Good morning. India’s GDP growth figures announced on Friday helped end a difficult week on a pleasant note. Government data indicated that for the quarter that ended in March, the economy grew at a faster than forecast pace of 7.8 per cent. Overall, GDP growth for the full financial year stood at 7.7 per cent, with robust demand in the manufacturing, services and construction sectors. The disruption on account of the war in the Middle East will be fully visible in the current quarter’s numbers.

Before we jump into today’s stories, a programming note: I am away for the next couple of weeks, having foolishly committed to walk 102 miles of the Cotswold Way in England. But we have an exciting array of FT correspondents lined up, starting with FT Asia editor and crowd-favourite Robin Harding on Friday. Don’t miss them.

In today’s newsletter, India’s securities regulators allege a $159bn revenue manipulation by gold exporter Rajesh Exports. First though, markets have been punishing, but is India’s AI future as bad as it is made out to be?

India’s AI report card

There has been much hand wringing about India’s lack of an AI play. The latest casualty has been its standing in global stock market rankings. Fired by an AI-fuelled rally last week, Taiwan and South Korea overtook India in market capitalisation as foreign portfolio investors sold Indian equities to buy companies such as Samsung Electronics and TSMC. Just 18 months ago, Indian stock valuations were more than double that of Taiwan and almost 3.5 times that of South Korea.

So where does India stack now in the new AI-world — technologically, economically, and in the equity markets? 

Technologically, India appears to have largely ceded any ambition to build a sovereign AI model. The only promising option is Sarvam, which is building a foundational large language model for Indian languages. Even as recently as a year ago, Indian technology companies and industry thinkers (visionaries?) were broadly of the view that there was no need to enter the LLM arms race, and that India’s competitive advantage lay in building AI applications. However, that approach has several drawbacks, some of which are becoming visible. 

The absence of a sovereign model leaves Indian companies and users dependent on external technology. There are already concerns that paying to use this technology is a drain on foreign exchange and a growing cost item for Indian tech firms. Social media memes abound about employees idling in offices after their daily access quotas have run out. Building applications is an important use case, but it is increasingly looking like India will pay a price for sitting out on the foundational layer.

Economically, it’s a mixed bag. AI services exports are a growing component of India’s foreign earnings. A significant driver is the global capability centre ecosystem, through which large multinationals channel their research and development into technology hubs located in India. This concentrates a large number of well-paid professionals and generates considerable local economic activity in the process. 

Data centres, one area where India has genuine potential (ecological impact aside), are creating economic buoyancy in their surrounding areas. Estimates of what generative AI could add to India’s GDP by 2030 range widely — from $500bn to $1.3tn — depending on which report one reads.

That’s the good bit. The not-so-great bit is the difficulty in finding talent. Research from consulting major Bain & Co suggests that by 2027 India’s AI sector will create 2.3mn jobs, but projections of available talent only touch 1.2mn. 

On the markets, the AI deficit will continue to weigh on foreign inflows for the foreseeable future. Indian benchmark indices are the only ones in the red among Asian peers year-to-date, while India’s weight in the emerging markets MSCI index has shrunk to about 11 per cent from a peak of nearly 20 per cent in 2024. Even if global markets — particularly in the US, Taiwan, and South Korea — were to correct sharply as valuations run ahead of revenues, capital is unlikely to rotate back to India in a hurry.

The domestic story, however, remains intact. GDP figures released this week showed the economy growing at the fastest pace in two years. Once the overhang from the Middle East conflict eases and consumption recovers, domestic buying should return to banks, consumer goods, automobiles and retail sectors, among others, in the stock market.

Do you think India will catch up on AI? Hit reply or email me at [email protected]

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What’s going on at Rajesh Exports?

India’s stock market regulator has issued a damning report accusing gold trading company Rajesh Exports of overstating revenues by a staggering $159bn. In a 109-page interim order, the Securities and Exchange Board of India alleged that the company used its Switzerland-based subsidiary Valcambi to inflate revenues in its consolidated accounts, and invoked Swiss disclosure rules to shield its books from scrutiny. The regulator described the scale of the alleged inflation as “egregious and unheard of”, putting the misrepresentation at 99.8 per cent of the revenues attributed to overseas subsidiaries.

Sebi further accused the company of obfuscating its accounts, providing incomplete and selective disclosures, and misrepresenting its finances to shareholders. In its defence, the company rejected the allegations outright, terming them a “confusion and communication gap”. 

Beyond the obvious implications, two other important factors are at play.

The first concerns the government-owned Life Insurance Corporation (LIC), arguably India’s largest institutional investor. LIC now holds close to 11 per cent of the company’s shares, after steadily building its stake over the years. The insurer has yet to make any public statement about a potential lapse in its due diligence. This is troubling on two counts: LIC manages the savings of hundreds of millions of ordinary Indians and, since its own stock market listing in 2022, it has a responsibility to keep both policyholders and shareholders informed when its investment process may have been compromised.

The second concerns the government’s production-linked incentive scheme. In 2021, through its subsidiary ACC Energy Storage, Rajesh Exports was selected as one of three battery storage beneficiaries under the Rs181mn manufacturing subsidy programme. For a gold exporter, a battery manufacturing venture is an unusual diversification — but stranger still is the execution. A December 2025 notification from the government indicated that the company had installed zero GWh capacity against an awarded capacity of 5GWh. 

If Sebi’s allegations of inflating revenues are correct, the government would do well to also scrutinise the subsidiary’s accounts to ensure that public money is not being misused. The Ministry of Heavy Industries has yet to comment.

Go figure

Yes, we have had enough AI talk for one day. But I couldn’t resist sharing this chart. A new poll shows that in the US, AI is now less popular than Trump and ICE!

Quick question

Do you think India will be able to maintain its growth momentum in this fiscal year? Tell us here.

Buzzer round

On Friday, we asked you to name a Hollywood legend, who would have turned 100 this month, won a Golden Globe, was married three times, was a style icon with her golden blonde hair and red lipstick, and is arguably the most famous singer of a very common song.

The answer is, of course, Marilyn Monroe.

Great response to this one. Aniruddha Dutta was first with the right answer, followed by Vivek Kumar, Himanshu Sharma, Anuj Balaji and Sushant Jain. Congratulations!

Thank you for reading. India Business Briefing is edited by Stephen Harris. Please send feedback, suggestions (and gossip) to [email protected].