BACK PAGE | PAGE 24 ECONOMY | PAGE 3 Irdai plans commission curbs to check mis-selling INTERNATIONAL | PAGE 7 Middle class growth engine of India, says FM LUCKNOW, SATURDAY, JULY 4, 2026 Trump allies double down on efforts to reshape Fed FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL 19 NO. 178, 28 PAGES, P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 77,763.91 ▲ 261.79 NIFTY: 24,270.85 ▲ 95.15 NIKKEI 225: 69,744.07 ▲ 1,010.92 HANG SENG: 23,350.03 ▲ 295 `/$: 95.22 ▲ 0.17 `/€: 108.94 ▼ 0.10 BRENT: $71.85 ▲ $0.05 GOLD: `145,764 ▲ `3,300 THE PROPOSED MERGER of Power Finance Corporation and REC could dampen incremental demand for the combined entity's bonds, as several institutional investors may approach regulatory exposure limits once the two issuers become a single entity, market participants said, reports ChristinaTitus. ECONOMY PAGE 2 GOODS EXPORTS IN APRIL-JUNE ROSE 15%: GOYAL INDIA’S MERCHANDISE EXPORTS rose by more than 15% year-onyear in the April-June quarter of FY27, while services exports grew 11% in the same period, Commerce and Industry Minister Piyush Goyal said on Friday, reports Mukesh Jagota. » INSIDE « INDICES EXTENDWINNING RUNTO 4THWEEK PAGE 6 RESERVOIRSWEAK DESPITE MONSOON REVIVAL PAGE 2 Nestle India bets on expanding rural reach NESTLE INDIA WILL sharpen its focus on penetration-led volume growth by expanding its distribution network deeper into rural and smaller towns, as the FMCG major looks to drive sustainable growth despite an uneven consumption environment marked by high food inflation and patchy rural demand, reports Ashutosh Mishra. ■ PAGE 4 Military purchase proposals worth `52,000 cr cleared THE CENTRE ON Friday approved defence acquisition proposals worth around `52,000 crore, giving a major push to the armed forces' efforts to strengthen air defence, counter-drone capabilities and surveillance as India continues to sharpen its military preparedness, reports fe Bureau. ■ PAGE 2 HCLTechwins $1.14-bnAI deal from European firm POULOMI CHATTERJEE Bengaluru, July 3 NET NEW GAINS HCLTECH ON FRIDAY said that it haswon a strategic contract valued at $1.14 billion deal from a Europe-headquartered Fortune Global 50 companytotransformandmanage itsdigitalworkplaceandenterprisenetworks.Whilethecompany did not disclose the client,industrysources identified it as Mercedes-Benz. The development marks one of the largest AI-led deals securedbyanIndianITservices company in recent years and offering a rare bright spot for the sector amid weak discretionary technology spending. The agreement, running from July 2026 to December 2031with an option to extend it byanotherfiveyears,will see HCLTech establish an AI-driven operating model to transform and manage the client’s global digital workplace and enterprise networks. The deal is entirely net new business and is estimated to contribute about $228 million in annual HCL Tech 1,140 Intra-day on BSE (`), July 3 Close 1,127.10 Open IT stocks performance Oracle Financial 2.08 Persistent Systems 2.06 Coforge 1.66 Nifty IT Index Previous close 2.16 LTM 1,078.10 2.49 Mphasis 5.74% % gain 1.76 commit to AI-led transformation programmes rather than isolated pilot projects. Infosys Chairman Nandan Nilekani has described AI adoption as root-and-branch surgery,statingthatcompanieswillhaveto redesign technology architecture, business processes and operating models together to unlock AI's full potential. announced on Friday that it has completed the acquisition of Jaspersoft, one of the two acquisitions announced last December, adding another capability in enterprise analytics. The scale of the latest contract reinforces a broader theme that has increasingly been articulated by industry leaders over the past year: enterprises are beginning to revenue during the initial fiveyear term. The timing is significant. Indian IT companies are preparing to report Junequarter earnings against the backdrop of slowing discretionary spending, delayed conversion of large deals into revenue and increasing pressure on pricing asAI improves delivery efficiency. HCLTech separately Continued on Page 7 ECONOMYDEFIESODDS IIP growth (% y-o-y) Overall Gross GST collections Manufacturing Electricity and gas supply (growth, %, y-o-y) April 4.9 5.1 May 6.1 5.5 8.2 1.2 Jan 12.9 5.6 (% growth y-o-y) 30 Power demand (MW) (% growth) 20.62 10 0 - 10 -20 Exports 17.97 Jan 2026 May 2026 19 17 15 13 11 9 7 7.2 20 Electronics Excluding petroleum May Apr Apr 215,832 251,114 GTRI calculations based on DGCIS data June (mn tonne) 142 4.0 Car sales (April-May, units) Dec Jan Source: Govt/RBI data Feb 2026 Mar Apr FY26 FY27 17.4 6,89,674 % y-o-y May June (growth % y-o-y) Apr 2025 May 2026 Net FDI ( in $ bn) 4.6 10.4 2025 2026 (up to April) Net FPI inflows -14,218 June 2026 May 2026 Apr 10.88 2024 growth (% y-o-y) 1.3 145 2,402 4,436 5,335 4,631 5,433 3,765 2025 Mar 17.65 3.0 Freight loading External commercial borrowings ($ million) Nov Feb Bank credit Merchandise exports Imports 3.2 9.9 Capital goods 14 9 6 4.6 Consumer durables 8.7 Equity Debt (in $ million) 8,09,946 FourChina-linkedfirmsget nodtobidforpowerprojects SAURAVANAND New Delhi, July 3 THE GOVERNMENT HAS allowed four Chinese-linked powerequipmentmanufacturerswith factories in India to bid forcriticalgovernmentprojects fortwoyears,signalling a major improvement in economic ties between the two neighbours. Theselectiveeasingprocurementrestrictionsisamidshortagesofhigh-voltagetransformers and gas-insulated switchgears,which threaten to delay the country’s powercapacity and grid expansion plans. The move follows recent relaxations in the rules governing foreign direct investments from China. According to a finance ministryofficememorandumdated June 24, accessed by FE,“it has been decided to grant exemptionfromtheprovisionsofPublic Procurement Order No. 4 dated 23.02.2023 under Rule 144(xi) of GFRs, 2017” to the four entities for two years from the issuance of the order. The companies covered by theexemptionareTBEAEnergy India, Nanjing Electric India, New Northeast Electric India andTaikai Electric (India). Continued on Page 7 Multiple high-frequency indicators reflect that the Indian economy has remained resilient in the face of the West Asia war and tariff assault by the US.A quick retreat in global crude oil prices following the US-Iran peace deal has significantly improved the country’s short-term economic outlook.Yet,a deficient monsoon and slow progress in Kharif sowing remain causes for concern.These pose an upside risk to inflation and could hit rural demand. 11.9 PFC-REC MERGER MAYTEMPER BOND APPETITE 10.9 PAGE 6 9.0 MARKETS AGREEMENTFORFIVEYEARSWITHOPTIONTOEXTENDITBYFIVEMORE 40.5 IN THE NEWS Mar -1,050 -5,221 -336 Apr -4,909 May 466 June -3,045 5,594 RING-FENCED RELAXATION ■ The companies covered by the exemption are TBEA Energy India, Nanjing Electric India, New Northeast Electric India and Taikai Electric (India) ■ The selective easing is amid shortages of highvoltage transformers and gas-insulated switchgears ■ It follows recent relaxations in the rules governing foreign direct investments from China MORE REGULATORY SCRUTINY appears to be building for Meta in India, with the government on Friday deciding to summon the company over allegations that advertisements promoting child sexual abuse material (CSAM) appeared on Instagram, even as it continued to press the social media giant over WhatsApp’s proposed username feature that it fears could fuel cyber fraud. Sources said Information Technology MinisterAshwini Vaishnaw has directed officials in the Ministry of Electronics and Information Technology (MeitY) to seek an explanation from Meta following a BBC investigation that alleged the company's recommendation algorithm had been promoting videos containing CSAM and that such advertisements were appearing on Facebook and Instagram despite Meta's advertising policies prohibiting sexually explicit content. The ministry will seek Meta's response on the issue, they said. THE MINISTRY OF electronics and IT (MeitY) on Friday directed Google and Apple to remove seven battery management system (BMS) applications from their app stores after they were found to have been used to remotely disable erickshaw batteries, expos- RED FLAG ■ There are allegations that advertisements promoting child sexual abuse material appeared on Instagram ■ ABBC probe alleged its recommendation algorithm had been promoting such videos This comes just two days after the notice to Meta over WhatsApp username ■ Meta policies prohibit sexually explicit content »INSIDE« ITSECRETARY SAYSTIMETO BRINGADEDICATEDAI LAW PAGE 4 The latest development comes just two days after MeitY issued a notice to Meta over WhatsApp's proposed username feature, signalling a widening regulatory focus on the company’s products in India. Continued on Page 7 Chipsdownforthebudgetphoneasmemorycrunchbites THE ARTIFICIAL INTELLIGENCE boom has begun to exact avisible toll on theworld's smartphone industry — and Indianbuyersaresquarelyinthe lineoffire. While India-specific figures are not yet available, China's three largestAndroid makers — Xiaomi,Oppo and Vivo — have slashed their 2026 global shipmenttargetsbyasmuchas30%, accordingtoaNikkeiAsiareport this week,as memory chips are diverted wholesale to AI data centres. InIndia,thecrisiswasalready visibleandisexpectedtoworsen further.Smartphoneshipments in India fell 3% year-on-year in the January–March quarter,the market'sweakestshowinginsix years,withmorethan80models seeingaveragepriceincreasesof about 15% as memory costs surged, according to CounterpointResearch. The future looks dim as research firm Gartner expects the memory crunch to shrink global smartphone shipments by8.4%in2026evenasaverage selling prices rise 13% over 2025 levels; PC shipments, it projects, will fall harder, by 10.4%, with prices up 17%. Gartner does not expect meaningful pricing relief before the endof2027,givenhowlongnew memorycapacitytakestobuild. The root of the squeeze is structural. DRAM and NAND TOUGH CHOICES ■ More than 90% ■ Companies catering to price-sensitive buyers are increasingly relying on software optimisation & AI-led enhancements of buyers preferred new smartphones over refurbished ones but remained largely uncompromising on prices ■ Apple recently hiked prices of several MacBook, iPad models after saying it could no longer absorb higher memory costs flashpriceshavesurgedglobally ascloudgiantsbuildingAIinfrastructure lock up memory productionthroughlong-termsupply agreements, pushing smartphone makers to the back oftheallocationqueue. Premium players have respondedbysimplypassingthe bill on: Apple recently raised prices across several MacBook and iPad models after saying it could no longer absorb higher memory costs,and Microsoft & HP have followed similar playbooks.Butforbrandswhosevolumessitinthe`15,000–30,000 band,thatrouteislargelyclosed. "Brands in the mid-market segment have managed to pass on only part of the rising input costs.The segment theycaterto is more price conscious andwill not absorb a significant price increase like those in the premium segment can," Faisal Kawoosa, chief analyst at Techarc,said. A Techarc study found that while more than 90% of buyers preferrednewsmartphonesover refurbished devices, they remained largely uncompromising on price. Kawoosa expects Vivo,Xiaomi and Oppo torationaliseportfoliosthisyear —fewerlaunches,fewervariants — alongside the trimmed shipmentexpectations. The result, analysts say, is a distinctly smartphoneflavoured shrinkflation: headline prices are preserved while hardwareisquietlyparedback. ing security vulnerabilities in Chinese-made battery management systems widely used in India's electric three-wheeler ecosystem, reports Ojasvi Gupta. The ministry has expanded its action beyond two apps that had initially come under scrutiny. ■ PAGE 4 Juneservices sectorgrowth at17-mthlow FE BUREAU New Delhi, July 3 INDIA’S SERVICES SECTOR activity slowed to its weakest pace in 17 months in June as challenging market conditions and reduced client interest in some services reportedly stymied growth in total sales and output, according to the latest HSBC survey. As a result, hiring activity was broadly stagnant and business confidence faded, the survey said. Coming in at 57.4 in June compared to 59.8 in May, the seasonally adjusted HSBC India Services PMI Business Activity Index registered its weakest expansion in 17 months. “The loss of momentum points to more challenging market conditions and weaker demand, particularly at home,” Pranjul Bhandari, chief India economist at HSBC, said. Even so, external demand held up well, with overseas sales remaining robust and growth reaching a threemonth high, Bhandari said. She added that price pressures also continued to cool, with both input cost and output price inflation moderating as geopolitical disruptions in the Middle East began to subside. Continued on Page 5 Manufacturers quietly trim specifications, slash global shipment targets URVI MALVANIA & OJASVI GUPTA Mumbai/New Delhi, July 3 however, ring-fenced the relaxation from becoming a wider precedent MeitYdirects takedown of seven battery apps Metafacesfresh govtscrutinyover adsonInstagram OJASVI GUPTA New Delhi, July 3 ■ The finance ministry, Manufacturersarereusingprevious-generation chipsets, droppinghigherRAMandstoragevariants,trimmingcamera resolutionsandtweakingbuild materials and audio components — even as they protect the features buyers notice most, such as larger batteries, AI capabilities and ecosystem integration. "Thepremiumbrandsbenefit from stronger brand equity and higher profitability.At the same time, the industry is also witnessing a form of shrinkflation,whereOEMsmaintainsimilarpricepointsbutquietlyoptimise hardware," said Prachir Singh,senioranalystatCounterpointResearch. Continued on Page 5 QUICK PICKS FMCG majors see strong Q1 SOME OF THE top FMCG firms expect double-digit growth in both revenue and profit in the June quarter, driven by calibrated pricing action & broad-based growth across categories, reports Viveat Susan Pinto. ■ PAGE 4 Gold outlook positive:Titan THE OUTLOOK FOR the gold market in India remains positive despite elevated and volatile prices, Titan, the country’s largest jewellery retailer, said in its FY26 annual report, reports Viveat Susan Pinto. ■ PAGE 5 Lucknow