Talking to ET Now, Agrawal, Chairman & Co-Founder, MOFSL termed the inducement a “1000-pound gorilla” determination, arguing that it addresses a important hole in India’s participation within the world AI infrastructure increase — a wave he described as the most important infrastructure construct humanity has ever seen.
“This 1000-pound gorilla, for those who see what is going on on the planet, we had been ignored 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 mentioned.
He famous that the increase in information centres has been a significant development driver for the US economic system and mentioned India now has a novel alternative to develop 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. At this time, America is absolutely rocking solely due to this explicit increase. And now by doing this, a 22-year tax vacation — I imply, the nation which has the best aggressive edge in doing an information centre, the price of infrastructure shall be lowest, price of working individuals shall be lowest, price of energy shall be lowest,” he mentioned.
Agrawal added that India’s means to provide giant quantities of inexperienced and standard energy might additional strengthen its enchantment as an information centre and AI hub.
“We will present as a lot inexperienced energy, gray energy we wish. I believe this explicit alternative is completely what was wanted and that is going to be incremental development,” he mentioned.Whereas estimates recommend that recent investments of ₹30,000–50,000 crore might stream into the sector, Agrawal cautioned that the true scale of the chance might solely develop into clear over time.
“Allow us to see. Some persons are saying ₹30,000, ₹40,000, ₹50,000 crores form 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 taking place on the again of it. So, these are the issues which you can not say how large will probably be, however it is a game-changing form of a factor,” he mentioned.
He burdened that the transfer stood out within the finances as a daring, unconventional reform with long-term implications.
“Aside from no matter different issues are there within the common manner within the finances, this one was fully out of syllabus, out of field, and it’ll have far-reaching affect — perhaps not in six months, however as we go ahead, I believe that is going to be a game-changing factor. It may possibly really change the outlook for the nation, outlook for the markets,” Agrawal mentioned.
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 disenchanted that India doesn’t have any AI play. Now, we’re proper there. So, it will be a giant factor,” he added.
Nonetheless, Agrawal additionally flagged considerations across the latest hike in Securities Transaction Tax (STT) on futures and choices, warning that it might act as a drag on market liquidity and brokerage sector development.
“The intention of the regulators or the policymakers or lawmakers in Delhi may be very clear — they’ve been making an attempt to curb this hypothesis,” he mentioned, referring to earlier modifications 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. When you see all of the brokerages, the earnings are down by 25–30% 12 months on 12 months due to that,” he mentioned.
Agrawal famous that simply because the sector was starting to get better, the recent STT hike might create one other headwind for high-frequency and arbitrage buying and selling methods.
“Now nearly we’re popping out of that exact form of a headwind, and now we’ve a recent new headwind the place the F&O and possibility contracts will develop into way more unremunerative for the high-frequency merchants, and that may suck the liquidity out of the market,” he mentioned.
Whereas the total affect stays unsure, Agrawal expects development within the broking area to stay subdued for the close to time period.
“What number of trades will develop into unviable, I have no idea, however positively 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 development. Possibly after this This fall, I used to be pondering we’ll once more go to 25% form of development. Now, I believe that won’t occur,” he mentioned.
General, whereas the STT hike might weigh on near-term market exercise, Agrawal believes the info centre tax vacation might show to be probably the most consequential structural reforms lately — probably positioning India as a severe world participant in AI infrastructure over the approaching many years.
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