The Week That Was: From Modi-Trump Meeting To New Income Tax Bill
The Reserve Bank of India ordered New India Cooperative Bank to cease daily operations immediately, effective from the close of business on Thursday.
This week has been eventful with significant developments in international relations, the financial market, and legislative changes. Here are the major events that shaped the week
Modi Meets Trump - US-India Bilateral Trade Agreements
On Feb. 13, 2025, Prime Minister Narendra Modi and US President Donald Trump announced a series of initiatives aimed at strengthening bilateral ties. The joint statement outlined a comprehensive framework for cooperation across multiple sectors, including defence, trade, technology, energy, and people-to-people connections.
The leaders revealed plans to sign a new 10-year framework for the ‘US-India Major Defense Partnership in the 21st Century,’ which will deepen defense ties between the two nations. The US will expand defence sales and co-production with India, including the procurement of Javelin anti-tank guided missiles and Stryker infantry combat vehicles. Additionally, the two countries will accelerate defence technology cooperation across space, air defence, missile, maritime, and undersea technologies.
Trump's Reciprocal Tariffs
President Donald Trump has directed his administration to consider imposing reciprocal tariffs on various trading partners, signalling a potential broader campaign against what he perceives as an unfair global trade system. On Thursday, Trump signed a measure instructing the US Trade Representative and Commerce Secretary to propose new tariffs on a country-by-country basis to rebalance trade relations.
This extensive process could take weeks or months to finalise. Howard Lutnick, Trump’s nominee for Commerce Secretary, mentioned that all studies should be completed by April 1, allowing Trump to take immediate action thereafter.
Rupee Hits Record Low
The Indian rupee opened at a record low on Monday, trading at 87.92, weakening by 50 paise against the US dollar. This decline follows fresh threats of tariffs from US President Donald Trump on steel and aluminum imports.
The rupee’s performance comes after a rate cut by the Reserve Bank of India last Friday, which initially strengthened the rupee by 15 paise to close at 87.43 against the US dollar. The RBI, under new Governor Sanjay Malhotra, stated that the central bank will focus on smoothing volatility in the FX market without targeting a specific exchange rate level.
Fed Still In No Rush To Lower Rates
Federal Reserve Chair Jerome Powell stated on Tuesday that the central bank does not need to hurry in adjusting interest rates, once again indicating that officials will be patient before considering further reductions in borrowing costs.
“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said.
But Trump Calls For Lower Interest Rates
President Donald Trump has urged for lower interest rates, leading to increased pressure on the Federal Reserve as he advances his second-term economic agenda, which emphasises tariffs and expanded tax breaks. “Interest rates should be lowered, something which would go hand in hand with upcoming tariffs,” Trump stated in a social media post on Wednesday.
New Income Tax Bill
On Thursday, Finance Minister Nirmala Sitharaman tabled the new Income Tax Bill 2025 in Lok Sabha. The minister moved a motion to form a select committee on the bill, which was passed by the House.
The terms and conditions of the committee will be decided by the Speaker, and the report must be prepared by March 10. The select committee will submit its report by the first day of the next session. The new tax bill, which will replace the Income Tax Act 1961, is set to take effect in April 2026. Significant changes have been made to the Income Tax Act, 1961, reducing the number of sections from 819 to 536.
New India Cooperative Bank
The Reserve Bank of India ordered New India Cooperative Bank to cease daily operations immediately, effective from the close of business on Thursday. The bank is prohibited from granting or renewing loans and advances, making investments, incurring liabilities, borrowing funds, or accepting fresh deposits.
“These directions are necessitated due to supervisory concerns arising from recent material developments in the bank, and to protect the interest of depositors,” the RBI stated on Thursday.
However, there is no need to panic. Sources indicated to NDTV Profit that 90% of the 1.3 lakh depositors of New India Cooperative Bank are fully covered under the deposit insurance scheme and will be paid within the stipulated timeline of 90 days. Under this scheme, all deposits up to Rs 5 lakh are fully insured.
IPOs This Week
India’s primary market was buzzing in the second week of February, with at least nine public issues opening for subscription, mostly in the SME space. Quality Power Electrical Equipments Ltd., Hexaware Technologies Ltd., and Ajax Engineering Ltd. launched their IPOs in the mainboard space.
Concreting equipment player Ajax Engineering’s Rs 1,269-crore initial public offering opened on Feb. 10, with a price band set between Rs 599 and Rs 629 per share.
In the SME segment, six companies aimed to raise over Rs 200 crore. Chandan Healthcare Ltd. began its subscription on February 10 to raise Rs 107.36 crore. PS Raj Steels Ltd., Voler Car Ltd., and Maxvolt Energy Industries Ltd. kicked off their IPOs on February 12. The IPOs of L.K. Mehta Polymers Ltd. and Shanmuga Hospital Ltd. opened on February 13 to raise Rs 7.38 crore and Rs 20.62 crore, respectively.
