Indian pharmaceuticals, IT, and service exporters poised to benefit; UK firms may face entry barriers in Indian market

In a landmark development, the India-UK Free Trade Agreement (FTA) signed on July 24 has opened up new opportunities in government procurement, marking a first-of-its-kind bilateral arrangement for India. This deal, part of the broader Comprehensive Economic and Trade Agreement (CETA), allows mutual access to public procurement markets—a move expected to significantly boost trade and investment between the two nations.

Indian Firms Gain Access to $122 Billion UK Procurement Market

The agreement grants Indian companies access to the UK’s $122 billion public procurement market, including lucrative opportunities with the UK’s National Health Service (NHS). In return, UK firms will be eligible to bid in India’s $114 billion government procurement space, though with certain thresholds and strategic sector exclusions.

Under the agreement:

• Indian companies can bid for UK government contracts starting from ₹1.6 crore

• UK companies can bid for Indian contracts starting from ₹5.5 crore

NHS Procurement Opens Doors for Indian Pharma Industry

A standout feature of the deal is the inclusion of the NHS in the UK’s list of procuring entities. This move is expected to benefit Indian pharmaceutical exporters, especially those producing APIs and high-end generics.

“There is a significant boost expected in the UK’s NHS procurement of Indian API and high-end generics, which currently constitute 25% of prescription drugs,” said the Ministry of Commerce in a press release on July 25.

In addition to pharmaceuticals, sectors such as software services, technical textiles, and office equipment are likely to see increased traction due to India’s comparative advantage in quality service delivery.

“If Indian firms meet the quality standards, they are likely to benefit from this opening—especially in services,” noted Agneshwar Sen, Trade Policy Leader at EY.

UK Firms May Struggle in India Due to Procurement Norms

Despite the reciprocal access, UK companies may face challenges in India’s procurement landscape, particularly due to the L1 bidding system, which prioritizes the lowest-cost bid over other factors.

“UK firms may find it challenging to enter the Indian market under the L1 system, even with the relaxed rules,” said Sen.

While India has classified UK firms with at least 20% local content as Class-II suppliers—placing them on par with Indian vendors—price sensitivity and structural hurdles may still limit their competitiveness.

Sensitive and Strategic Sectors Remain Excluded

Both countries have exercised caution by excluding key strategic sectors from the agreement:

India’s exclusions include:

• Indian Railways

• Food Corporation of India

• Handloom Sector

• National Industrial Corridor Development Corporation

• Defence and ammunition

• MSME-specific procurement

• Agriculture and food programs

UK’s exclusions include:

• UK Space Agency

• Defence and national security

• Agricultural products

• Transport and postal services

• Drinking water and energy sectors

A Strategic Win with Guardrails

The India-UK trade pact marks a major stride in liberalizing public procurement markets, potentially unlocking billions in trade value. While Indian exporters—particularly in pharma and IT—stand to benefit significantly, UK firms may face uphill challenges in penetrating India’s complex procurement ecosystem.

Nonetheless, the deal highlights a growing strategic and economic partnership, rooted in mutual benefit while maintaining safeguards for sensitive sectors on both sides.

Source: Moneycontrol

Specialised Investment Funds (SIFs) are emerging as India’s next big innovation in investing bridging the gap between mutual funds and portfolio management services, and opening new doors for high-net-worth and market-savvy retail investors.

Sometimes, the most significant revolutions in finance don’t grab headlines. Yet they quietly transform how capital flows and wealth is built. India’s investment ecosystem is witnessing such a shift. At the heart of this change lies the rise of SIFs—Specialised Investment Funds—that offer a powerful blend of flexibility, thematic focus, and professional management.

What Are SIFs?

SIFs are a new category of investment vehicles introduced under SEBI’s regulatory innovation framework. They aim to offer the flexibility and concentration benefits of Portfolio Management Services (PMS) while retaining the accessibility and regulatory discipline of mutual funds. Think PMS-style agility with mutual fund-level transparency.

Broadly, the SIF universe includes two distinct components. First are the SEBI-registered SIFs, designed for sophisticated strategy deployment. Second are Social Impact Funds, a sub-category under Alternative Investment Funds (AIFs) Category I, which seek to generate both financial returns and measurable social impact across sectors such as clean energy, rural fintech, and education.

What Makes SIFs Unique?

SIFs allow fund managers significantly more room to manoeuvre than traditional mutual funds. For example, while mutual funds are restricted to investing a maximum of 10% in a single stock, SIFs can allocate up to 15%, allowing for higher conviction bets. They also enable the use of derivatives, long-short strategies, and exposure to niche, emerging themes such as artificial intelligence, defence technology, and green energy clusters.

Unlike traditional SIP-friendly mutual funds that follow a more passive or benchmark-driven approach, SIFs are built for alpha outperformance over the benchmark. They are especially appealing to high-net-worth individuals (HNIs) and experienced retail investors looking to diversify their portfolios beyond conventional options.

Benefits of SIFs for Investors

SIFs offer multiple advantages for sophisticated investors:

• Tactical flexibility: Fund managers can implement complex and concentrated strategies with fewer restrictions.

• Higher return potential: For those with a higher risk appetite, SIFs present an opportunity to generate superior returns in specialized sectors.

• Thematic and niche exposure: Investors can access underrepresented themes that are typically unavailable in traditional mutual fund structures.

• Impact investing options: Through Social Impact Funds, investors can align their portfolios with their values—focusing on both profit and purpose.

Risks and Considerations

While SIFs offer compelling opportunities, they come with elevated risks. These funds tend to have a higher beta—meaning they can be more volatile than the broader market—due to concentrated bets, derivative strategies, and sector-specific themes. Liquidity can also be a concern, especially if the fund imposes lock-in periods or invests in illiquid instruments.

Moreover, because SIFs are designed for higher alpha, it’s crucial to assess them using risk-adjusted return metrics such as the Sharpe ratio, which measures the return earned per unit of risk. Investors should also pay close attention to the fund’s strategy, transparency, and alignment with their own investment horizon and risk tolerance.

Are SIFs Accessible to Retail Investors?

Historically, SIFs were accessible only to institutions and HNIs, primarily due to high minimum investment thresholds—often starting at ₹10 lakh or more. However, SEBI is gradually working toward democratising access. For instance, the introduction of Zero Coupon, Zero Principal (ZCZP) instruments on social stock exchanges is allowing retail investors to participate in impact-oriented funds with lower entry barriers.

As AMCs explore retail-compatible SIF formats and SEBI continues refining the regulatory structure, broader accessibility could soon become a reality.

Who’s Active in the Market?

The SIF space in India is rapidly gaining traction. For example, Edelweiss Mutual Fund has launched its Altiva SIF platform, which will follow a hybrid long-short strategy. The fund is currently awaiting SEBI approval. Meanwhile, major players like HDFC AMC, ICICI Prudential, and Nippon India are exploring thematic and long-short strategies under the SIF banner.

In the impact investment space, firms such as Aavishkaar, Omnivore, and Elevar Equity are driving innovation through social impact funds. They focus on sectors like affordable healthcare, clean drinking water, rural finance, and more.

Additionally, venture capital funds like Sequoia India, Accel, and Blume Ventures are backing early-stage technology and social startups. On the private equity side, firms such as KKR, Carlyle, and Blackstone are investing in mature, unlisted companies across India’s growth sectors.

Final Thoughts: Are SIFs the Future of Investing in India?

India’s financial markets are evolving rapidly, and so are the preferences of its investors. SEBI’s efforts to blend innovation with strong regulatory oversight are allowing next-generation financial products like SIFs to emerge and thrive.

SIFs are not for everyone. They require thoughtful risk assessment, a clear understanding of fund strategies, and a longer-term investment view. But for those who seek diversification, higher returns, or impact-aligned investing, SIFs represent a bold, intelligent way forward.

Whether you’re aiming to outperform the market or make a difference with your capital, SIFs could be the next major building block in your investment journey.

Source: Moneycontrol

SEBI’s latest consultation paper introduces sweeping changes across equity, debt, hybrid, and solution-oriented mutual fund schemes aimed at rationalising offerings and enhancing transparency.

In a significant move set to reshape the mutual fund landscape, the Securities and Exchange Board of India (SEBI) has proposed a comprehensive review of scheme categorisation and portfolio rationalisation for mutual funds.

The proposed changes aim to:

• Eliminate portfolio overlaps between similar schemes,

• Introduce clearer nomenclature,

• Enable innovative fund structures, and

• Ensure investors receive products aligned with their financial goals and risk profiles.

SEBI has opened the consultation for public feedback until August 8, 2025.

Key Proposals at a Glance

Equity Funds: Reducing Overlap, Increasing Differentiation

• Value and Contra Funds can coexist only if portfolio overlap is ≤ 50%.

• Overlap monitoring will occur:

  • At the time of New Fund Offer (NFO), and

  • On a semi-annual basis using month-end portfolios.

• Portfolio breach?

  • AMC must rebalance in 30 business days, with a one-time extension of 30 days.

  • If overlap persists, exit option without load must be provided to investors.

Sectoral & Thematic Funds:

• No more than 50% overlap with other equity schemes (excluding large-cap).

• Compliance required within one year for existing schemes.

Residual Allocation Flexibility:

Equity schemes can invest in:

• Debt and money market instruments

• Gold & silver (as per SEBI rules)

• REITs & InvITs
  Subject to prescribed asset-class limits.

Debt Funds: Better Names, Better Understanding

• ‘Duration’ to be replaced with ‘Term’ in fund names for clarity.

• Low Duration Fund → Ultra Short to Short Term Fund

• Scheme names to specify the duration explicitly, e.g.:

  • Overnight Fund (1 Day)

  • Medium Term Fund (3–4 Years)

Sectoral Debt Funds:

• Allowed if overlap ≤ 60% with other debt schemes.

• Adequate supply of investment-grade papers required.

• Exempted from sectoral exposure limits under Clause 12.9.1.

Residual Allocation:

• Can include REITs & InvITs, except in:

  • Overnight, Liquid, Ultra-Short, Low Duration, and Money Market Funds

Hybrid Funds: Refined Structure and Exposure Limits

• Arbitrage Funds can invest only in:

  • Government securities (maturity < 1 year)

  • Repos backed by government securities

• Equity Savings Schemes must maintain:

  • 15% to 40% in net equity and arbitrage exposure

• Residual investments in REITs & InvITs allowed for hybrid schemes
  (except Dynamic Asset Allocation & Arbitrage Funds)

Solution-Oriented Funds: Goal-Based Investing Gets a Boost

SEBI plans to allow:

• Life Cycle Fund of Funds (FoFs) for specific goals:

  • Housing, marriage, children’s education, etc.

• Lock-in periods: 3 / 5 / 10 years with clear rationale

• Target-date FoFs investing in a pre-defined structure

FoFs can invest in:

• Most hybrid schemes (excluding Aggressive Hybrid, Dynamic Asset Allocation, Multi-Asset Allocation)

• Most debt schemes, except All Seasons Bond Fund

Launching Additional Schemes: Stricter Criteria

Asset Management Companies (AMCs) may launch additional schemes in existing categories if:

• Existing scheme is 5+ years old

• Has an AUM > ₹50,000 crore

• Similar investment objective, strategy & asset allocation

Conditions include:

• New scheme must have a separate Scheme Information Document (SID)

• Same naming convention (e.g., Large Cap Fund – Series I & II)

• AMC may assign a separate fund manager

• New scheme must match TER (Total Expense Ratio) of the existing one on the date of NFO

If the existing scheme sees a significant AUM decline, AMC may:

• Merge it with the new scheme

• Ensure no more than two schemes exist in a category at any time

What This Means for Investors

• Clarity in scheme differentiation

• Better portfolio diversification

• Less duplication across fund houses

• More innovative, goal-oriented investment options

These changes are expected to streamline the mutual fund universe and empower investors to make better-informed decisions.

Source: The Economic Times

SIP AUM grows by over ₹5 trillion in just 17 months, reflecting rising retail investor confidence and market recovery.

India’s Systematic Investment Plan (SIP) assets under management (AUM) crossed a major milestone of ₹15 trillion in June 2025, marking the fastest ₹5 trillion jump in the history of mutual funds. According to data from the Association of Mutual Funds in India (AMFI), SIP AUM grew by over 24% since February 2025, rising from ₹12.38 trillion to ₹15.30 trillion.

This sharp surge underscores resilient investor participation, even amid global and domestic market volatility.

SIP AUM Growth Journey: A Timeline of Milestones

• 2016: SIP AUM crosses the first ₹1 trillion

• July 2021: Reaches ₹5 trillion (took 5+ years)

• January 2024: Touches ₹10 trillion (in 31 months)

• June 2025: Crosses ₹15 trillion (in just 17 months)

This acceleration shows that retail investors are increasingly embracing SIP investing for long-term wealth creation, even during turbulent markets.

SIP Share in Mutual Fund Industry at All-Time High

With this milestone, the SIP AUM now accounts for 20.57% of the total mutual fund industry AUM — the highest ever. Over the past year, SIPs have maintained a strong position, consistently contributing close to 20% of total mutual fund assets.

Union Budget 2025 Boosts SIP Momentum

The 2025 Union Budget played a key role in strengthening retail SIP flows. Key tax relief measures, including:

• Enhanced standard deduction

• Revised tax slabs

• Increased disposable income

These reforms have empowered salaried and middle-income investors to allocate more capital toward disciplined monthly investments via SIPs.

Record SIP Inflows in June 2025

• SIP inflows hit a record ₹27,269 crore in June

  • Up from ₹26,688 crore in May

  • Slightly above ₹26,632 crore in April

• Net equity mutual fund inflows surged to ₹23,568 crore, a 24% increase over May

These figures indicate sustained retail investor confidence, driven by better liquidity, improved earnings outlook, and positive equity sentiment.

Market Recovery Fuels Investor Optimism

Indian equity markets have made a strong comeback since mid-March, following a steep correction that began in October 2024.

• Sensex and Nifty: Up 13%

• BSE MidCap: Up 18.5%

• BSE SmallCap: Up 23%

These rebounds have encouraged both new and existing investors to continue SIPs or increase contribution amounts, leveraging the cost-averaging benefits.

“SIPs offer a disciplined approach by averaging investment costs over time. They allow investors to buy more units when prices fall, making them ideal during volatility,” said Ajay Garg, CEO of SMC Global Securities.

Experts See Structural Strength in SIP Investing

According to Nikunj Saraf, Vice President at Choice Wealth, a combination of factors is driving consistent SIP momentum:

• Reduced redemptions

• Strategic diversification

• Strong market fundamentals

• Rising retail financial literacy

“This reflects deepening trust in mutual funds and a structural commitment to long-term equity investing,” he said.

Outlook: SIPs Set to Drive Long-Term Wealth Creation

With improving investor confidence, strong market fundamentals, and favourable policy support, SIPs are expected to remain a core investment vehicle for millions of Indian households. The trend signals a maturing investor base, one that values consistency, compounding, and financial discipline over short-term market noise.

Source: MoneyControl

Higher refunds drive down net direct tax collections despite gross tax receipts growing 3.2% year-on-year

India’s net direct tax collections stood at ₹5.63 lakh crore as of July 10, 2025, marking a 1.34% decline from ₹5.70 lakh crore in the same period last year, according to the latest data released by the Ministry of Finance.

This drop in net collections is primarily attributed to a sharp 38% rise in tax refunds, which amounted to ₹1.02 lakh crore so far this fiscal, up from ₹73,913 crore in the corresponding period last year.

Gross Direct Tax Collections Grow 3.2% YoY

Despite the dip in net collections, gross direct tax receipts (before refunds) showed positive momentum, growing 3.17% year-on-year to ₹6.65 lakh crore — compared to ₹6.44 lakh crore collected during the same period last year.

Direct taxes include:

• Corporate Tax: Net collections stood at around ₹2 lakh crore

• Personal Income Tax & Others: Netted ₹3.45 lakh crore

• Securities Transaction Tax (STT): Collected ₹17,874 crore

Refunds Surge to Over ₹1 Lakh Crore

The significant increase in refunds, which crossed ₹1.02 lakh crore, is being seen as part of the government’s move to streamline compliance and reduce taxpayer grievances.

“This year’s refund activity is notably higher, reflecting efficient tax processing systems and faster return settlements,” said a senior tax official.

FY26 Targets: 12.7% Growth in Direct Taxes

For the full fiscal year 2025–26, the government has set an ambitious target of ₹25.20 lakh crore in direct tax collections, representing a 12.7% increase over FY25.

The government also aims to collect ₹78,000 crore through Securities Transaction Tax (STT) in FY26.

Outlook

While the current decline in net collections may seem concerning, tax experts believe the surge in refunds is a sign of administrative efficiency rather than a slowdown in tax compliance. As the fiscal progresses and advance tax inflows pick up, the numbers may realign with the government’s projected target.

Source: MoneyControl

Gold and silver ETFs witness all-time high net inflows in June 2025 as investors diversify amid global uncertainty.

Investor interest in precious metals has surged, with gold and silver exchange-traded funds (ETFs) recording their highest-ever inflows in June 2025. According to data from the Association of Mutual Funds in India (AMFI), net investments into these ETFs touched a record ₹4,085 crore — with gold ETFs attracting ₹2,081 crore and silver ETFs close behind at ₹2,005 crore.

In parallel, equity mutual funds also witnessed strong momentum, with inflows rising 24 percent from the previous month to ₹23,587 crore.

Precious Metals Gain Prominence in Asset Allocation

Amid a backdrop of macroeconomic uncertainty, investors are increasingly using gold and silver ETFs to diversify portfolios and mitigate risks from global volatility.

“Investors are increasingly looking to hedge their portfolios with gold and silver amid concerns over global growth, geopolitical risks, and interest rate volatility,” said Nehal Meshram, Senior Analyst at Morningstar Investment Research India.

With a weaker US dollar, persistent inflation, and uncertainty around central bank policy decisions, non-yielding assets like gold and silver have regained investor appeal.

Gold vs Silver: Performance Trends Over the Past Year

Over the last 12 months:

• Gold has rallied approximately 40 percent in dollar terms

• Silver has gained nearly 19 percent, driven by increasing industrial demand

“Gold ETF inflows saw a seven-fold jump, primarily due to heightened investor demand and the absence of Sovereign Gold Bond issuances in the past year,” noted Feroze Azeez, Deputy CEO at Anand Rathi Wealth.

Silver, while still behind gold in asset size, is gaining traction due to its dual investment and industrial demand characteristics. Sectors like clean energy, electric vehicles, and AI-driven electronics are significantly contributing to silver’s long-term outlook.

“Silver is no longer seen just as a precious metal. Its industrial applications are a major driver of both demand and price appreciation,” said Trivesh D, COO at Tradejini.

Why Experts Recommend a Blended Allocation

Though gold continues to be a core asset for stability, silver brings in potential for cyclical growth tied to industrial production and innovation.

“Gold offers stability and proven defensive characteristics, while silver provides cyclical upside linked to industrial growth. A blended approach allows investors to harness the strengths of both,” explained Suranjana Borthakur, Head of Distribution and Strategic Alliances at Mirae Asset Investment Managers (India).

Geopolitical concerns, such as the recent 10 percent tariff threat by US President Donald Trump on BRICS nations, are adding further upside to gold, as India remains a founding member of the bloc. At the same time, silver’s industrial exposure keeps it aligned with sectors driving future growth.

Key Takeaways for Investors

• Gold remains a reliable hedge during volatile times, suitable for risk-averse portfolios

• Silver provides upside potential, especially from industrial and technology-led sectors

• A balanced exposure to both gold and silver can improve risk-adjusted returns

With global markets continuing to experience fluctuations and uncertainty, experts believe that precious metal ETFs will continue to attract investor interest, offering a vital diversification tool beyond traditional equity and fixed income options.

Source: Moneycontrol

India’s Goods and Services Tax (GST) collections for June 2025 stood at ₹1.85 lakh crore, registering a 6.2% year-on-year (YoY) increase, according to official government data released Tuesday. This steady rise reflects continued momentum in consumption and compliance, even as monthly collections moderated from earlier highs in FY25.

Key Highlights:

• June 2025 GST collection: ₹1.85 lakh crore (up 6.2% YoY)

• May 2025 collection: ₹2.01 lakh crore

• April 2025 collection (all-time high): ₹2.37 lakh crore

• FY25 total GST collection: ₹22.08 lakh crore (up 9.4% YoY from ₹20.18 lakh crore in FY24)

• GST revenue has doubled over the last 5 years, up from ₹11.37 lakh crore in FY21

GST Sees Steady Growth Amid Eight-Year Milestone

As India marks eight years of GST implementation, the indirect tax regime has shown remarkable maturity and growth. Over the last five years, GST collections have doubled, indicating stronger tax compliance, digitalization of invoices, and a broader tax base.

“The GST collection of ₹22.08 lakh crore in FY25 is the highest annual figure since its launch in July 2017,” the Finance Ministry noted.

All major components of GST—Central GST (CGST), State GST (SGST), Integrated GST (IGST), and cess—reported year-on-year increases in June, underlining a healthy tax pipeline across states and sectors.

Monthly Trend Shows Dip After Record High

While YoY growth remains positive, June’s ₹1.85 lakh crore collection was lower than May’s ₹2.01 lakh crore and the record-breaking ₹2.37 lakh crore in April. This month-on-month softening is seen as seasonal and not indicative of structural slowdown.

Experts suggest that pre-year-end filings and settlements in April typically cause spikes, while subsequent months normalize.

Strong FY25 Performance Reflects Economic Momentum

The GST collection for FY25 clocked ₹22.08 lakh crore, a 9.4% increase over the previous fiscal year. This strong performance points to robust consumption trends, increased formalization, and better enforcement mechanisms.

The Finance Ministry attributed the rise to ongoing reforms, enhanced data analytics for compliance tracking, and increased awareness among businesses.

Outlook: Positive Trajectory for GST System

The GST regime continues to stabilize, with consistent growth trends offering confidence for future fiscal planning. As India’s economy expands and more businesses move into the formal tax net, GST collections are expected to remain on an upward trajectory.

Source: Economic Times

India’s manufacturing sector surged to a 14-month high in June, defying global trade headwinds and demonstrating robust domestic demand. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 58.4 in June from 57.6 in May, signaling sustained growth momentum in factory output, new orders, and employment.

According to HSBC Chief India Economist Pranjul Bhandari, “India’s manufacturing PMI reached a fourteen-month high of 58.4 in June. Robust end-demand fuelled expansions in output, new orders, and job creation.”

Key Highlights:

• PMI climbs to 58.4 in June, the highest since April 2024.

• Quarterly average PMI also rises to 58.1 in Q2 FY26 from 57.4 in Q1.

• Export orders grow at the 3rd fastest pace since March 2005.

• Job creation hits a new high, indicating improved business confidence.

• Input cost inflation eases, giving manufacturers better pricing control.

Global Demand, Especially from the US, Fuels Growth

The surge in factory activity came despite ongoing external pressures such as rising US tariffs for the third consecutive month. Export demand remained a bright spot, with firms reporting increased orders from the United States and other major global markets.

“The rate of expansion in new export orders was the third highest since data collection began in 2005,” HSBC reported.

Employment and Pricing Trends Improve

Stronger demand translated into record-high job creation in June. Meanwhile, manufacturers gained more control over pricing, as input cost inflation dropped to a four-month low. This allowed companies to pass on some costs to consumers without major disruptions.

Industrial Output Tells a Contrasting Story

While PMI data signals optimism, the Index of Industrial Production (IIP) paints a less rosy picture. Industrial output grew by just 1.2% in May, the slowest pace in nine months. The slowdown was largely due to heavy monsoon rains disrupting mining and power generation.

• Capital goods and construction sectors showed resilience.

• Consumer durables and non-durables – key demand indicators – saw contraction, suggesting subdued consumer sentiment.

Outlook: Optimistic but Cautious

Despite the strong PMI numbers, uncertainties over inflation, global competition, and shifting consumer preferences are keeping businesses cautious.

“The outlook for Indian manufacturing remained positive in June, though concerns around pricing, demand shifts, and competition weighed on sentiment,” HSBC added.

What It Means for the Economy

With these mixed signals, analysts expect India’s GDP growth in Q1 FY26 to moderate, especially in comparison to the 7.4% expansion recorded in Q4 FY25.

Still, the resilience in manufacturing, especially exports and job creation, provides a cushion to India’s broader economic trajectory.

Source: MoneyControl