India’s widely diversified Adani Group conglomerate’s fast-paced expansion came to an abrupt halt after US short-seller Hindenburg Research went public on January 24 with a damning report. The report charged business tycoon Gautam Adani’s firms of accounting fraud, stock price manipulation and corporate malfeasance.

The stock of Adani Group companies plummeted. Tens of thousands of small shareholders lost huge amounts of money as they dumped Adani stocks. Banks stared at the possibility of loan defaults. Credit Suisse, Standard Chartered and Citigroup stopped accepting Adani Group shares as collateral.

Despite Adani Group’s denial of any wrongdoing and debt prepayment in a couple of companies, banks and investors were not reassured. Adani’s capitalization fell to around $95 billion from $140 billion in 20 trading sessions as of February 22.

Gautam Adani, who has ties to Prime Minister Narendra Modi, had overtaken fellow industrialist Mukesh Ambani in personal wealth. On January 1, Adani was worth an estimated $121 billion and was on track to overtake Tesla and SpaceX CEO Elon Musk as second-richest man globally. In the wake of recent events, however, his net worth has fallen to $43 billion.

Many partners have revisited business relations with the Adani Group. France’s TotalEnergies put future investments in Adani Total Gas, a joint venture, on hold. Similarly, Adani Power had to forego a $846 million acquisition of DB Power. A local company, Orient Cements, terminated development of a grinding plant with Adani.

The group still has admirers, even as market regulators launch a probe. Israel indicated confidence in the group’s capacity to develop its geostrategic Haifa port. Sri Lanka picked Adani Green Energy to develop two wind power plants for $442 million, apart from a $700 million terminal project at the country’s largest port.

Swaminathan S. Anklesaria Aiyar, research fellow at the Cato Institute, drew parallels between Gautam Adani and General Electric CEO Jack Welch and other figures who “diversified crazily to create giant conglomerates, succeeded for a few decades amid applause, but eventually came a cropper.” Aiyar foresees more “financial discipline” imposed on Adani, whom he describes as “a strategic player.”

Sanctions against Russia have inspired local currency-denominated deals in oil and natural gas products and services, as Russia and some of its clients sought workarounds.

Hence, India’s state-run Hindustan Petroleum agreed to purchase 2 million barrels of Russian Urals crude to be paid for in rupees instead of US dollars, Minister of Petroleum and Natural Gas Hardeep Puri told the upper house of Parliament on March 17. However, the ministry walked back any such deal approximately two weeks later.

In 2021, India sourced about 33 million barrels of crude—roughly 2% of its oil imports—from Russia, according to government statistics. India’s oil imports are projected to surpass $100 billion for the fiscal year that ends on March 31. A 2-million-barrel purchase would represent a drop in the bucket for the third-largest oil importer.

Meanwhile, Russia’s top crude exporter, Rosneft, had offered between a $20 to $25 per barrel discounts from spot prices, and had further sweetened the deal by subsuming freight and insurance costs. Bharat Petroleum is close to clinching a similar deal. Crude payments in rupees could be set off against receivables of Indian exporters from Russian entities by reviving the Soviet era “rupee-ruble trade.” Prime Minister Narendra Modi set up a multi-ministerial group to sort out such a payment mechanism after US and EU allies sanctioned Russian banks.

Iran, long under US, EU and UN sanctions for allegedly pursuing nuclear weapons, is also ready to accept payment for oil in rupees and rials. Indo-Iranian bilateral trade plunged to a wobbly $2 billion for the year ending March 31, from $17 billion in fiscal year 2019, according to the Iranian ambassador to India, Ali Chegeni.

It’s not just the Indian rupee. Saudi Arabia, the UAE and Nigeria, the other three big oil suppliers to India, are also open to local currencies—Saudi riyals, dirhams and nairas. Saudi Arabian oil exporters may accept payments in Chinese renminbi. China buys more than 25% of Saudi Arabia’s exported oil.

Indian Prime Minister Narendra Modi’s decision to list state-owned insurance behemoth Life Insurance Corporation of India (LIC), destined to be the largest IPO in the country’s history, has enthused both domestic and foreign investors.

Considered the Indian government’s crown jewel, LIC is valued at approximately $203 billion and has assets worth more than $500 billion. Its IPO, which is expected to raise almost $8 billion, opens in mid-March and will top the prior record, set by payments gateway Paytm’s $2.5 billion debut issuance in November.

Analysts have compared LIC’s issuance with Saudi Armaco’s epic $29.4 billion offer in 2019, which led to the sale of 450 million shares. The LIC issuance is important for two reasons. First, it will help trim India’s fiscal deficit to 6.4% of GDP in the current financial year ending March 2022. It will also allow Modi’s government to meet its disinvestment and privatization target at scaled-down levels of $10 billion, from an initially estimated $24 billion. Key to the success of the LIC issuance, say independent analysts and market insiders, will be pricing.

LIC is a household name in Indian insurance and holds a 64% market share. With 2,000 branches, 100,000 employees and 2.5 million agents, its public offering is the third-largest in the insurance industry globally after AIA’s $20.5 billion offering in 2010, followed by Japanese insurer Dai-ichi Life’s $11 billion listing.

When 5% of LIC’s stock (316 million shares) are sold, top foreign investors like GIC Re, Canada Pension Plan Investment Board, Blackrock and Abu Dhabi Investment Authority are likely to line up with block deals. They have already expressed keen interest. In March last year, the Indian parliament increased the foreign direct investment limit in the broader insurance sector from 49% to 74%. However, Reuters reported in September that the Indian government had only permitted foreign investors to buy up to 20% of the insurer.

A prospectus filed with the Securities Exchange Board of India stated that 5% of shares on offer would be exclusively set aside for LIC policy holders. The company holds 286 million policies and was the fifth-largest premium collector in 2020.

SBI Capital Markets, Citigroup, Nomura, JPMorgan and Goldman Sachs, and five other domestic and international investment banks have been enlisted as lead managers and book runners on the IPO.

Indian conglomerate Tata Group acquired money-losing national carrier Air India in a $2.4 billion equity and debt transaction. Tata subsidiary Talace Private also acquired Air India Express and a half interest in Air India’s airport-servicing and cargo-handling business, Air India SATS.

For 13 years, successive government’s bid to privatize the state-run airline did not materialize, owing to political disagreements and opposition from airline unions.

After 68 years, Air India returned to its roots; it was founded by JRD Tata as Tata Airlines in 1932. The Indian government purchased a 49% interest in the company in 1947 before nationalizing the airline in 1953.

Under terms of the deal, Tata will gain Air India’s 141 aircraft and 7,000 domestic and international airport slots and pay $1.2 billion toward 42 aircraft, many of them Boeing 787 Dreamliners. Air India will continue to operate under the same name.

In other aviation news, Italia Trasporto Aereo became Italy’s national carrier after a $3 billion investment and ceasing to operate as Alitalia on October 15. SwissAir, which went into oblivion in 2002 following liquidation, reappeared as Swiss International Airlines and then merged with German airline Lufthansa in 2005.

Eventually, Tata may consider synergies and merge Air India with its premium Vistara Airlines, and Air India Express with rival AirAsia in the budget air-travel segment. Tata officials say the company will avoid overlap so as not to cannibalize each carrier’s business.

For now, Tata Group commands a 25% share in the Indian aviation market, which is on its way to becoming the third-largest globally, with passengers spending an estimated $136 billion on travel by the end of the year.

Tata’s takeover of Air India is expected to lead to a churn in the Indian aviation market and present opportunities for foreign players. According to government estimates, the Indian aviation industry may attract $4.99 billion in foreign investments in the next four years.         

India added 7,000 new start-ups in 2020, making it one of the top five countries for birthing new businesses, according to a report from the Indian Venture Capital Association and Bain & Co. Twelve new firms soared over $1 billion in valuation during the Covid-19 period. Venture capital firms contributed over $10 billion, according to the report. Sequoia Capital, Elevation Partners, Falcon Edge and Light Speed were among those closing deals even as the pandemic peaked.

The momentum has continued into 2021 as Covid-19-related restrictions ease. Venture Intelligence, a Chennai-based tracking firm, reports that Indian start-ups sealed 152 deals for $2.8 billion in capital in the last three months. Investors are moving in more rapidly, if anything, on promising newcomers. Udaan, a B2B e-commerce start-up, needed just 26 months to reach unicorn status. CRED, a Bengaluru-based fintech, has been valued at more than $2 billion after less than 29 months in operation, making it the fourth unicorn to emerge in 2021, following Digit (insurance); Infra.Market (logistics); and Innovaccer (health care).

Scarce Covid-19 vaccines, Covishield and Covaxin, are boosting India’s soft power as millions of doses travel from Indian facilities to low-income countries struggling with the pandemic.

The two vaccines are available to the Indian government at a price of about $3 to $4 per dose and rolled out by Serum Institute of India (SII) in Pune, and Hyderabad-based Bharat Biotech. The shipments are part of Vaccine Maitri, or Vaccine Friendship, an initiative of Prime Minister Narendra Modi. By February 19, Bharat and SII had supplied over 22.9 million doses to 49 countries in the Caribbean, Asia and Africa, with more on the way. The Ministry of External Affairs says the vaccine supplies are mostly free of cost, on humanitarian grounds.

India launched its own drive, the largest of any country, targeting 300 million people domestically for vaccination in the next few months; the second phase commenced late last month. Indian pharma companies, meanwhile, have supplied 16.5 million doses of Covishield and Covaxin internationally under commercial contracts and some 6.5 million funded by grants. The number is expected to multiply, as India produces over 60% of the world’s vaccines overall.

SII entered into partnership last April with AstraZeneca and the University of Oxford to manufacture Covishield. In February, it increased its capacity, aiming to produce 100 million doses a month by next month. Founded in 1966, SII reported net sales of $717 million in 2019.

Bharat, which developed Covaxin in collaboration with the state-run Indian Council of Medical Research, began operations in 1996. Bharat reported profit of $15.3 million on sales of $104.5 million in 2018-19 and has capacity to produce 300 million doses of the vaccine annually.

Brokerage firm Sharekhan, in a recent note to clients, pointed to huge growth opportunities for Indian pharma companies in the export market—and Bharat and SII are not the only ones hoping to take advantage. Cadila Healthcare, India’s fifth-largest pharma company, valued at $6.2 billion, is betting big on its DNA-based vaccine, ZyCoV-D, which is now in third-phase trials.

Few companies can today can boast that they are debt free, but with an infusion of $15 billion from 12 top global investors, Reliance Industries Ltd (RIL) and its digital subsidiary Reliance Jio Platforms (Jio), which provides digital and telecom services, e-commerce and offers grocery shopping through Jio mart, are now among them. 

Investments from such digital icons such as Facebook and Intel, and the interest of an array of global investors— Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, L.Catterton and PIF— was a vote of confidence in Mukesh Ambani, the tycoon leading RIL.

The company mobilized an additional $7.17 billion in liquid funds via rights issue from existing retail shareholders. Reliance group’s campaign to de-leverage continued with the sale of its nascent oil retailing venture to British Petroleum, bringing another $1 billion to its kit.

Next in the works is a mega deal that involves sale of 20% stake in RIL to Saudi Aramco.

Ambani’s leadership helped grow his personal fortune past $68.3 billion in 2020, edging past Warren Buffet among the world’s richest men. 

It may seem strange that rival tech titans FANG (Facebook, Apple, Netflix and Google) as well as Microsoft and Disney are now bundled together onto a common platform through huge investments, equity exposure and technology interfaces but that’s exactly what happened thanks to India’s Reliance Jio (Jio). Google bought a $4.5 billion 7.73% stake in Jio one day before announcing a $10 billion dedicated India fund to counter Facebook’s $5.7 billion investment effort in the country. All this happened in the last six weeks as Jio mobilized $20 billion in investments from 13 prominent technology investors and digital companies.

“When Facebook announced its investment in Jio, little did anyone know that 12 other investments would follow. Google partnership adds another technology offering for Jio. Now they (Jio) not only provide the phone and the network, but they can also provide the operating system in the phone via the newly proposed Google and Jio joint development plans” said Vikram Shah, co-founder and CEO of California-based investment advisor, Vested Finance.

Back in July 2018, when Reliance acquired US-based telecom software firm Radisys, independent consultancy Deloitte said the move was aimed at preparing for an ambitious foray into 5G, Internet of Things (IoT) and offering high-end digital services. Reliance also acquired another 4G software developer, Rancore Technologies, a year earlier.

These acquisitions seem to have paved the way for Reliance head honcho Mukesh Ambani announcement at the first virtual annual general meeting of investors last week that it was ready with 5G technology and could rollout high-speed digital services immediately after the government auctions 5G spectrum next year.

Well, coming up with home-grown 5G technology, operating system and entry-level cost effective mobile phone would put a large number of top telecom companies on notice including known brands like Nokia, Ericsson, Samsung and Chinese firms, Huawei, ZTE that are facing heat from lawmakers in several geographies including US, UK and India on reported  security concerns.

Credit Suisse, in a note told investors that recent partnerships entered into by Jio had “…great potential to offer services across verticals like education, healthcare, agriculture, financial services, enterprise services, IoT and entertainment apps.”

What seems to have energized foreign investors’ interest in Jio is the increasing dominance of Jio Platforms in India with the country’s internet users expected to reach a whopping 800 million in next two years from roughly 350 million today.

That nine out of ten smart phones in India come with Android operating system and Google’s popularity on videos, maps and email will help immediately cash-in on the partnership with Alphabet led by Sundar Pichai who made a fleeting presence at Reliance investors meet to announce the investment in Jio.

Interestingly, Jio’s push for 5G and homegrown smartphone may translate into business risk for rival telecom companies: Bharti Airtel led by Sunil Bharti Mittal and Idea Vodafone stewarded by Kumar Birla, two respected names in Indian corporate world.

Goldman Sachs Equities Research said that the risk was due to the fact that “feature phone segment contributed about 30 percent of Bharti and Idea Vodafone wireless revenues.”

Given the competitive market in India across telecom and digital space, both Bharti and Idea Vodafone are expected to rollout their competitive corporate plans shortly, analysts averred.

But, Morgan Stanley in a research note post-Reliance announcement have pointed to huge potential that JioMart that has linkages with two thirds of 12,000 retail stores in tier two & four towns. Morgan Stanley researchers led by Mayank Maheshwari based in Singapore also emphasized the business potential in Jio’s new business segments like conferencing and JioGlass.

India will be the last in the G20 group of countries to access global debt markets when it launches its first foreign bond sale worth $10 billion. The bond is expected to be issued in the autumn and marks a fundamental shift in Indian government borrowing, which is pegged at $104 billion in the current fiscal year ending March 31, 2020.

Most Indian government borrowings are usually offered on the domestic market, and in the local currency. However, finance ministry officials divulged that the sovereign bond could be in more than one tranche and in multiple currencies, including US dollars and Japanese yen. The bond will be launched simultaneously at financial centers in London, Singapore, Hong Kong and New York. The tenure and coupon rate have yet to be finalized.

The issuance formed part of the federal budget, which was presented to parliament on July 5 by Finance Minister Nirmala Sitharaman.

The Narendra Modi–led government is looking to leverage the country’s extremely low sovereign external debt-to-GDP ratio at 5% to mobilize low-cost funds to partially finance the fiscal deficit.

However, former governors of the Reserve Bank of India (RBI), Raghuram Rajan and Duvvuri Subbarao, have opposed the move to tap international debt markets to meet government spending needs. They cited Argentina and Turkey’s not-so-positive experiences of bond issuance to finance their country’s debt. “It could be an addiction, difficult to get out of, and make India vulnerable to foreign exchange rate volatility,” they cautioned.

Rajan instead advocated lifting foreign investment caps in rupee-denominated government debt paper, as sovereign bonds “were fraught with risks and no real benefits.”

However, Finance Minister Sitharaman has ruled out a “rethink” on the sovereign bond, which is expected to take the pressure off the domestic rupee market and create space for private borrowers. She sees an opportunity to cut interest costs in India’s $2.6 trillion economy, which has slowed in the past five years. The issue may also set a price reference point for large Indian corporates hoping to tap international debt markets.

Indian companies have had a successful run in global markets with Masala bonds, denominated in rupees and sold to foreign institutions with an appetite for the country’s debt paper.

As of March 31, 2019, India’s total external debt stood at $543 billion, according to Reserve Bank of India estimates. The external debt-to-GDP ratio was 19.7%. Approximately 38% of the country’s debt consists of commercial borrowings by private enterprises; 24% is nonresident Indian deposits with banks; and 18.9% is short-term trade credit, with the government’s share being minimal.

She’ll need all the grit she can muster.

After his landslide win in this year’s lower-house elections, her boss was immediately thrown into a search for a new finance chief. Arun Jaitley, who served during Modi’s first term, opted out due to health reasons. Sitharaman must find a way to pull India’s economy out of a slump, restore GDP growth beyond 8%, tackle joblessness and counter trade pressures brought by US President Donald Trump. And those are just the biggest headline challenges.

Born into a middle-class family in the southern state of Tamil Nadu, Sitharaman acquired a reputation for hard work as she climbed the ranks of the right-wing, ultranationalist ruling coalition, the National Democratic Alliance (NDA), rising to become chief spokesperson of the NDA’s dominant member, the Bharatiya Janata Party.

Now she’s charged, despite a lack of political consensus, with implementing market-oriented economic reforms over the next five years, including labor-market restructuring and opening up the land market to private domestic and foreign investors. But her priority has been identified as selling off government holdings in key blue-chip, state-run enterprises and large public-sector banks. At the same time, Sitharaman is expected to devise a plan to pull more than 660 million people out of rural and agrarian economies while pursuing financial-sector and market reforms to please global investors.