#10 - WK49
The $100 Billion Handshake
Welcome to Week 49.
Some weeks are defined by single headlines, but this one gave us a mix, high-stakes diplomacy in Delhi, a pension battle in Berlin and flight cancellations chaos.
In Germany, Chancellor Friedrich Merz narrowly averted a government crisis on Friday when the Bundestag passed the controversial pension package. The bill locks pension levels at 48% of average wages until 2031 and allows retirees to earn up to €2,000 tax-free per month if they continue working. Young conservative lawmakers had revolted against the €185 billion package, arguing it unfairly burdens younger generations.
The big headline from India came from Delhi, where Prime Minister Modi broke protocol to personally welcome Russian President Vladimir Putin at Palam Airport on Thursday evening. It was Putin’s first visit to India in four years. In a week when geopolitical tensions continue to simmer globally, India and Russia sat down for their 23rd Annual Summit, reaffirming what they call a “Special and Privileged Strategic Partnership” that has remained resilient despite external pressures.
Modi and Putin unveiled an ambitious roadmap targeting $100 billion in bilateral trade by 2030, with Modi confident it could happen even sooner. From defense manufacturing under Make in India to a new 30-day free e-visa for Russian tourists, the agreements signed covered everything that matters for both economies.
But while diplomacy flourished in Delhi, travel plans got complicated. IndiGo, India’s largest airline, cancelled over 1,000 flights on Friday alone. The culprit? A severe pilot shortage triggered by new Flight Duty Time Limitation (FDTL) rules that cap how long pilots can work, especially at night. These regulations were announced way back in January 2024, but IndiGo admitted to DGCA on Thursday that it “failed to anticipate actual crew requirements”. The regulator stepped in Friday, granting IndiGo temporary exemptions from night-duty rules until February 10.
Stock Market
The Sensex had a relatively quiet week, closing at 85,712 points on Friday, almost flat compared to where it started on Monday around 85,706. The real action happened on Friday when the Reserve Bank of India (RBI) delivered a positive surprise, cutting the repo rate by 25 basis points to 5.25%. This sparked a rally of 447 points on the day, with banking stocks like SBI and Bajaj Finserv leading the charge. The rate cut signals that the RBI is confident about inflation coming down (they revised their forecast to 2% from 2.6%) while raising growth expectations to 7.3% from 6.8%.
The DAX performed better, closing the week around 24,028 points—marking its second consecutive weekly gain with an increase of approximately 0.8%. The index touched a three-week high on Friday, largely supported by expectations of a US Federal Reserve rate cut next week.
The Euro strengthened against the Rupee this week, moving from ₹104.03 on Monday to a peak of ₹105.22 on Tuesday, the highest rate seen in December so far. The rate then stabilized around ₹104.73 by Friday. The overall trend in 2025 has been favorable for Euro holders, with the EUR/INR rate up about 18% since January when it was trading near ₹88
Germany News Roundup
Bundestag Approves Pension Law with Majority, promising a comprehensive reform to stabilize and strengthen the pension system, with implementation set for January 2026 after Bundesrat approval. - Deutschlandfunk
Siemens Collaborates with Rheinmetall on F-35 Jet, supporting automation and medical tech integration in Rheinmetall’s defense manufacturing, including components for the F-35 fighter jet in Germany. - WELT
VW Converts Dresden Plant into Innovation Campus, transforming the site into a tech hub for AI, robotics, and chip design after ending car production by 2026 with significant investment planned. - Heise
Porsche Considers Shift to Military Production, amid economic challenges in automotive sector, exploring defence investments without formal weapon manufacturing confirmation currently. - The Khyber Mail
Germany Activates Arrow 3 Missile Shield, marking the first deployment outside Israel, enhancing Western Europe’s air defense with advanced long-range interceptors amid rising geopolitical tensions. - DefenseNews
Germany Votes for Voluntary Military Service, introducing a program for all 18-year-old men to support national defense enhancements by 2026, amid public protests and plans to increase Bundeswehr personnel significantly. - BBC
Vulcan Energy Secures €2.2B for German Lithium Project, mobilizing extensive public and private funding to develop first phase lithium extraction from geothermal brine, aiming for sustainable European supply and EV battery production by 2028. - electrive.com
Zeekr Launches Electric Cars in Germany, targeting the German company car sector with three fully equipped EV models, competitive pricing, and extensive service network, aiming to capture commercial fleet users switching to electric vehicles. - ArenaEV
SCHUFA Score to Simplify and Go Online, from 2026, reducing scoring criteria from 250 to 12, enhancing transparency, and allowing free online access and detailed score insights via an account and app. - Iamexpat.de
India News Roundup
India Withdraws Mandate on Pre-Installed Cyber Safety App, following public backlash over privacy concerns, leading smartphone makers to resist the directive to preload the Sanchar Saathi app on new devices. - BBC News
India Offers Free 30-Day E-Visa to Russians, aiming to boost travel and strengthen bilateral ties after Modi-Putin talks and unveiling Vision 2030 for economic cooperation expansion. - India Today
IndiGo Flight Cancellations To Normalize Mid-December, following operational crisis caused by Flight Duty Time Limitations, with full refunds and rescheduling waivers offered for affected passengers amid regulatory intervention. - Hindustan Times
India and Germany Boost Electric Mobility Collaboration, focusing on scalable financing, battery readiness, workforce skills, and integrated national frameworks to advance clean and sustainable transport solutions efficiently. - BioEnergy Times
Adani Plans $5B Investment in Google’s AI Data Center, joining the AI boom by funding a major Google data center project in India to meet rising demand for data capacity and computing power. - The Hindu
Putin’s India Visit
Russian President Vladimir Putin made a two-day state visit to India on December 4-5, marking his first trip to India in four years.
Key Meetings
Putin’s visit centered around extensive bilateral talks with PM Modi, covering defense, energy, trade, and regional security. The leaders also addressed the India-Russia Business Forum, where both sides discussed accelerating economic cooperation. The summit commemorated 25 years of the India-Russia Strategic Partnership, which began in 2000.
Major Announcements and Agreements
Trade and Economy:
Both countries unveiled a 2030 Economic Cooperation Roadmap with an ambitious target of $100 billion in bilateral trade by 2030, PM Modi expressed confidence this could be achieved ahead of schedule
Acceleration of Free Trade Agreement (FTA) negotiations with the Eurasian Economic Union (EAEU)
Focus on faster implementation of trade corridors using digital technology to link customs and logistics systems, reducing transit times and costs
Defense and Strategic Cooperation:
Expansion of joint research, co-development, and co-production of defense systems under the Make in India initiative
Continued INDRA joint military exercises and defense technology exchanges
Joint production of spare parts and components for maintaining Russian military equipment in India
People-to-People and Tourism:
Introduction of free 30-day e-Tourist Visa for Russian citizens visiting India on a reciprocal basis
Opening of new Indian Consulates in Yekaterinburg and Kazan to enhance diplomatic presence
Other Key Areas:
Russia officially joined India’s International Big Cat Alliance (IBCA), boosting wildlife conservation cooperation
Over a dozen MoUs signed covering labor mobility, healthcare, maritime training, academia, and media cooperation
Framework established for movement of skilled workers from India to Russia
Cooperation on science, technology, innovation, R&D, start-ups, critical minerals exploration, and digital technologies
Checkout complete list of outcomes at Ministry of External Affairs
The joint statement emphasized that “Russian-Indian relations remain resilient against external pressures” despite the complex geopolitical environment. Both leaders reaffirmed their commitment to the Special and Privileged Strategic Partnership, with Putin inviting Modi to Russia for the 24th India-Russia Annual Summit in 2026.
Opportunity (IN)
India-Russia Defense Manufacturing Play
Putin’s Delhi visit laid the groundwork for something bigger than trade numbers, a formal shift from buyer-seller to joint manufacturing of military hardware and spare parts on Indian soil.
Why This Matters
About 60-70% of India’s military equipment is Russian-origin, Sukhoi jets, T-90 tanks, S-400 missile systems. The problem? Getting spare parts from Russia takes forever, affecting critical defense systems. Friday’s summit directly addresses this by encouraging “joint manufacturing in India of spare parts, components, and aggregates for maintenance of Russian-origin arms and defense equipment under Make-in-India programme through transfer of technology”. The agreement even allows eventual exports to “mutually friendly third countries”.
Who Benefits?
Bharat Dynamics Limited (BDL) emerges as the star player. Discussions around additional S-400 air defense systems include technology transfer for BDL to locally assemble and produce essential missile components. 1
Hindustan Aeronautics Limited (HAL) remains the backbone for aircraft production and maintenance. With Russian Sukhoi-30 jets forming the majority of India’s fighter squadrons, HAL’s role becomes even more critical, potentially including joint production of Sukhoi-57 fifth-generation stealth fighters. 2
Bharat Electronics Limited (BEL) and Mazagon Dock Shipbuilders are positioned to benefit from electronics integration and naval collaboration respectively.
The Investment Angle
The Nifty Defence index is up nearly 300% over three years. The real opportunity isn’t just immediate orders, it’s the structural shift to domestic manufacturing with technology transfer, creating annuity-like revenue from spare parts, maintenance, and exports.
Until Next Sunday…
As we wrap up this eventful week, all eyes turn to December 10 when the US Federal Reserve holds its policy meeting. Markets are pricing in an almost 90% probability of a 25 basis point rate cut. But here’s the twist, Fed officials are deeply divided, with growing tensions between those worried about a slowing economy and others concerned about sticky inflation.
The outcome could trigger significant volatility across global markets, affecting everything from the dollar index to emerging market flows into India and Germany. Coming right after India’s own surprise rate cut on Friday, next week’s Fed decision will be crucial for currency movements, bond yields, and equity markets as we head into the final stretch of 2025. Keep an eye on Wednesday evening, it could set the tone for your year-end portfolio decisions.
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Stay informed, stay invested, and see you next week.
See you next Sunday,
Jimit Patel