Gallantt Ispat Share Price Hits 52-Week High After Board Approves Major Expansion Plan

As of 12:40 PM on April 16, 2025, shares of Gallantt Ispat Limited were trading up by 2.57%, touching a new 52-week high on the bourses. The rally comes on the back of a significant capacity expansion announcement. The stock has shown strong momentum, rising by over 8.5% in the month of April so far.

Board approves ₹1,014.98 crore capex plan

At its board meeting, Gallantt Ispat Limited approved a substantial capital expenditure of ₹1,014.98 crore. The investment will support:

  • Expansion of production capacity across its integrated steel plants

  • Establishment of a captive solar power plant to enhance energy self-sufficiency

Notably, the entire CapEx will be funded through internal accruals, with no external debt being raised for this initiative.

Capacity expansion details

The planned expansion involves increasing the output capacities of key units at the company’s integrated steel facility in Gorakhpur, Uttar Pradesh. The updated capacities post-expansion will be:

 

Product Proposed Addition Existing Capacity Total Capacity After Expansion
Steel Billets (MT) 2,72,250 5,28,000 8,00,250
Rolling Mill (MT) 2,77,200 528000 8,05,200
Sponge Iron (MT) 1,15,500 5,44,500 6,60,000
Pellet (MT) 1,98,000  7,92,000 9,90,000
Captive Power Plant (MW) 78 22 100
Captive Solar Power Plant (MW) 0 100 100

 

Timeline for execution

The entire project has been categorised as a brownfield expansion, enabling quicker execution given the existing infrastructure. The company aims to complete the project by March 2026.

Conclusion

The expansion underscores Gallantt Ispat’s long-term growth vision and commitment to sustainability through renewable energy integration. By using internal resources for funding, the company aims to maintain a robust balance sheet while scaling operations to meet rising demand.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

New Guaranteed Pension Scheme Receives Tepid Initial Response

The Government of India introduced the Unified Pension Scheme (UPS) as a middle path between the traditional Old Pension Scheme (OPS) and the National Pension System (NPS). While the promise of a guaranteed pension—equivalent to 50% of the last 12 months’ average basic pay—is central to UPS, the response so far has been lukewarm. As of mid-April, only about 1,500 central government employees, or a mere 0.05% of the 2.7 million staff enrolled in NPS since 2004, have opted for UPS.

What is the Unified Pension Scheme?

Unveiled to address long-standing employee demands for pension certainty, UPS introduces defined benefit elements into what had become a defined contribution retirement ecosystem under NPS. Key features include:

  • Guaranteed monthly pension of 50% of the last 12 months’ average basic pay for those with at least 25 years of service.

  • Full inflation indexation of pension benefits.

  • A survivor benefit that pays 60% of the pension to the spouse after the pensioner’s death.

  • A minimum pension of ₹10,000 per month for those who have completed at least 10 years of service.

Limited Adoption So Far

Despite these seemingly attractive benefits, UPS has had a tepid reception. Just over 1,500 employees have switched from NPS in the first two weeks since the scheme became available on 1 April. However, the decision window remains open till 30 June, and the timeline could be extended if needed.

Major Points of Comparison: UPS vs NPS

1. Contribution Structure

  • Employee Contribution: Remains the same at 10% of basic pay + DA in both NPS and UPS.

  • Government Contribution:

    • NPS: 14%

    • UPS: 18.5% (10% to the individual account and 8.5% to a common pool corpus)

2. Pension Flexibility

  • NPS offers options with or without the return of purchase price during annuity selection.

  • UPS has no capital return option and provides a joint life annuity that ends upon the dependent’s death.

3. Pension Corpus Allocation

Under UPS:

  • The 20% contribution (employee + government) goes into the individual pension fund.

  • The additional 8.5% government contribution forms a common pool to cover any shortfall in paying the guaranteed pension.

Withdrawal and Pension Implications

In UPS, if an employee opts to withdraw up to 60% of the individual corpus after retirement, the guaranteed pension will be proportionally reduced. This contrasts with NPS, where the remaining 40% (after the allowed 60% lump sum withdrawal) could be larger, thanks to a higher total monthly contribution (24% under NPS vs 20% under UPS).

The Trade-Offs Government Employees Are Considering

Employees appear to be in wait-and-watch mode, weighing:

  • Longevity of service (as UPS requires a minimum of 25 years for full benefits)

  • Capital return flexibility under NPS

  • Higher corpus potential under NPS due to greater monthly contribution

  • Guaranteed income security under UPS versus market-linked returns of NPS

Conclusion

The UPS may provide more certainty in retirement income, but it comes with trade-offs in flexibility, corpus size, and personalisation of annuity options. The scheme is still in its early days, and uptake may rise as employees conduct more detailed evaluations of the benefits. With the deadline of 30 June approaching, the coming weeks will be crucial in determining the broader acceptance of this hybrid pension model.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Siemens Energy India Share Allotment Done – When Is the Listing Date?

Siemens Energy India Ltd. has officially become an independent entity after the demerger of the energy business from Siemens Ltd. This structural reorganisation took effect on April 7, 2025—the same day designated as the record and ex-date.

The move is aimed at providing better operational focus by isolating the energy vertical from Siemens Ltd.’s core industrial and automation business.

Share Allotment to Siemens Ltd. Shareholders

On April 14, 2025, Siemens Energy India Ltd. allotted 35.6 crore equity shares to shareholders of Siemens Ltd. The allotment followed a 1:1 ratio, meaning each shareholder received one Siemens Energy India share for every share held in Siemens Ltd. This distribution was approved by the Listing Committee on the same day.

Investor enthusiasm was evident as Siemens Ltd. surged 20% on the ex-date, hitting its upper circuit.

When Will Siemens Energy Shares Be Listed?

Following the demerger and allotment, the shares of Siemens Energy India are expected to be listed on Indian stock exchanges within 30 to 90 days from the record date—that is, between May and July 2025. 

The listing will offer investors an opportunity to trade the newly issued shares and directly participate in the performance of the energy-focused business.

Focus Areas of Siemens Energy India

Siemens Energy India has been carved out to exclusively serve the country’s energy sector. Its portfolio spans across:

  • Grid technologies 
  • Industrial power generation 
  • Gas services 
  • Power generation and transmission project execution 

With India accelerating its transition to cleaner and more efficient energy systems, Siemens Energy India’s offerings are aligned with key infrastructural needs.

Financial Performance Snapshot

Prior to the demerger, Siemens Ltd.’s energy segment made significant contributions:

  • 35% of revenue (FY21–FY24 average) 
  • 40% of EBIT (FY21–FY24 average) 

For FY24 alone, Siemens Energy India reported:

  • Revenue: ₹6,280 crore 
  • EBITDA Margin: 15.7% 
  • Net Profit: ₹710 crore 

The company’s order book at the end of Q3 FY24 stood at ₹10,050 crore, with ₹8,800 crore in fresh orders during the financial year, signalling a strong demand environment and operational visibility.

Conclusion

With the demerger complete and shares allotted, Siemens Energy India is poised to debut on the Indian bourses soon. The entity brings with it a specialised focus on the energy sector, backed by healthy financials and a robust order pipeline. Investors await the listing window, which could open any time between May and July 2025, marking a new chapter for Siemens’ operations in India.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

ICICI Bank Slashes Savings Account Rate by 25 Basis Points

ICICI Bank Ltd. has revised the interest rate on its savings account deposits, reducing it by 25 basis points. Effective from April 16, the revised rates apply to balances below ₹50 lakh, which will now earn an annual interest of 2.75%. 

Meanwhile, deposits exceeding ₹50 lakh will attract an interest rate of 3.25% per annum, as per the official communication on the bank’s website. 

Context: RBI’s Recent Policy Shift Sparks Sector-Wide Rate Cuts

This adjustment by ICICI Bank is part of a broader trend across the banking sector, which comes in response to the Reserve Bank of India’s recent decision.

Last week, the RBI’s Monetary Policy Committee reduced the key policy interest rate by 25 basis points, bringing it down to 6%. Such changes in the repo rate usually ripple through the banking system, influencing lending and deposit rates alike.

Sector Movement: Other Major Banks Follow Suit

Prior to ICICI Bank’s move, several other major private and public sector lenders had already revised their savings and deposit rates. On April 12, HDFC Bank Ltd. reduced its savings account rate by 25 basis points to 2.75% and adjusted fixed deposit rates downward by up to 40 basis points for select long-term tenures.

Likewise, institutions such as State Bank of India, Kotak Mahindra Bank Ltd., Bank of India, and Yes Bank have implemented similar reductions in their deposit interest rates, reflecting a sector-wide recalibration in response to the RBI’s policy action.

Impact: Cost of Funds and Bank Profitability

By lowering savings account interest rates, banks can reduce their overall cost of funds. This reduction allows for a potential increase in net interest margins (NIMs), which is the difference between interest earned on loans and interest paid on deposits. A higher NIM contributes positively to a bank’s profitability, especially when loan growth remains steady or increases.

While beneficial for banks’ balance sheets, these interest rate revisions may have implications for depositors who rely on savings account returns for liquidity and short-term income.

Conclusion

The recent rate cut by ICICI Bank aligns with the broader moves within the banking industry, all triggered by the RBI’s monetary policy stance. As financial institutions continue to respond to macroeconomic signals, deposit rates may remain fluid in the near term, shaped by central bank actions and evolving liquidity conditions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Top 5 Smallcap Stocks That Attracted Mutual Fund Managers in March

According to data released by the Association of Mutual Funds in India (AMFI), equity mutual fund net inflows declined 14% in March 2025 to ₹25,082.01 crore. This was primarily driven by reduced participation in sectoral and thematic funds.

However, the small cap segment stood resilient amid the broader moderation in investor activity, indicating sustained institutional interest in emerging companies.

Small Cap Fund Inflows Rise 10% in March

Net investments in small cap mutual funds increased by 10% to ₹4,092.12 crore in March, showcasing the confidence mutual fund managers continue to place in this segment. While mid cap fund inflows saw a marginal increase of 0.9% to ₹3,438.87 crore, large cap funds saw a significant dip of 13.5%, pulling in only ₹2,479.31 crore.

Which Smallcap Stocks Attracted the Most Buying?

The shift in investor preference towards small caps was reflected in the stock-level activity by mutual funds. The top 5 small-cap stocks that saw the highest net buying by mutual funds in March 2025 span across diverse sectors—travel, healthcare, consumer durables, and financial services.

Stock Name Sector Net Qty Bought Approx. Buy Value(In . ₹ cr) *
TBO Tek Ltd. Travel 69,19,755 832.6
JB Chemicals & Pharmaceuticals Ltd. Healthcare 24,76,489 404.6
Aster DM Healthcare Ltd. Healthcare 66,52,572 294.86
Crompton Greaves Consumer Electricals Ltd. Consumer Durables 72,25,262 243.89
Manappuram Finance Ltd. Financials 1,12,33,592 243.61

These stocks gained traction across various sectors, with travel and healthcare companies leading the pack. 

Conclusion

Despite a 14% dip in overall equity mutual fund inflows, the rise in small-cap and mid-cap fund allocations suggests a shift in investor outlook towards niche and high-growth segments. 

The pattern of stock selection by mutual funds in March offers insight into current institutional preferences, but it is essential to understand that these trends are based on past performance and market dynamics that may evolve over time.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.

212% Return on Sovereign Gold Bond: RBI Announces Premature Redemption for 2017 Series III

The Reserve Bank of India (RBI) has opened a window for premature redemption of the Sovereign Gold Bond (SGB) 2017–18 Series III. As per the latest circular, bondholders will have the opportunity to encash their holdings on April 16, 2025, marking a significant financial event for those who invested in this series.

The bonds, originally issued on October 16, 2017, were priced at ₹2,956 per unit. The redemption price has now been fixed at ₹9,221 per unit, reflecting a substantial gain of 212% for investors who opt for early exit.

How the Redemption Price Is Calculated

The redemption value is determined based on the simple average of the closing gold price (999 purity) over the three business days preceding the redemption date — specifically, 9 April, 11 April, and 15 April 2025. This pricing data is sourced from the India Bullion and Jewellers Association Ltd., in accordance with the RBI’s guidelines.

Such a calculation method ensures transparency and consistency in aligning the bond value with market rates of gold, offering a fair exit opportunity to investors.

Terms of Premature Redemption

According to the original terms of issuance, as per the RBI notification dated October 6, 2017, investors are eligible to redeem SGBs after the completion of 5 years from the date of issue. These premature redemption opportunities are available only on the next interest payment date, which occurs bi-annually.

This mechanism provides a structured and predictable exit route for investors, aligned with the interest payment schedule of the bonds.

Interest Income Adds to Total Returns

In addition to capital appreciation, investors have also earned semi-annual interest at a fixed rate of 2.5% per annum on the face value of the bond since 2017. While the interest is taxed as per the applicable income tax slab, the capital gains arising from redemption are exempt from tax for individual investors, if held till maturity.

This interest component enhances the total return for investors, offering both income and appreciation benefits throughout the holding period.

Liquidity Before Full Maturity

While the full tenure of SGBs is 8 years, the premature redemption facility allows investors to liquidate their investments early, should they require funds or wish to capitalise on prevailing gold prices.

By offering this mid-term liquidity option, the RBI aims to balance long-term wealth creation with short-term financial flexibility for bondholders.

Conclusion

The early redemption opportunity for the 2017 Series III SGB is a noteworthy event for investors, highlighting how gold-backed bonds can offer robust returns over time. Although gold prices are influenced by a range of domestic and global factors, instruments like SGBs serve as an interesting example of how market-linked returns combined with government-backed safety can shape long-term investment strategies.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Andhra Pradesh Allots 21.16 Acres to TCS for 99 Paise to Boost IT Investments

In a notable development aimed at positioning Visakhapatnam as a major technology hub, the Andhra Pradesh Cabinet has approved the allotment of 21.16 acres of land to Tata Consultancy Services (TCS) at a nominal lease of 99 paise. The land will be utilised by TCS to establish a state-of-the-art development centre, with a proposed investment of ₹1,370 crore.

The move is seen as a strategic push by the state to attract large-scale IT investments and generate employment opportunities. According to the official press release, the new facility is expected to create around 12,000 jobs in the region.

High-Level Engagement and Follow-Up

The announcement follows a series of meetings and negotiations between the Andhra Pradesh government and Tata Group executives. In October 2024, the state’s Minister for IT and Electronics, Nara Lokesh, visited Tata House and presented a compelling case for setting up a large-scale IT development centre in the state.

A government spokesperson confirmed that continuous follow-ups and discussions eventually led to the land allotment. The government described the move as a bold and deliberate signal to the broader industry that Andhra Pradesh is committed to becoming a serious player in India’s digital economy.

Role of Leadership and Industry Collaboration

The involvement of Chief Minister N Chandrababu Naidu has also been central to this development. In August 2024, he met with N Chandrasekaran, Chairman of Tata Sons, in Amaravati to discuss the possibility of TCS setting up operations in the state. Following the meeting, Naidu posted about the initiative on social media, indicating strong political will behind the effort.

Subsequently, the state established a Task Force for Economic Development, co-chaired by Chandrasekaran, underscoring the government’s collaborative approach to economic planning and industrial development.

A Nod to Historical Precedents

This decision draws parallels with an earlier initiative by Prime Minister Narendra Modi, who, during his tenure as Chief Minister of Gujarat, had allotted land in Sanand to Tata Motors for the Nano project at a similarly symbolic price of 99 paise. That move, too, was intended to send a powerful message to investors about the state’s pro-business stance.

Broader Vision for Tech and Infrastructure Growth

The land allotment to TCS aligns with the state’s broader vision of transforming Visakhapatnam into a thriving IT destination. As part of this vision, Chief Minister Naidu had promised during his election campaign to create three lakh jobs in Visakhapatnam over a five-year period.

In addition to the TCS development centre, the state government has outlined plans to establish a 500-acre ‘Data City’ near Visakhapatnam. Moreover, a memorandum of understanding (MoU) has been signed with global tech giant Google to set up an Artificial Intelligence (AI) Data Centre in the region.

Conclusion

The allotment of land to TCS for 99 paise is not merely a financial concession but a calculated initiative by the Andhra Pradesh government to send a clear message to the IT industry. Through strategic engagement, long-term planning, and active facilitation, the state is working to position Visakhapatnam as a new frontier for technology and innovation in India.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Non-Life Insurance Crisis: 68% of Claims Unpaid, Policyholders of Bangladesh in Distress

A worrying trend has surfaced in Bangladesh’s non-life insurance sector. According to data released by the Insurance Development and Regulatory Authority (IDRA), nearly 68% of insurance claims remained unpaid by the end of 2024.

Out of the total Tk3,582.89 crore worth of claims filed during the year, only Tk1,481.63 crore (41%) was paid. This has left policyholders grappling with unresolved claims worth approximately Tk2,635 crore.

Comparison with Previous Year Shows Declining Performance

The claim settlement ratio in 2024, although marginally improved, still reflects significant underperformance. In 2023, only 32% of claims were settled — Tk1,237.40 crore out of total claims of Tk3,871.92 crore. Despite the slight increase in payout ratio in 2024, the absolute number of unpaid claims remains alarmingly high.

Policyholders Suffer Amid Financial Uncertainty

Many individuals who placed their trust in insurance policies for financial protection are now facing hardship. The delayed settlements have resulted in severe distress, with some policyholders struggling to cover losses from accidents, property damage, and other insured events. 

As per the existing law, claims should be settled within 90 days. However, this provision is frequently overlooked, exacerbating the suffering of the insured.

IDRA Vows Action Against Defaulting Insurers

In response to the rising volume of unsettled claims, IDRA is planning to take disciplinary steps. A governance review meeting is expected to be held soon with the directors of insurance companies demonstrating poor claim settlement records. 

The authority aims to hold insurers accountable and improve transparency and trust in the sector.

Reinsurance Delays Blamed for the Bottleneck

Insurers cite reinsurance delays as a primary obstacle. By law, 50% of non-life policies must be reinsured through Sadharan Bima Corporation (SBC), while the rest can be placed with foreign reinsurers. However, insurers claim that SBC’s slow settlement process hinders their ability to promptly reimburse policyholders. In contrast, foreign reinsurers are known for relatively quicker claim settlements.

Some Insurers Paying from Own Funds

To maintain goodwill and reputation, a few insurers have reportedly been settling claims from their own reserves, even while waiting for reimbursements from reinsurers. This practice, though commendable, is not sustainable across the board, especially for companies with weaker financial positions.

SBC Highlights Challenges in the Reinsurance Chain

SBC has responded by attributing delays to procedural issues. According to their communication with IDRA, incomplete documentation and late premium payments by insurers are often the root causes of delayed settlements. This points to a systemic issue involving both the insurers and reinsurers.

Conclusion

The current situation in Bangladesh’s non-life insurance sector raises concerns about operational inefficiencies, regulatory compliance, and policyholder protection. While IDRA’s proposed interventions may offer hope, restoring faith in the insurance ecosystem will require structural reforms, improved governance, and timely coordination among all stakeholders.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Homeowners Rejoice: ITAT Rules Redeveloped Property Not Taxable as ‘Other Income’

In a landmark decision that brings clarity to thousands of homeowners involved in redevelopment projects, the Income Tax Appellate Tribunal (ITAT) has ruled that a flat received in exchange for an old one should not be taxed as ‘Income from Other Sources’. This interpretation falls under Section 56(2)(x) of the Income Tax Act and marks a pivotal moment for property owners in cities like Mumbai, where redevelopment is a pressing necessity.

Background of the Case: A. Pitale vs. Income Tax Officer

The case in question involved a taxpayer, A. Pitale, who had purchased a flat in a housing society back in 1997–98. When the society underwent redevelopment, Pitale received a new flat in December 2017. However, the assessing officer treated the difference between the stamp duty value of the new flat (₹25.1 lakh) and the indexed cost of the old flat (₹5.4 lakh), a sum of ₹19.7 lakh, as taxable income under the head ‘Other Sources’.

The ITAT, however, set aside this view. It recognised the transaction as a case of extinguishment of rights and not as a case of the taxpayer receiving immovable property for inadequate consideration. As such, it ruled in favour of the taxpayer.

Redevelopment: A Growing Reality in Urban India

Redevelopment has become an inevitable solution in land-constrained cities like Mumbai, where vertical expansion is the only way to accommodate growing housing demand. Similarly, other cities, including Delhi, have started focusing on redevelopment to rejuvenate old residential clusters.

For instance, the Municipal Corporation of Delhi, in collaboration with HUDCO, has announced redevelopment plans for model flats in areas like Minto Road, Azadpur, and Model Town. Such initiatives are indicative of the widespread adoption of redevelopment as a tool for urban renewal.

Why Is This Ruling Important?

This ruling provides clarity for both taxpayers and developers. Until now, there was uncertainty about the taxability of receiving a new flat in a redevelopment project. By recognising that the transaction does not fall under the purview of Section 56(2)(x), the ITAT has effectively removed the ambiguity that could have led to undue taxation.

This decision reinforces the principle that when an old property is surrendered and a new one is allotted in its place, it is not a case of additional income but a replacement of rights.

Points to Keep in Mind for Homeowners

While this judgment brings relief from taxation under the ‘Other Sources’ category, it is important to note that capital gains tax provisions still remain applicable. If the redeveloped property is sold in the future, homeowners will be liable to pay capital gains tax based on the cost of acquisition and the period of holding.

Hence, documentation and accurate record-keeping regarding the original acquisition cost and the date of ownership will remain crucial for calculating future tax liabilities.

A Step Forward in Tax Clarity

This decision by the ITAT serves as a much-needed clarification in the domain of real estate taxation. It sets a precedent for similar cases and helps streamline the taxation treatment of redevelopment transactions. For homeowners in redevelopment-prone cities, this is a significant relief and a step towards equitable taxation.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

US Government Cancels ₹44,000 Crore in IT Contracts: IT Majors TCS and Infosys Not in the List

In a landmark announcement that has rippled across the global IT landscape, the United States government has cancelled outsourcing contracts worth $5.1 billion (~₹44,000 crore). These contracts, predominantly with large consulting firms, were classified as “non-essential spending” and terminated under a new cost-optimisation drive led by US Defence Secretary Pete Hegseth.

The terminated projects were primarily associated with the Pentagon and related federal departments, and their cessation is part of a broader movement to reduce reliance on third-party consultants for tasks that could be performed internally by government personnel.

Accenture and Deloitte Among the Hardest Hit

Among the key casualties of this decision are global consulting heavyweights Accenture and Deloitte. These firms were reportedly handling major contracts linked to defence and administrative digital infrastructure. The decision has not only led to the cancellation of current contracts but also sets a precedent for how future government outsourcing may be approached.

US Defence Secretary Hegseth termed the cancelled contracts “wasteful spending,” suggesting that nearly $4 billion in government funds could be saved through this measure alone.

Indian IT Firms TCS and Infosys Remain Unscathed—For Now

Interestingly, Indian IT behemoths such as Tata Consultancy Services (TCS) and Infosys were not listed among the impacted vendors. While this development provides a temporary cushion for Indian investors and stakeholders, the broader message from the US administration hints at a possible re-evaluation of all outsourced engagements, regardless of geography.

The decision does not directly affect Indian companies at present, but the sentiment driving the cancellations could have implications for future bids and renewals of government contracts.

Elon Musk Applauds Government Efficiency Measures

Billionaire entrepreneur Elon Musk voiced his support for the Department of Government Efficiency (DOGE), the task force responsible for spearheading this cost-cutting initiative. Speaking at a recent cabinet meeting at the White House, Musk lauded the move and projected potential federal savings of up to $150 billion in FY2026 through DOGE’s optimisation efforts.

Musk has previously argued that DOGE could uncover up to $1 trillion in overall savings. While he has also actively campaigned against tariffs, his economic advisories have not altered the Trump administration’s trade policies.

A Turning Point for the IT Consulting Industry

The cancellation of such large-scale contracts signals a pivotal moment in how the United States, one of the largest consumers of outsourced IT services, intends to handle digital transformation initiatives moving forward. The trend appears to be shifting from outsourcing to in-sourcing, as government departments look to develop internal capabilities.

For companies heavily reliant on US federal contracts, this move presents a significant strategic challenge. The new paradigm demands that consulting firms, both global and Indian, rethink their value propositions, emphasise cost-efficiency, and potentially diversify their client base beyond government projects.

Conclusion

While Indian IT majors like TCS and Infosys have managed to escape immediate impact, the broader signals from the US government point to a more cautious and cost-conscious approach in federal spending on IT services. This shift could reshape the contours of the global consulting market, urging service providers to become more agile, innovative, and resilient in a rapidly evolving environment.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.