Business & Economy Today: Tariff Shock, TCS Slump & A ₹3 Lakh Cr Wipeout

India Business & Economy Briefing | January 13, 2026: India’s economy confronted new tariff risks from the United States, pushed its long-running EU trade negotiations into the final stretch and endured a volatile trading session in Mumbai on Tuesday as Q3 earnings revealed pressure in IT services and resilience in financials ahead of Budget 2026.

Geopolitics and Trade: External Pressures Tighten

The global trade environment shifted after U.S. President Donald Trump announced a 25% tariff on countries trading with Iran, raising compliance and supply-chain questions across Asia and Europe.

Indian analysts expect limited direct impact because India’s trade with Iran has declined sharply since 2019, but Basmati rice exporters (LT Foods and KRBL) and fruit and nut exporters are monitoring potential spillovers. The directive also casts uncertainty over India’s ambitions for the Chabahar Port, a strategic gateway to Central Asia that previously operated under waivers.

At the same time, India advanced its negotiations with the European Union. After talks between Prime Minister Narendra Modi and German Chancellor Friedrich Merz, negotiators confirmed the India–EU Free Trade Agreement has entered its “final stages.” The deal could reshape exports in manufacturing, mobility, electronics and services, while recalibrating European access for automotive and machinery.

India also reduced purchases of Russian fossil fuels, slipping to third place among major buyers as refiners including Reliance Industries cut crude intake amid tighter sanctions and settlement hurdles. The shift signals a possible rebalancing in India’s energy sourcing heading into FY27.

Markets React to Earnings and Policy Signals

Q3 FY26 earnings diverged across sectors as global discretionary spending cooled and domestic consumption held firm.

In IT services, margins compressed:

• TCS reported a 14% YoY decline in net profit to ₹10,657 crore, citing one-off labour code expenses.
• HCLTech posted an 11% YoY drop in profit to ₹4,076 crore and pointed to persistent weakness in global automotive tech spending, underscoring a gap between Indian consumption and global industrial demand.

In financials, profitability strengthened:

• Bank of Maharashtra lifted Q3 net profit 26.5% to ₹1,779 crore.
• ICICI Prudential Life increased profit 19% YoY, reflecting steady insurance demand.

Equity markets priced in both earnings stress and geopolitical risk. The Sensex fell more than 900 points from its intraday peak, erasing roughly ₹3 lakh crore in market capitalization as FIIs sold into uncertainty.

The bond market also absorbed macro signals. Bloomberg Index Services delayed India’s inclusion in the Global Aggregate Bond Index due to operational and tax settlement issues, hardening the 10-year benchmark yield by ~3 bps to 6.63% and tempering hopes of an immediate $20–$25 billion inflow.

Regulators moved on platform oversight as the Centre ordered Blinkit, Zepto and Swiggy to remove “10-minute delivery” branding on safety and compliance grounds — the first direct policy action targeting the quick commercemodel.

On prices, retail inflation rose to 1.33% in December 2025, a three-month high driven by vegetables, while still inside the RBI’s comfort band.

Sector Strength and Pre-Budget Positioning

Despite volatility, several sectors entered the new year with momentum.

• In autos, passenger vehicle sales jumped 27% YoY in December 2025, led by SUVs and compact crossovers. Tata Motors launched the Punch Facelift at ₹5.59 lakh, intensifying competition in the entry-SUV category.
• In capital markets, the Bharat Coking Coal (BCCL) IPO drew strong demand with the grey market premium (GMP) steady at 40–45% on its final day.
• In electronics, India’s exports crossed ₹4 lakh crore in 2025, according to IT Minister Ashwini Vaishnaw, highlighting continued gains from PLI-linked mobile manufacturing and supply-chain diversification.

With the Union Budget less than three weeks away, investors are now focused on tariffs, industrial policy, capital-market reforms and energy diversification as India balances geopolitical friction and trade realignment against mixed Q3 earnings.

Macro Signals Into Budget 2026

India enters mid-January with an economy that is externally constrained by tariff and sanctions risk, internally resilient in consumption, and highly sensitive to policy signals. As bond yields harden and trade routes face fresh scrutiny, Budget 2026 is emerging as a key inflection point for market sentiment and capital allocation.