Talking to ET Now, Agrawal, Chairman & Co-Founder, MOFSL termed the inducement a “1000-pound gorilla” choice, arguing that it addresses a important hole in India’s participation within the international AI infrastructure increase — a wave he described as the most important infrastructure construct humanity has ever seen.
“This 1000-pound gorilla, in the event you see what is going on on the planet, we had been neglected by way of the AI infra increase. That is humanity’s largest infra construct wherever on the planet. That’s the information centre capex which is going on, and that information centre, you want loads of energy. I imply, it’s a energy guzzler,” Agrawal stated.
He famous that the increase in information centres has been a significant growth driver for the US financial system and stated India now has a novel alternative to change into globally aggressive by leveraging decrease infrastructure, manpower and energy prices.
“However we had been lacking out on this explicit transfer which is definitely powering total America in a giant manner. In the present day, America is actually rocking solely due to this explicit increase. And now by doing this, a 22-year tax vacation — I imply, the nation which has the very best aggressive edge in doing an information centre, the price of infrastructure shall be lowest, price of operating folks shall be lowest, price of energy shall be lowest,” he stated.
Agrawal added that India’s capacity to provide giant quantities of inexperienced and standard energy could additional strengthen its enchantment as an information centre and AI hub.
“We can present as a lot inexperienced energy, gray energy we wish. I feel this explicit alternative is totally what was wanted and that is going to be incremental growth,” he stated.Whereas estimates counsel that recent investments of ₹30,000–50,000 crore could circulate into the sector, Agrawal cautioned that the true scale of the chance could solely change into clear over time.
“Allow us to see. Some individuals are saying ₹30,000, ₹40,000, ₹50,000 crores type of new funding can come in a short time, however God is aware of. In 1995, it was very tough to determine that India will do $250 billion of software program exports, and even that’s occurring on the again of it. So, these are the issues which you can’t say how large will probably be, however it is a game-changing type of a factor,” he stated.
He confused that the transfer stood out within the funds as a daring, unconventional reform with long-term implications.
“Other than no matter different issues are there within the common manner within the funds, this one was fully out of syllabus, out of field, and it’ll have far-reaching impression — perhaps not in six months, however as we go ahead, I feel that is going to be a game-changing factor. It will possibly really change the outlook for the nation, outlook for the markets,” Agrawal stated.
He additionally pointed to a shift in investor notion, noting that India had beforehand been seen as missing a transparent AI funding story.
“Markets had been dissatisfied that India doesn’t have any AI play. Now, we’re proper there. So, it’s going to be a giant factor,” he added.
Nevertheless, Agrawal additionally flagged issues across the current hike in Securities Transaction Tax (STT) on futures and choices, warning that it could act as a drag on market liquidity and brokerage sector growth.
“The intention of the regulators or the policymakers or lawmakers in Delhi may be very clear — they’ve been attempting to curb this hypothesis,” he stated, referring to earlier adjustments such because the conversion of weekly by-product contracts into month-to-month ones in November 2024.
“That was the primary one for which we’re struggling for the final 4 quarters. In the event you see all of the brokerages, the earnings are down by 25–30% 12 months on 12 months due to that,” he stated.
Agrawal famous that simply because the sector was starting to recuperate, the recent STT hike could create one other headwind for high-frequency and arbitrage buying and selling methods.
“Now nearly we’re popping out of that individual type of a headwind, and now we’ve a recent new headwind the place the F&O and possibility contracts will change into much more unremunerative for the high-frequency merchants, and that can suck the liquidity out of the market,” he stated.
Whereas the total impression stays unsure, Agrawal expects growth within the broking area to stay subdued for the close to time period.
“What number of trades will change into unviable, I have no idea, however undoubtedly it’s a headwind. Solely time will inform how badly we get impacted, however one other 4 quarters will stay in gradual land by way of growth. Possibly after this This fall, I used to be pondering we are going to once more go to 25% type of growth. Now, I feel that won’t occur,” he stated.
Total, whereas the STT hike could weigh on near-term market exercise, Agrawal believes the info centre tax vacation could show to be one of the consequential structural reforms in recent times — probably positioning India as a severe international participant in AI infrastructure over the approaching many years.
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