In a significant push towards expanding its global economic footprint, India is actively forging new trade alliances and diversifying its export destinations. A recent SBI research report highlighted that India's merchandise exports are increasingly moving beyond the United States, with a notable rise in trade with the UAE, China, and other emerging markets. This strategic diversification is being further bolstered by government support and various strategic deals. Despite this positive trend, high tariffs continue to impact labor-intensive sectors such as textiles, jewelry, and seafood, prompting the government to approve ā¹45,060 crore, including ā¹20,000 crore in credit guarantees on bank loans, to support exporters and enhance their global competitiveness.
On the international trade front, India and Israel are considering implementing their proposed Free Trade Agreement (FTA) in two phases. This approach aims to secure early benefits for the trade community while initially avoiding more sensitive sectors. The negotiations, formally launched with the signing of Terms of Reference, encompass market access for goods, investment facilitation, customs simplification, and cooperation in technology transfer. Union Commerce and Industry Minister Piyush Goyal recently concluded a successful three-day visit to Israel, meeting with Prime Minister Benjamin Netanyahu to discuss deepening bilateral economic and strategic engagement across various sectors, including agriculture, water, defense, science, technology, and innovation.
Furthermore, India and Canada are reviving negotiations for a Comprehensive Economic Partnership Agreement (CEPA). Canadian Prime Minister Mark Carney and Indian Prime Minister Narendra Modi met to relaunch these talks, which aim to more than double two-way trade to $70 billion by 2030. The proposed CEPA is extensive, covering goods, services, investment, agriculture, digital trade, labor mobility, and sustainable development.
Domestically, India is prioritizing economic transformation through strategic investments and the growth of its small and medium-sized enterprises. Nivruti Rai, Managing Director & CEO of Invest India, emphasized the critical role of high-quality foreign direct investment (FDI), technological collaboration, and the rapid scaling of MSMEs in accelerating India's economic growth and achieving the goal of doubling the GDP.
In the financial markets, Indian stock markets experienced a downturn on Friday, influenced by a global selloff, though analysts anticipate a recovery in the coming week. The Indian banking sector also witnessed its first operating profit decline in 13 quarters during July-September, primarily due to sluggish net interest income growth resulting from faster downward repricing of loans compared to deposits.
Meanwhile, new labor codes are on the horizon, expected to lead to a 5-10% payroll hike for IT firms. These codes are also set to boost fixed-term employment, streamline gratuity payments, and enhance social security provisions across various industries.