Daily News - Wednesday, 28 May 2025
Urban growth key to India’s rise as 3rd largest economy: PM Modi (BusinessLine)
Prime Minister Narendra Modi emphasised that accelerating economic development in India’s urban centres, especially Tier 2 and Tier 3 cities, will be crucial for India to surpass Germany and become the world’s third-largest economy, a goal he described as urgent and within reach. Highlighting India’s current position as the fourth-largest economy after recently overtaking Japan, Modi urged urban bodies to become engines of growth through targeted annual economic goals, value addition in agri-produce, and support for the 2 lakh startups largely based in smaller cities. Supporting this vision, Union Minister Manohar Lal Khattar noted that India, with a 1,000 km metro network and 950 km under construction, is on track to surpass the US and secure the second position globally in metro infrastructure within 2–3 years.
FDI inflows hit 3-yr high, grow 14% to $81 b in FY25 (The Economic Times)
Foreign direct investment (FDI) equity inflow into India declined by 24.5% year-on-year to $9.34 billion in Q4 FY25, compared to $12.37 billion in the same period last year, even as total FDI (including reinvested earnings and other capital) reached a three-year high of $81.04 billion in FY25, marking a 14% annual growth. Despite the quarterly dip, FDI equity for the full fiscal year rose 13% to $50 billion, with the services sector leading at $9.35 billion (up 40.77%), followed by software and hardware (16% share), and manufacturing FDI increasing 18% to $19.04 billion. Maharashtra attracted the largest share (39%) of equity inflows, while Singapore (30%), Mauritius (17%), and the US (11%) were the top sources, supported by India’s liberal FDI regime and targeted sectoral reforms.
Investments worth ₹4.32 tn expected in North-east, states to offer incentives: Jyotiraditya Scindia (mint)
India’s eight north-eastern states have attracted investment proposals worth ₹4.32 trillion during a recently concluded regional summit, with Union Minister Jyotiraditya Scindia confirming that state governments will soon roll out incentives to convert these deals into tangible economic gains. The Central government is prioritizing the region’s strategic development through enhanced infrastructure and connectivity, including turning Guwahati and Agartala into international gateways and accelerating work on the India-Thailand-Myanmar trilateral highway to tap into Southeast Asia’s $122 billion trade ecosystem. The investment proposals span diverse sectors such as manufacturing, FMCG, IT, tourism, agriculture, hydropower, and bamboo, reflecting a broad-based strategy for inclusive and region-specific economic growth across all eight ‘Ashta Lakshmi’ states.
India poised for growth amid global uncertainty, says finance ministry (mint)
India’s economy continues to demonstrate resilience amid global volatility, supported by strong services growth, robust GST collections, and steady rural demand, according to the finance ministry’s April economic review. Structural reforms and a focus on skill-based policies are expected to bolster medium-term investor confidence, though external risks loom, particularly from the US-imposed 26% reciprocal tariffs on Indian imports, set to take effect in July if ongoing negotiations fail. The ministry cautioned that global uncertainties and tighter financial conditions could dampen private sector capital expenditure, but a successful India-US trade agreement may reverse current export headwinds and unlock new market opportunities.
India-UK FTA rollout only in H2 CY26 (mint)
The India-UK Free Trade Agreement (FTA), though concluded on 6 May 2025, is unlikely to take effect before the second half of 2026, as a minimum 10-month implementation timeline is expected post-signing, pending legislative procedures in the UK. The phased tariff reductions will lower duties on UK whisky and gin from 150% to 75% initially and 40% by the tenth year, while duties on British electric vehicles will drop from over 100% to 10% under a capped quota, potentially boosting bilateral trade by £25.5 billion. However, contentious issues like the UK’s Carbon Border Adjustment Mechanism (CBAM) remain outside the FTA, with both nations continuing climate cooperation independently as domestic preparations for treaty ratification get underway.
