A pivotal budget for India #IndiaFinance

Good morning. Journalists all over the world have worn down the “A” and “I” keys on their computers this week and I am no exception. Media companies owned by India’s richest people — Mukesh Ambani and Gautam Adani — have joined a copyright infringement lawsuit against OpenAI in the Delhi high court. This is the first big case that could determine some critical issues around training rules for generative AI.

But first, let’s set the scene for tomorrow. Just another Saturday for the world. But Budget Day for India.

Balancing act

I will confess that over the past few years my interest in the Union Budget waned. It was becoming a noisy event with little impact on on-the-ground realities. There would be some bickering about this or that tax for a few days and then we would all go back to our regular lives. But tomorrow when finance minister Nirmala Sitharaman presents her budget proposals in parliament, I’ll be paying close attention. This (financial) year India has been caught in a deadlock of a falling growth rate, high inflation, high interest rates and high unemployment, and Sitharaman’s proposals have the power to determine the course of the economy.

My guess is that the minister will rely on public spending on infrastructure to boost growth. This will spread public money more widely in the economy and drive up job numbers. Besides, this has been a cornerstone of the Modi government; great roads are also a good talking point during elections. But Sitharaman will have to keep an eye on the fiscal deficit, which the government has targeted at 4.9 per cent of GDP for the year ending March, and so the amount of money she can allocate to infrastructure development will be restricted.

One perennial budget demand is for a cut in income taxes for the salaried middle-class in India. This year, though, the frustration of this segment — which pays taxes but does not access some public services like government-run schools or hospitals — is particularly intense. There is all kinds of speculation about proposed changes, but the most persistent one is that a fourth tax bracket might be introduced. According to local media reports, the government is working on a new income tax act to replace the current law and has been consulting experts for feedback and suggestions. My guess is that it will be unveiled at a later date (perhaps with a complicated Hindi name like the Indian Penal Code, or Bharatiya Nyaya Sanhita, was in 2024) and the big changes in the tax structure will come then.

The one thing I feel certain about is that there will be some AI-related announcements. The budget speech has, in recent years, become an exercise in signalling intent by the government. This week there has been a lot of angst about India’s inability to develop an innovative AI product like China’s DeepSeek. The government will use the budget to announce an initiative or two to get on the AI bandwagon. However, these kinds of programmes have had limited success in the past. Schemes like Start up India, Skill India and Digital India, which were announced with much fanfare, have seen their budget outlays shrink every year.

Sitharaman’s budget speeches have got shorter over the years. In 2020, she spoke for two hours and 40 minutes, but in 2023 wrapped it up in 87 minutes. (I’m ignoring 2024 because it was an election year and there were two mini-budgets). I only hope she keeps it crisp this year and focuses on the larger, more important points that will help move the needle on the economy and not get bogged down with detailed explanations about minor initiatives. It’s a Saturday, after all.

Do you have any questions about the Budget? Write to us at [email protected] or hit reply and we’ll answer them next week.

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1. Suspending the Trump dump today in favour of the AI dump. OpenAI, in which SoftBank wants to invest $25bn (an FT scoop), says it has evidence that DeepSeek used its proprietary model to train its own open-source competitor; Microsoft’s cloud sales disappoint as it struggles to meet AI demand; and Mark Zuckerberg is going to spend “hundred of billions” on the technology. Two questions — does DeepSeek offer Apple’s faltering AI strategy a lifeline, and has Europe missed its AI moment?

2. The US Fed decided to keep interest rates steady, and Trump is mad about it.

3. HSBC, as part of a business overhaul, is set to exit parts of its investment banking business in the UK, US and Europe.

4. Air miles and frequent-flyer programmes drive enormous profits for airlines. (Check out the list of top 10 most valuable airline loyalty programmes).

5. At last, humour has reached LinkedIn (This might finally make me use the platform more).

6. Why Louis Vuitton is betting big on Formula 1.

Ambani and Adani vs Openai

On the off chance that I haven’t typed AI enough times today, here’s some more. OpenAI is having a terrible week. Globally, it was rattled by the emergence of a scrappier competitor, DeepSeek, and in India, large media companies joined publishers in a lawsuit against the US company. As chronicled by Indian media, the original case was filed by the Indian newswire service, Asian News International (ANI), in November 2024 in the Delhi high court. ANI alleged that OpenAI was training ChatGPT using copyrighted content without authorisation. In early January, the Federation of Indian Publishers joined the case and this week, the Digital News Publishers Association — whose members include media houses owned by Ambani and Adani — filed interventions in the case too. OpenAI has questioned the jurisdiction of the court and is contesting the addition of the two new groups since the key issues raised by them are different from those being contested with ANI. (Book publishers, for example, contend that ChatGPT publishes summaries and extracts, but OpenAI’s view is that it picks up the information from publicly available sources and therefore there is no infringement of copyright.)

The case will be keenly watched as it is grapples with critical questions about copyright in the age of generative artificial intelligence. Most significantly, the court could determine that use of copyrighted data qualifies as “fair use” for AI developers. If OpenAI is able to convince the court of this, it will open up an enormous trove of material to train its software on. (The company is facing similar lawsuits in other countries too.) Detailed hearings are scheduled to begin on February 21. I’ll keep you posted.

Go figure

Tragedy struck at the Kumbh Mela this week when a stampede broke out early on Wednesday morning. Here’s what we know, so far.

Read, hear, watch

It’s a working weekend for me, alas, and I will be spending most of it in front of a screen. If I can manage to find some time, I hope to get started on the gritty sequel of Patial lok on Amazon Prime. I know I’m way behind most people on this, but I have been watching Black Warrant on Netflix and it fulfils my weekly quota for gruesome content, thank you very much. As a palate cleanser between episodes, I watched this lovely Thai film, How to Make Millions before Grandma Dies (also on Netflix). I highly recommend it.

It’s been a very busy work week and my reading, too, is suffering. I have been dipping into Nina Stibbe’s memoir Went to London, Took the Dog for a few minutes before bed every night. It’s hilarious and wholesome.

I’m afraid I don’t have any strong recommendations for anything else this weekend (or next, actually). Send me yours.

Buzzer round

What is Nato trying to prevent by deploying drones, submarines, ships and aircraft in the Baltic Sea?

Send your answer to [email protected] and check Tuesday’s newsletter to see if you were the first one to get it right.

Quick answer

On Tuesday, we asked: Do you think the Indian stock market will bounce back after the budget? It’s a close one, here are the results.

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