation to $23.24 billion. IndiGo is now the only Indian carrier in the global top 10, operating over 15,700 weekly flights — up 12.7% from last year. Since 2023, Indian airlines have placed massive aircraft orders, including IndiGo’s 500 Airbus A320neos and its first 30 A350s. With over 90% market share between Air India and IndiGo, India is poised to become the global aviation industry’s next powerhouse.

— 🇨🇳🇺🇸 China-US Trade War Heats Up! China continues “fight[ing] to the end,” and announced tariffs of 84% on American goods beginning April 10. Beijing added export controls on certain rare earth minerals and said it would file a suit against the US in the World Trade Organization. China also added 11 American drone companies to a list of “unreliable entities,” thus barring Chinese companies from doing business with them. China’s actions come after Trump’s ‘Liberation Day’ tariffs and subsequent announcement of a 104% tariff on Chinese goods. India, for its part, is in talks with the US about a bilateral trade deal that could help the country bypass American tariffs.

—🏠 Loan Relief! Buying a home in India has been tough because of rising prices and salaries not keeping up. However, the latest repo rate cut by the RBI could be a boon for the affordable and mid-range housing sector, reported The Economic Times, as it would make home loans cheaper and in reach of a larger base. The Core reported last month that rising inventory in the affordable and mid-range real estate sector had affected smaller players, with many going out of business.

—🕯️ End Of An Era. Darshan Mehta, former managing director of Reliance Brands Limited (RBL), passed away on Wednesday. Mint reported that Mehta was working with RBL till recently, but took over as a non-executive director on RBL’s board last November. Mehta played a key role in India’s retail and fashion sector, with RBL being established under his leadership in 2007. RBL’s portfolio includes brands such as Jimmy Choo, Tiffany & Co, Tory Burch and Kate Spade. Mehta was a chartered accountant by profession.

PODCAST

On Episode 553 of The Core Report, financial journalist Govindraj Ethiraj talks to Paul Hickin, Chief Economist and Editor-in-Chief at Petroleum Economist as well as Dipti Deshpande, Principal Economist at Crisil limited.

1. Indian markets hold out once again

2. Oil prices are now around $60 a barrel, what could happen?

3. Reserve Bank governor is grilled on rupee even as Chinese Yuan continues to slide

4. Fear of owning US treasuries grips global bond traders

5. RBI lowers growth forecasts for the year to 6.5% from 6.7%

😒 UGHH

First clogged toilets, now this. Air India is under fire again for allegedly downgrading paying business class passengers to the economy on its long-haul Delhi-Chicago route, while crew members used the premium seats for rest, according to aviation news blog Aviation A2Z. A source confirmed this incident to The Core off the record. 

One traveller found her assigned seat had only a tray table glitch and noticed several empty business class rows were later used by the crew for sleep. The same passenger witnessed this on her return trip, while others confirmed similar experiences. The use of pre-printed forms on flight AI126 hints at a systemic issue, not one-off incidents.

Meanwhile, an Air India spokesperson denied the incident to Aviation A2Z, saying this was a system put in place as Air India aircraft don’t have a specific rest area of the crew onboard. 

This comes despite the airline’s earlier promise that fare-paying passengers would be prioritised over crew for premium cabins—a policy crucial for a carrier aiming to revamp its image and business post-privatisation. Despite privatisation and a fleet overhaul, passengers report a recurring pattern: being told at the gate their business class seats have “technical issues”—mostly non-reclining problems. They're then handed pre-filled forms requesting consent to move to the economy.  The Core had earlier pointed out that Air India’s old school practices, such as reserving premium seats for crew, was working against it, and it must shed these legacy issues to make a comeback. 

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas