Daily News - Wednesday, 7 May 2025
India, UK secure ‘historic’ free trade agreement, deal will ‘significantly enhance commerce, generate new job avenues’ (The Indian Express)
India and the United Kingdom concluded the long-awaited Free Trade Agreement (FTA) at the end of April, eliminating UK tariffs on key Indian exports such as textiles, footwear, and automobile components (currently ranging from 2–18%), while India agreed to reduce tariffs on whiskey and gin from 150% to 75%, further dropping to 40% over 10 years, alongside slashing automotive tariffs to 10% under a quota. The agreement, hailed as a “historic milestone” by Prime Minister Modi and a “landmark trade deal” by Prime Minister Starmer, is expected to enhance bilateral trade, create jobs, and attract investment, with the textile and footwear industries anticipating a boost in exports and employment, despite concerns from the alcohol beverage sector. Additionally, the Double Contribution Convention exempts Indian skilled workers in the UK from social security contributions for three years, enhancing mobility and opportunities for Indian professionals, while discussions on the Bilateral Investment Treaty (BIT) are set to follow, with India proposing a ‘rebalancing mechanism’ to address the impact of the UK’s Carbon Border Adjustment Mechanism (CBAM) on its metal exports.
India will retaliate if EU goes ahead with carbon tax: Goyal (Financial Express)
As India and the European Union (EU) accelerate negotiations on a Free Trade Agreement (FTA), Commerce Minister Piyush Goyal warned that India would retaliate against the EU’s proposed Carbon Border Adjustment Mechanism (CBAM), set to take effect in January 2026, which imposes carbon taxes on imports like iron, steel, aluminium, and cement if emissions exceed prescribed thresholds. Goyal criticized the carbon tax as a non-tariff barrier that could negate FTA benefits and increase costs in Europe but highlighted it as an opportunity for India to expand its exports globally. During his visit to Europe, Goyal met with EU and Norwegian officials, stressing that FTA negotiations should also address non-tariff barriers, and discussed the India-EFTA Trade and Economic Partnership Agreement (TEPA), signed in March 2024 and pending legal finalization.
Moody’s cuts India’s GDP growth forecast to 6.3% in 2025 (Financial Express)
Moody’s has cut India’s GDP growth projection for 2025 from 6.5% to 6.3%, citing global economic slowdown, heightened US policy uncertainty, and geopolitical tensions, while maintaining its forecast for 2026 at 6.5%, compared to 6.7% in 2024; it also expects the Reserve Bank of India to lower policy rates to support growth. Global growth forecasts were also lowered, with the US projected to grow at 1% in 2025 and 1.5% in 2026, down from 2.8% in 2024, while China’s growth is expected at 3.8% in 2025 and 3.9% in 2026, compared to 5% in 2024, reflecting trade tensions, especially US-China tariff policies. Moody’s highlighted risks of financial market volatility, geopolitical tensions in South Asia and the South China Sea, and ongoing conflicts in Ukraine and the Middle East as potential threats to economic resilience and global stability.
India to overtake Japan as fourth largest economy in 2025 (mint)
The IMF’s April 2025 World Economic Outlook projects India to surpass Japan as the world’s fourth-largest economy with a nominal GDP of $4.187 trillion in 2025, slightly ahead of Japan’s $4.186 trillion, while still trailing behind the US ($30.51 trillion), China ($19.23 trillion), and Germany ($4.74 trillion). This ascent highlights India’s robust domestic demand, favourable demographics, and structural reforms despite recent growth moderation—GDP grew by 6.2% in Q3 FY25, up from 5.6% the previous quarter, though still short of the National Statistical Office’s target of 6.5%. The IMF also revised India’s growth forecast for 2025-26 to 6.2% (from 6.5%) due to global trade tensions, including a 27% US reciprocal tariff on Indian goods, later reduced to 10%, which strained trade dynamics and impacted financial stability.
India climbs three spots to 130 on Human Development Index: UNDP (The Economic Times)
India improved its ranking in the Human Development Index (HDI) to 130 in 2023 from 133 in 2022, with its HDI value rising to 0.685, reflecting gains in health, education, and income, including a life expectancy increase to 72 years, an average schooling expectancy of 12.95 years, and a gross national income of $9,046.76 (PPP 2021). UNDP credited programs like the National Rural Health Mission, Ayushman Bharat, and the Right to Education Act for these improvements, while 135 million Indians moved out of multidimensional poverty between 2015–16 and 2019–21; however, income inequality still reduced India’s HDI by 30.7%. India’s ranking in the Gender Development Index (GDI) also rose to 102 in 2023 from 108 in 2022, and it was recognized as an emerging AI powerhouse with the highest self-reported AI skills penetration.
