By Nantoo Banerjee

It is good that the government has finally decided to introduce the Producer Price Index (PPI) as a more reliable inflation tracker than the Wholesale Price Index (WPI). However, it may not be desirable to dump WPI entirely after a period of the next five years. Wholesale price levels remain highly valuable to assess inflation in a country like India. For instance, domestic producer price of items such as petroleum and pharmaceuticals in India has little link to their market price. Central banks in many countries use both these indices as important indicators. Because changes in input and production costs (what factories pay) typically pass through to consumer retail prices (what you pay), economists use this data to forecast future consumer inflation trends.

In India, crude oil is mostly imported. The domestic output is just around 10 percent of the country’s requirement. As a result, the domestic market is entirely dictated by global import prices. The producer price of domestic crude oil is believed to be much less than the import price. While the actual cost of extracting this oil in India is low, the price at which domestic producers sell it is largely tied to international market rates and government formulas (e.g., pricing formulas linked to imported crude.) India being a price-taker, this import price is volatile and fluctuates daily based on international geopolitics, supply-demand dynamics, and the rupee-to-dollar exchange rate. Similarly, producer price of medicines, especially prescription drugs, has little link with their wholesale and consumer price which include post manufacturing expenses (PME) which may vary from 500 percent to 2,000 percent or even more.

Interestingly, India’s provisional Wholesale Price Index inflation surged to 8.30 percent year-on-year in April 2026, up sharply from 3.88 percent in March. This marked the highest wholesale inflation rate since October 2022, primarily driven by spikes in fuel, food, and manufacturing costs. On the contrary, India’s latest retail inflation, measured by the Consumer Price Index, stood at 3.48 percent (provisional) for April 2026 compared to the same month last year. The headline CPI index value is 105.12. This data utilizes the updated base year of 2024 = 100.

Many nations use both PPI and WPI to track inflation more accurately. For instance, Japan actively tracks the Corporate Goods Price Index (CGPI), which functions as their PPI tracking producer output/input costs, while also compiling and releasing a legacy WPI to monitor transaction prices between businesses. The Philippines government actively maintains both indices, with the WPI acting as an essential inflation guide for bulk sales, while the broader PPI monitors industry output price movements. However, it may be noted that many other economies like the US, China, Germany, France, Australia and the UK rely solely on the PPI to measure producer inflation, as it covers both goods and services and aligns with modern economic accounting. The PPI acts as a critical leading indicator of inflation, as changes in factory gate prices usually trickle down to consumer prices over time.

The WPI measures average price changes of goods sold in bulk at the wholesale level. While major economies transitioned to the globally standardized PPI, many countries still publish WPI-based inflation tracking. Japan tracks domestic corporate goods prices using methods synonymous with a WPI. Germany’s the Erzeugerpreise acts as their producer and wholesale price barometer. Canada tracks industrial product price (IPP) changes. Indonesia publishes Statistics Indonesia (BPS) to monitor bulk commodity prices. Italy tracks wholesale prices across domestic and imported goods (often reported via Moody’s Analytics Wholesale Price Index.) South Korea measures price movements across goods originating from and trading within domestic markets. Brazil tracks industrial and wholesale price aggregates (often monitored via Trading Economics Wholesale Prices).

However, it must be appreciated that the PPI is widely considered a more accurate tool for tracking inflation than the WPI. In fact, the PPI has several structural advantages. The WPI only tracks goods. Because services now make up over 50 percent of India’s economy, the WPI misses a massive portion of economic activity. The PPI tracks service sectors (like banking, telecom, and insurance) alongside goods. The WPI counts intermediate goods multiple times as they pass through various stages of production (e.g., steel, then auto-parts, then the final car). This artificially inflates the measured inflation rate. The PPI tracks output and input prices separately to avoid this.

The PPI includes both an Input Index (what businesses pay for materials and services) and an Output Index (what they receive). This creates an early-warning system that shows how rising production costs get passed on to consumers. The WPI only measures domestic wholesale transactions and completely excludes goods that are exported. The PPI captures producer price dynamics globally. In India, the WPI has historically been used in long-term commercial contracts and government price-escalation clauses. Therefore, the transition away from it must be gradual. Many countries transitioned to PPI as their primary measure of producer-level inflation.

Finally, it must be said that neither the WPI nor the PPI is the best measure for the cost of living. Neither index is “better” overall; they simply track inflation from different perspectives. For retail inflation and the interest rates set by the RBI, the Consumer Price Index (CPI) holds the key as it reflects the actual prices paid by end consumers. While the PPI is the best measure for tracking production and business costs, neither WPI nor PPI is the best measure for tracking the cost of living.

For retail inflation and the interest rates set by the RBI, CPI is the primary standard because it reflects the actual prices paid by end consumers. Major countries and global economies track inflation using CPI, PPI and gross domestic product (GDP) deflators. Economists use producer indices to strip out inflation from nominal growth data. Because PPI separates out indirect taxes and trade margins, it acts as a cleaner GDP deflator for tracking actual economic output. Adopting it follows International Monetary Fund (IMF) guidelines, giving foreign investors clearer comparability. (IPA Service)

The article Producer Price Index Is Welcome Though WPI Need Not Be Dumped appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Producer Price Index Is Welcome Though WPI Need Not Be Dumped appeared first on Arabian Post.

By Nantoo Banerjee

Bangladesh’s involvement of China in the country’s US$ 1.5-billion Teesta River Comprehensive Management and Restoration Project (TRCMRP) seems to have posed a significant geopolitical tension for India and its defence concerns. Dhaka made a formal request to China for the project during Foreign Minister Khalilur Rahman’s recent visit to Beijing, reflecting a pivot in Bangladesh’s foreign policy under its new government. And, Beijing obliged quite eagerly as it could be part of its Belt and Road Initiative (BRI) in Bangladesh. The project under Chinese technical and financial involvement has naturally heightened India’s security concerns in view of its close proximity to the Siliguri Corridor, often called “Chicken’s Neck”, a highly sensitive, narrow strip of land connecting the Indian mainland to its eight northeastern states.

There is nothing surprising about the newly elected Bangladesh government’s sudden decision to involve China in the project as a comprehensive water-sharing agreement on the Teesta has been stalled for over 15 years, largely due to opposition from the state of West Bengal, led by former Chief Minister Mamata Banerjee. Under the Indian Constitution, water is a state subject. The Centre cannot sign a binding Teesta water sharing agreement without West Bengal’s consent. Mamata Banerjee blocked the deal due to domestic water scarcity, ecological concerns, and political considerations. In September 2011, then-Prime Minister Manmohan Singh and the UPA government drafted an interim treaty proposing a water division during the dry season, giving India 42.5 percent and Bangladesh 37.5 percent. Mamata Banerjee, who was initially scheduled to accompany the Prime Minister to Dhaka, skipped the trip at the last minute and refused to sign the proposed deal.

Unable to secure a pact over the years, Bangladesh shifted focus to a conservation approach, inviting foreign infrastructure bids. The TRCMRP plans to build massive reservoirs, dredge the riverbed, build embankments, and construct satellite cities to mitigate dry-season water shortages and manage monsoon floods. Although New Delhi had already submitted its own technical and conservation proposal for the Teesta basin in a bid to resolve the issue collaboratively, the new Bangladesh government has opted for its own project under Chinese collaboration. New Delhi views China’s prominent involvement in the basin as a strategic security concern near its borders. India has actively offered to fund and handle the conservation project to pre-empt Chinese influence but the new Bangladesh government decided to collaborate with China.

The Teesta issue has unfolded amid broader water diplomacy concerns, including the impending expiration of the 1996 India-Bangladesh Ganges Water Treaty. Bangladesh is pushing for urgent negotiations to establish a new Ganges water-sharing treaty with India, as the current 1996 pact expires in December. Leaders from the ruling Bangladesh Nationalist Party (BNP) have formally linked the future of Dhaka’s bilateral ties with New Delhi to a fair, climate-resilient water-sharing deal that meets Bangladesh’s current needs. While the 30-year-old treaty established a structured mechanism for sharing dry-season flows at the Farakka Barrage, Bangladesh has frequently raised concerns that the actual water released during lean months often falls short of what was promised. On the contrary, India has maintained the issue of the release of Ganga water is addressed through established bilateral platforms, such as the ongoing joint measurements of water levels and engagement through the Joint Rivers Commission between the two countries.

While demanding renegotiations of the Ganges Water Treaty to govern the equitable sharing of dry-season water flows (January 1 to May 31) from the Ganga River between India and Bangladesh, the latter is believed to have approved a mega-project to construct a barrage on the Ganges water-fed Padma River. Bangladesh maintains this is for internal water management and mitigating dry-season salinity. The Ganga water treaty dictates water sharing at the Farakka Barrage in West Bengal based on 10-day cycles. If flows are under 70,000 cusecs, the water is divided equally (50:50). When water flows fall between 70,000 and 75,000 cusecs, Bangladesh is guaranteed 35,000 cusecs, with India receiving the remainder. For flows exceeding 75,000 cusecs, India retains 75,000 cusecs and Bangladesh receives the rest. If water levels drop below 50,000 cusecs, both governments must hold immediate emergency consultations to adjust the sharing.

Now, Bangladesh’s decision to involve China in the Teesta River Comprehensive Management and Restoration Project has deeply alarmed India. New Delhi views Beijing’s growing footprint close to the Siliguri Corridor as a critical strategic and security threat. The “Chicken’s Neck” is a 20-km wide and 60-km long chokepoint. It serves as India’s only overland link connecting mainland India to its eight northeastern states. The northern Bangladesh project site where the river enters the country is situated less than 100 kms from this vital corridor. India strongly fears that a massive Chinese infrastructure presence in the basin —combined with other reported projects such as the Lalmonirhat airbase — could establish a permanent or semi-permanent Chinese diplomatic and logistical foothold right near India’s most sensitive military and territorial chokepoint. India’s alarm is primarily driven by geography.

India must try to address Bangladesh’s river concerns as its three key sources of river water flow down from India through Brahmaputra, Ganga and Teesta. These rivers shrink considerably during the dry season. Every dry season, the water flow comes down. This is particularly more so in the case of Teesta River flowing through the Indian states of Sikkim and West Bengal before entering Bangladesh, where it is vital for agriculture and livelihoods. Hydro-politics has been a persistent source of tension between India and Bangladesh. The two countries must work together toward finalizing climate-resilient water-sharing agreements. With West Bengal now ruled by Bharatiya Janata Party, the national government should find it easier to address the river issues with Bangladesh. (IPA Service)

The article Chinese Part In Bangladesh Teesta Project Alarms India appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Chinese Part In Bangladesh Teesta Project Alarms India appeared first on Arabian Post.

By Nantoo Banerjee

India’s economy is navigating severe stress. The impact of Persian Gulf war, high cost of imported crude oil, frequent upward adjustment of retail oil prices, rising commodity rates, soaring transportation costs, weakening Rupee and continuous exit of foreign portfolio investors (FPI) are posing a big challenge to the economy. The government appears to be somewhat clueless about how to tackle the situation effectively. It has deployed both monetary and fiscal interventions. The measures don’t seem to be working as effectively as the situation demands. The falling Rupee is further raising the cost of imports. The US-Iran conflict has disrupted shipping through the Persian Gulf. India relies on the region for over 90 percent of its LPG and 60 percent of its natural gas imports, and the government and Reserve Bank of India (RBI) have been forced to implement supply-side distributions and emergency measures.

The current macroeconomic environment is being strained by several compounding factors. The Rupee’s continuous slump – already close to 97 per USD and inching towards 100 — has made energy imports significantly costlier. Foreign investors have pulled out over $26 billion from Indian equities, driven by global risk aversion tied to the geopolitical crisis. FPIs continued an aggressive sell-off in the Indian stock market in April and May, this year, pulling out a combined net total of over Rs.87,000 crore ($10+ billion) from equities. This prolonged retreat was driven by global economic uncertainty, rising crude oil prices, and the relative attractiveness of higher yields in developed markets. In April, FPIs pulled out Rs.60,847 crore from Indian equities, making it the seventh consecutive month of net selling.

The selling pressure continues to persist, with foreign investors withdrawing over Rs.27,000 crore in the first half of the current month. A stronger US dollar and elevated US bond yields prompted investors to shift toward safer, defensive assets. Geopolitical tensions weighed heavily on risk appetite toward emerging markets like India. Expensive market valuations and fluctuating crude oil prices are causing anxiety among foreign institutional players. The BFSI (Banking, Financial Services, and Insurance) sector absorbed the brunt of the April-May selling, with FPIs divesting over Rs.30,900 crore in this segment alone. Other major sectors hit by FPI exit included consumer discretionary, healthcare, energy, and auto.

The prices are soaring up. Higher wholesale fuel prices have raised the cost of production and transportation, leading to accelerated wholesale and retail inflation. The country’s Wholesale Price Index (WPI) stands at 8.3 percent, a 42-month high. It was 3.88 percent in the previous month. Going by the sector specific inflation rate, fuel and power accounted for the highest increase (24.71 percent), followed by manufactured products (4.62 percent) and primary food and non-food articles (2.31 percent). The food basket climbed to a 12-month high led by eggs, meat, and fish. The retail price inflation as measured by the Consumer Price Index (CPI), which normally takes two to three months’ time to reflect the WPI rate, provisionally stood at 3.48 percent for the month of April.

Prices of consumer goods, especially food items, have sharply increased in the current month. The retail food inflation rate in April was 4.20 percent. Historical and economic patterns demonstrate that producer costs eventually pass through to consumers. A key reason behind the short-term divergence between the WPI and CPI is that while WPI is heavily weighted towards manufactured goods, fuel, and industrial inputs, the CPI is substantially weighted towards retail food, housing, and various services such as healthcare, education, and transport. Because of these distinct baskets, retail inflation might appear subdued if food supply chains are operating differently or if service prices remain sticky.

The government and central bank interventions have their own limitations to control the price surge. Some of the countries have gone for subsidising oil prices to control inflation due to the oil shock. Such measures could, at best, work as temporary intervention to insulate retail buyers from wholesale shocks. For example, if global crude oil prices spike, oil marketing companies or governments might absorb the hit to keep retail fuel and LPG pump rates flat. However, these policies can only suppress retail inflation temporarily until the budgetary costs become unmanageable. In a country such as India, which is nearly 90 percent import dependent on oil, price subsidies beyond a point could substantially push up the budget deficit. A large federal budget deficit is bound to impact inflation primarily by increasing aggregate demand, as government spending injects money directly into the economy. When this demand outpaces the economy’s ability to produce goods and services, it creates upward pressure on prices.

The primary economic strains currently facing India include surging imported inflation. With Brent crude crossing the $100-a-barrel threshold, the government has been forced to raise retail petrol and diesel prices. This heavily inflates production, agricultural, and logistics costs, triggering economy-wide price hikes for consumers. Wholesale inflation has spiked significantly, while retail inflation is inching up, squeezing household budgets. The RBI notes that every $10 increase in crude oil adds significantly to the CAD. Capital outflows and a ballooning import bill have made Indian Rupee one of the worst-performing Asian currencies, further amplifying the cost of all imported goods.

Trade and supply chains are facing bottlenecks with marine insurers have abandoned war risk coverage in the West Asia-Gulf region, delaying cargo movement and pushing up freight charges. At the same time, energy-intensive industries, manufacturing, and agricultural exports to the region are experiencing major setbacks due to higher operational and shipping costs. The region also accounts for a major chunk of India’s overseas remittances. A prolonged conflict directly threatens the livelihoods of millions of Indian workers in the Gulf region, putting downward pressure on vital remittance inflows.

Although the government is taking various measures to manage the crisis and protect the country’s forex reserves, they don’t seem to be working hard enough. Import duties on gold and silver have been raised to 15 percent (effectively 18.4 percent with GST) from six percent. Precious metals have long been accounting for the second largest segment of import after oil. The latest measure is ostensibly to curb forex outflows on non-essentials. Ironically, the government had earlier defended large gold imports to contain smuggling.

Meanwhile, the RBI continues to assess the inflation trajectory, carefully balancing the need to anchor inflation expectations without causing a drastic stall to India’s overall GDP growth. Spurred by the crude crisis, the government is fast-tracking the country’s transition away from fossil fuels with new ambitious plans. With crude oil imports draining a staggering Rs 10.9 lakh crore from the exchequer in FY26, the government is shifting its alternative fuel strategies into overdrive.

The combination of rising commodity prices, foreign capital flight and falling exchange value of Rupee means the Indian economy faces short-term headwinds. The government and RBI are struggling to tackle the situation. The authorities may be trying to avoid strong anti-inflationary measures, rationing of oil consumption and mandatory cut in foreign exchange spending on account of tour and travel, foreign education and investments abroad as they consider the current crisis is of temporary nature. As of now, the government and RBI seem to be in favour of limited interventions that will balance supporting domestic growth while curbing inflationary pressures. (IPA Service)

The article Rising Prices, Falling Rupee And FPI Exit Pose Big Challenge To Economy appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Rising Prices, Falling Rupee And FPI Exit Pose Big Challenge To Economy appeared first on Arabian Post.

By Nantoo Banerjee

India’s continuous hesitancy to curb the retail oil consumption pattern despite a worldwide surge in fuel prices is inexplicable, if not unacceptable. The government, the biggest benefactor of large domestic fuel use by way of imposition of levies close to 50 percent of the retail oil prices, is not prepared to ration fuel consumption despite the fact that the country is nearly 90 percent crude oil import dependent. Last Friday, India’s state-run fuel retailers raised petrol and diesel prices for the first time in four years by a little over three rupees per litre to recoup some of the losses incurred by oil marketing companies due to higher global crude oil prices. The country is one of the last major economies to raise retail fuel prices following the disruption to shipping through the Strait of Hormuz by the war started by US-Israeli attacks on Iran. Most of the countries have already raised domestic oil prices. Others have adjusted local fuel subsidies to control the retail cost.

Following the Iran-US conflict, nations worldwide—particularly in South Asia and Southeast Asia— have been forced to constrain and ration domestic oil consumption due to severe supply disruptions and skyrocketing prices. The government of tiny Sri Lanka has implemented strict fuel rationing via the National Fuel Pass QR system, limiting the amount of petrol per vehicle, and declared Wednesdays as public holidays to cut down on commuting. To dial back on fuel usage, Pakistan has instituted a four-day work week, closed schools for two weeks, and mandated a 50 percent reduction in fuel allowances for government vehicles. Indonesia has implemented strict limitations on subsidized fuel sales and mandated a work-from-home policy for civil servants to counter soaring energy prices. Egypt has cut fuel allocations for all government vehicles by 30 percent. It has also slowed down large-scale public projects that consume high amounts of fuel and diesel. The Vietnam government mandated a forced, accelerated switch to ethanol-blended gasoline to lower domestic reliance on pure fossil fuels.

The countries witnessing very high retail oil price increases include Myanmar (101 percent), Cambodia (68 percent), the Philippines (54.2 percent), Vietnam (over 50 percent), and Pakistan (42 percent). Comparatively moderate petrol price increases are seen in the United States where petrol pump prices rose by around 36 percent as against Australia (29 percent), Canada (28 percent), and the UK (20 percent). Diesel drivers bore the brunt of the European energy squeeze, with average cumulative pump prices increasing by 20 percent region-wide.

While Spain recorded the largest diesel price increase within the EU at 27 percent, fuel costs in Germany increased by nearly 19 percent. In China, price hikes were capped at around 28 percent by government controls and refinery adjustments. In India, where oil prices are already very high due to central and state levies, retailers made modest increases in prices of petrol and diesel at around 3.2 percent to 3.4 percent. Saudi Arabia kept retail prices steady without any increase due to direct state subsidy structures.

While most of the major oil importing countries have enforced restrictions on petroleum oil consumption for the general public, India, the world’s third largest importer of crude oil after China and the US, maintains no mandatory rationing or government-enforced restrictions on petroleum oil consumption for somewhat unknown reasons. India holds only around 4.6 to 4.9 billion barrels of proven crude oil reserves. As a result, India imports over 85 percent of its crude oil needs and maintains strategic petroleum reserves for emergency supply protections. Oil imports by China and the US are basically intended to protect their massive internal oil reserves.

The US holds approximately 83 billion barrels of proven crude oil reserves. China’s reserves are estimated at over 28 billion barrels. This ranks China 13th globally and accounts for about 1.6 percent of the world’s total proven oil reserves. China and the US are the primary drivers of global crude oil demand, though their import needs are shaped by different economic and domestic production factors. China, the world’s second-largest economy and a primary manufacturing hub, requires immense energy supplies to sustain industrial output and growing domestic consumption. The country regularly imports upward of 11 million barrels per day. India meets around 85 percent of its oil demand through imports to keep pace with its rapid urbanization, industrial growth, and vast transportation networks.

While several Asian countries with or without domestic petroleum reserves and production have various restrictions to curtail oil consumption, the government of India merely promotes voluntary fuel conservation and enforces specific legal storage limits for individuals. The government is weighing austerity and energy-saving measures to curb oil consumption by the citizens through public appeals. Driven by escalating geopolitical conflicts in West Asia and surging global prices, these voluntary and official cutbacks aim to protect foreign exchange reserves and minimize the national trade deficit.

Government ministries and departments have been instructed to identify immediate avenues to restrict unnecessary fuel consumption and minimize foreign travel for officials. The government is urging citizens to revive work-from-home (WFH) models, participate in carpooling, increase their reliance on public transit, and conduct more virtual meetings. It has issued advisories for state governments to implement temporary extensions on industrial boiler certificates in power plants to optimize energy efficiency and operations.

Interestingly, the Reserve Bank of India is actively championing the need to curb oil consumption. Faced with a “crude oil shock” from the West Asia conflict and the rupee touching record lows (past Rs.95 per dollar), the central bank has stepped in to manage foreign exchange reserves and combat imported inflation. The RBI is tackling this challenge through both macroeconomic interventions and direct appeals to the public. To reduce the immediate drain on forex reserves, the RBI has instructed state-owned oil refiners to curb spot dollar purchases and instead utilize special credit lines for their import needs. The RBI Monetary Policy Committee has maintained a “lower for longer” stance but stands ready to raise interest rates if energy shocks lead to entrenched inflation.

To preserve the country’s current foreign exchange reserves, the central bank and the government are pushing for reduced reliance on fossil fuels through work-from-home mandates, higher use of public transport, and accelerated electric vehicle (EV) adoption. Beyond immediate crisis management, the central bank continues to support a long-term transition away from fossil fuels. Through the RBI’s Green Deposit Framework, banks channel capital directly into renewable energy and green transportation to enhance India’s structural energy security. It seems the country prefers indirect actions and creation of strong public awareness of the need for cutting fuel consumption to imposing higher taxes on petrol and diesel or rationing to cut fuel consumption. (IPA Service)

The article India Needs To Curb Oil Consumption appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article India Needs To Curb Oil Consumption appeared first on Arabian Post.

By Nantoo Banerjee

Only six months in power, Japan’s first female prime minister, Sanae Takaichi, has emerged as the world’s most powerful woman reshaping the country’s domestic social and economic policies and international relations, taking a hard line on China. Takaichi has taken a firm stance on China suggesting that a “Taiwan contingency is a Japan contingency” and advocating for deeper security ties with Taiwan. Soon after assuming the power, she brought the good news for India expressing Japan’s strong interest and commitment to work with India as a strategic, long-time partner. The Japanese interest is driven by a desire to diversify supply chains, manufacture locally, tap into India’s growing consumer market, and leverage its skilled, young workforce. A key aspect of Japan’s interest in manufacturing in India is its target to invest 10 trillion yen (approximately US$68 billion) in India over the next decade, with a strong focus on manufacturing and technology.

A conservative hard liner, Takaichi is seen as Japan’s ‘iron lady’. She is often compared to former British prime minister Margaret Thatcher. She is leading Japan’s traditionally male-dominated political scene shaping the future of her country through a conservative, assertive agenda aimed at reversing economic stagnation and strengthening national security. Following a historic landslide election victory during last February, where her Liberal Democratic Party (LDP) secured a two-thirds majority, she has a strong mandate to implement “Sakaenomics”—a blend of proactive fiscal spending and structural reform. Japan was the world’s second-largest economy until 2010, when it was surpassed by China. Japan dropped to fourth place behind Germany in 2023 and is projected to fall behind India by 2027, slipping to fifth place.

As of now more than two dozen countries are led by women as heads of state or government. Prominent democratically-elected leaders include Giorgia Meloni of Italy, Mette Frederiksen of Denmark, Mia Mottley of Barbados, Maia Sandu of Moldova, Nataša Pirc Musar of Slovenia, Samia Suluhu Hassan of Tanzania, Claudia Sheinbaum of Mexico, Judith Suminwa of the Democratic Republic of Congo, Netumbo Nandi-Ndaitwah of Namibia, and Hilda Heine of Marshall Islands. Giorgia Meloni, a conservative and Italy’s first female prime minister since 2022, leading the right-wing Brothers of Italy party, would appear to be the world’s second most powerful female political personality. Meloni enjoys 42 percent approval ratings, and holds a secure parliamentary majority. As a post-fascist figure with historical ties to neo-fascist movements, she leads a strong right-wing coalition. Meloni is regarded as a major, influential force in Europe.

A key factor behind Takaichi’s growing popularity and power in Japan is amplified by an active, successful social media campaign that fostered a “fandom” of support often called “sanae-mania,” particularly among younger men and conservatives. Takaichi resonates with the rising populist right in her country. Her platform focuses on strengthening national defense, revising the pacifist constitution, and asserting Japanese identity. Takaichi is seen as the ideological successor to the late Prime Minister Shinzo Abe, a known friend of India, who was invited to Parliament to address a joint session. She inherited his conservative base, and her supporters saw her as the only candidate who would fully realize Abe’s national security agenda. Following the departure of the moderate Komeito party from the coalition, Takaichi formed a new partnership with the right-leaning Japan Innovation Party (Ishin), allowing her to form a government and push a more conservative agenda, including lifting bans on lethal arms exports. She advocates for “proactive contributions to peace,” including accelerated defence spending and a “command centre” for national security, which has attracted support amid regional tensions.

Breaking away from the earlier practice, Takaichi has prioritized economic growth over austerity, advocating for increased government spending on infrastructure, tax cuts, and subsidies for middle- and working-class families. She has established a growth strategy council to focus on “crisis management investments” in critical technologies such as AI, semiconductors, quantum technology, and biotechnology to boost industrial competitiveness. A former minister of economic security, she is tightening regulations on the use of sensitive technologies to protect against economic coercion, particularly in critical minerals and infrastructure. She focuses on leveraging automation, AI, and increasing the participation of women and older workers rather than relying on large-scale immigration.

Takaichi is accelerating Japan’s defence plan, targeting a defence budget of two percent of GDP, this year. The new Japanese prime minister is in favour of acquiring counter strike capabilities and has initiated a revision of the 2022 National Security Strategy to strengthen deterrence. She has reaffirmed the US-Japan alliance as a top priority, maintaining close ties with the US to ensure regional stability in the Indo-Pacific. While taking a hard line on China regarding security, she is engaging in pragmatic diplomacy to manage economic dependencies. Her direct communication style has made her popular among younger voters, helping to shift the political landscape, though her rise has not necessarily been seen as a move toward greater gender equality by critics.

Interestingly, Sanae Takaichi is viewed as strongly pro-India, largely due to her commitment to continuing Shinzo Abe’s strategic partnerships and her hardline, anti-expansionist stance on China. She is expected to accelerate cooperation with India on defence, technology, and economic security. She favours stronger deterrence against China, placing high importance on India as a strategic partner. Takaichi has a history of developing technology ties with India in areas like AI, cyber security, and semiconductors. An ideological successor to the late Shinzo Abe, who strongly emphasized India-Japan friendship, her foreign policy stance aligns closely with New Delhi’s, ensuring continued strong bilateral relations. Notably, Japanese manufacturers have identified India as a top, promising overseas market for four consecutive years, with many shifting focus from China to India. Japan is actively encouraging its SMEs—which make up a large portion of its industrial base—to establish operations in India, supported by dedicated industrial townships.

Japanese companies like Suzuki, Daikin, and Panasonic have shown significant interest in India’s PLI schemes, which encourage domestic manufacturing. Japan is investing in dedicated industrial parks and infrastructure, such as in Neemrana and Sri City, to facilitate “plug-and-play” opportunities for its companies. India is viewed as a high-growth market with a large, rising middle class. Amid global supply chain disruptions, Japan sees India as a stable, trustworthy partner. India offers a vast pool of skilled engineering talent at competitive costs compared to Japan. Despite some concerns over local regulations and tax structures, the overall momentum for Japanese manufacturing in India is upward, with a goal of expanding the presence of Japanese companies to 5,000 in the coming years. It is nice to note that Japan and India are working together closely under Prime Minister Sanae Takaichi’s administration. (IPA Service)

The article Japan’s Pro-India Takaichi Is The World’s Most Powerful Lady appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Japan’s Pro-India Takaichi Is The World’s Most Powerful Lady appeared first on Arabian Post.

By Nantoo Banerjee

Pakistan may be right that peace in Lebanon is essential for talks between the US and Iran. But, the key question is: will Iran’s theological regime ever ask its terror sponsor, Hezbollah, to go soft on Israel which lately launched massive waves of airstrikes across southern Lebanon, hitting over 200 Hezbollah targets, killing hundreds of people and driving thousands out of home. Iran provides active, deliberate support—such as funding, weaponising, training, intelligence, or safe-haven—to Hezbollah. The latter is a violent non-state actor, hated by both Israel and the elected Lebanese government. The relations among Iran, Pakistan, Israel and Lebanon are extremely complex. Neither Pakistan, nor Iran recognize Israel as a sovereign state. Thus, Pakistan’s bid to act as a back-channel mediator between Iran and the US-Israel combine is bound to fail.

Pakistan itself faces significant hurdles as a US-Iran mediator due to its deep security and financial dependence on Saudi Arabia, a traditional rival of Shiite Iran. While Pakistan’s patchy bilateral ties with Tehran makes it appear biased or unreliable, it lacks the leverage to force a worthwhile deal between Iran and the US due to its close ties with the US and military ties with Saudi Arabia that hinder trust from Iran. Pakistan has a mutual defence pact with Saudi Arabia. Despite geographic proximity, Iran and Pakistan have experienced recent border friction, which undermines confidence in Pakistan’s impartiality. Pakistan is not trusted by the Islamic Revolutionary Guard Corps (IRGC), which holds significant decision-making power in Iran. A highly foreign aid-dependent nation, Pakistan is susceptible to pressure from the US, limiting its ability to serve as an independent broker. Facing its own internal security challenges and hostile relationship with India, a reliable trading partner of both Iran and the Arab world, Pakistan detracts from its credibility as a stable, regional broker.

If Pakistan is serious about its statement that peace in Lebanon is essential for useful talks between the US and Iran, it has missed an important fact that a never-ending Israel-Hezbollah friction stands in the way of such a peace. Pakistan’s diplomats seem to ignore the fact that Lebanon is not controlled by its elected government after the former Christian-majority country slowly converted itself into a Muslim majority nation. Today, Lebanon is controlled by Hezbollah, which functions as a “state within a state” by operating an autonomous military wing stronger than the Lebanese national army, providing extensive social services (schools, hospitals) in areas lacking state presence, and maintaining its own communication networks and infrastructure. As a major Shiite political party, it often acts without the approval of the Lebanese government.

Hezbollah operates independent of the Lebanese Armed Forces, controlling significant parts of South Lebanon and the Bekaa Valley. Thanks to constant Iranian back-up, the group is often considered the most powerful non-state actor and a key part of the “Axis of Resistance”. The group operates its own telecommunications network, social services, and security, creating a parallel structure to the Lebanese state, particularly in its stronghold in the southern Beirut suburbs. The Lebanese state’s monopoly on the use of force is heavily undermined by Hezbollah’s separate security apparatus, which often engages in conflicts independently of the national government. Hezbollah has demanded a complete withdrawal of Israeli forces from Lebanese territory and a “quiet for quiet” arrangement (a mutual halt to hostilities) as their two conditions for a ceasefire in Lebanon. However, Israel Prime Minister Netanyahu promptly rejected both the demands, stating that Israeli forces would remain “thickened” a 10-km “security zone” in southern Lebanon. Israel has demanded a complete disarmament of Hezbollah as part of long-term peace discussions with Lebanon.

A 10-day ceasefire between Israel and Lebanon from April 17 might have initially triggered dramatic scenes of celebration across cities like Beirut and Sidon, with fireworks lighting up the sky and crowds taking to the streets, but it was short-lived. The situation remains highly volatile, as reports of gunfire and fresh explosions raise concerns about the stability of the truce. The Lebanese army has accused Israel of violating the ceasefire through shelling, adding further uncertainty to an already fragile agreement. Israeli Prime Minister Benjamin Netanyahu has made it clear that Israeli forces will not withdraw, instead maintain a 10 km deep security zone in southern Lebanon. Emphasizing a strategy of “peace through strength,” Israel continues its push to disarm Hezbollah while keeping military pressure intact. Meanwhile, President Trump has expressed optimism about a potential historic peace deal, hinting at a possible meeting between Israeli and Lebanese representatives at the White House in the coming weeks. As regional dynamics involving Iran and broader West Asian diplomacy come into play, this ceasefire may at best work out as a temporary pause before further escalation.

A durable peace in the region may remain a distant dream. It is often described as a “mirage” despite ongoing diplomatic efforts and temporary ceasefires. While a 10-day ceasefire between Israel and Lebanon went into effect on April 17, intended to open a door for negotiations, intense regional hostilities—particularly in the context of unresolved Palestinian question—continue to hinder long-term stability. The current, fragile ceasefires are viewed more as a “pause” than a peace deal, with deep skepticism among all parties. Intense conflict between Israel, the US, and Iran has seen the killing of Iranian leaders, targeting of Iran’s nuclear infrastructure, and temporary closure of the Strait of Hormuz. The region is expected to continue to experience a “protracted war of attrition” rather than a peace process, often described as a “stress test” of international principles.

Finally, Iran’s theological government, focussed on prioritising the creation of a “Shiite Crescent” through a network of proxies, is often seen behind clashes with the security interests of neighbouring Arab states and Israel. It is a central factor in regional instability and a significant barrier to durable peace in West Asia. Iran’s projection of influence as a Shia theocracy has increased sectarian tensions in the region, causing friction with predominantly Sunni Arab nations, such as Saudi Arabia, and creating instability in nations like Yemen and Iraq. The country’s pursuit of nuclear technology, which the US and its allies fear could be weaponized, has sparked fears of an arms race in the region and increased the likelihood of pre-emptive strikes by Israel. Pakistan’s effort to broker peace between Iran and the US, often involving Israel by extension, is a complex, high-stakes diplomatic manoeuvring rather than a simple mediation. It is expected to fail, eventually. (IPA Service)

The article Pakistan’s Back-Channel US-Iran Peace Negotiation May Not Work appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Pakistan’s Back-Channel US-Iran Peace Negotiation May Not Work appeared first on Arabian Post.

The article Prices Are Fast Shooting Up Fanning Inflation appeared first on Arabian Post.

By Nantoo Banerjee

The Reserve Bank of India and the government may officially deny or even pretend to ignore the adverse impact of the continuous downhill journey of the Indian Rupee against the US Dollar on the economy, the disturbing trend, if not contained, is bound to lead the heavily import-reliant nation to high inflation and slower economic growth. On March 30, 2026, the Indian Rupee (INR) breached the 95-level against the US Dollar for the first time, touching a record low of 95.20–95.23. The situation is quite alarming. In fact, it is high time that the RBI raises the interest rate and the government slashes import of non-essentials to prevent further erosion of INR and the continuous exit of foreign portfolio investment. The latter is principally responsible for Rupee’s downtrend.

Foreign investors (FPI) made a record-breaking withdrawal from Indian equities in March 2026, pulling out over Rs.1.14 lakh crore ($12+ billion), the highest monthly sell-off ever. Last year, foreign Institutional Investors (FIIs) recorded their highest-ever annual exit from Indian equities, withdrawing over Rs.1.58 lakh crore (approx. $18 billion) as of late December, driven by high valuations, geopolitical tensions, and over five percent INR depreciation. This massive FPI exodus, affecting IT and large-cap stocks, is one of the key reasons behind Rupee’s downhill journey.

Globally, only three other currencies have done as badly as Indian Rupee in the current year. They are: Iranian Rial (IRR), Lebanese Pound (LBP) and Zambian Kwacha (JMW). By market-based pricing, the Iranian Rial is the weakest currency globally, trading around one million rials per US dollar. LBP continues to be among the world’s weakest currencies, with extremely low value in the local economy. ZMW has been experiencing volatility. The Zambian currency faces persistent risks to its value, particularly with recent increases in corporate demand for US dollars. Indian Rupee is labelled as one of Asia’s worst-performing currencies against the US dollar.

The INR is facing continuous downward pressure against the US dollar during the current year, hitting record lows, primarily driven by massive FPI outflows and severe geopolitical tensions in West Asia, a traditional source of India’s oil import and destination of merchandise export. The surge in oil prices due to the Iran war has significantly increased India’s import bill requiring more dollars and further weakening the INR. India’s total exports to West Asia and the Gulf are under severe strain. Last year, India’s exports to the region totalled around $65 billion while imports amounted to nearly $125 billion. Agricultural products exports alone accounted for $11.8 billion. The trade is facing a big disruption due to regional conflicts and rising shipping costs.

The main reason behind the major FPI outflow during 2025 is the RBI’s interest cut of 125 basis points through multiple cuts, including February, April, June, and a final 25 basis point cut in December. On the contrary, a strong US$, combined with its status as a safe-haven asset, has attracted capital away from emerging markets, including India. A lack of progress on the US-India trade deal and the threat of high tariffs on Indian goods have hampered export prospects, placing further pressure on the Indian currency. Also, there are concerns over economic momentum, including potential downgrades of India’s economic outlook (e.g., Goldman Sachs reducing the Nifty 50 target), which have increased investor caution.

Despite the RBI’s intervention to manage volatility, these combined structural and global pressures have made the INR one of the worst-performing currencies in Asia in early 2026. The INR has underperformed against almost all major currencies amidst India’s suffering from a persistent current account deficit. The country’s heavy reliance on imports (energy, gold and electronics) compared to low levels of export continues to put pressure on the currency. A robust US dollar, supported by safe-haven demand and potential rate decisions, has caused foreign investors to sell Indian assets, leading to consistent outflows. The weakening INR is further increasing the cost of vital imports like crude oil, resulting in higher domestic inflation for fuel and essential goods. The RBI has actively used foreign-exchange reserves to curb excessive volatility, causing reserves to drop significantly in the first quarter of 2026. If geopolitical tensions persist, the INR could face continued pressure, potentially approaching even weaker levels.

Despite the RBI’s recent restrictions on banks’ net open positions in the foreign exchange market to control volatility, the INR continues to slide. Higher domestic interest rates can induce Foreign Portfolio Investors (FPIs) to return to the Indian market, primarily by increasing the interest rate differential between India and developed economies like the US. A higher differential makes Indian assets—particularly debt instruments—more attractive, creating opportunities for “carry trades” where investors borrow cheaply elsewhere and invest in India for higher yields. When the RBI raises the repo rate or keeps domestic bond yields high, foreign investors often return, attracted by the improved risk-adjusted returns on Indian government securities (G-Secs) and corporate bonds.

However, while high rates are generally attractive, the return of FPIs is not driven by interest rates alone. Other factors, such as high equity valuations, global risk-off sentiments, and sharp currency fluctuations, can counteract the appeal of higher rates. For instance, if higher rates stifle domestic economic growth or cause a sharp depreciation of the Rupee, it may actually lead to FPI selling. Higher domestic rates do encourage FPI inflows (especially into debt), but their return to equities depends heavily on India’s growth prospects, earnings stability, and the global interest rate environment.

To prevent further slide of the INR amid volatility, the RBI should make more aggressive forex intervention and curb speculative bets on the currency by restricting bank positions while the government must heavily cut imports to reduce the trade gap, ensure a stable economic environment and, if necessary, issue NRI bonds. The INR needs to be stabilised fast as its decline implies higher import costs for oil, electronic components, and machinery, which could lead to higher domestic inflation. It also complicates the central bank’s efforts to balance inflation control with economic growth. (IPA Service)

The article Indian Rupee’s Continuous Downtrend Is A Big Concern appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Indian Rupee’s Continuous Downtrend Is A Big Concern appeared first on Arabian Post.

By Nantoo Banerjee

The central excise duty cut on petrol and diesel oil to help petro-fuel producers and marketeers partly cover their losses on account of the rising crude oil import prices is an internal government matter. It is not meant to have any impact on retail prices which continue to be very high and uneven across the country. If the current global crude market situation along with rising shipment and insurance costs continue, India’s retail consumers may soon have to pay much higher prices of petrol and diesel. States continue to levy varied value added tax (VAT) and sales taxes, with some, like Himachal Pradesh, even implementing new welfare-based cesses. These taxes vary significantly across different states. Lately, the Himachal Pradesh government approved a specific “orphan and widow cess” on petrol and diesel to fund welfare schemes. The current tax structure includes Basic Excise Duty, Agriculture Infrastructure and Development Cess (AIDC), and Road and Infrastructure Cess.

At the consumer level, petroleum products (petrol/diesel) in the country are taxed heavily by both central and state governments, accounting for roughly 50-55 percent of the retail price. The Centre levies excise duty and cesses, while states impose VAT (10–35 percent or fixed amount), leading to major price variations across states. The central government’s basic excise duty is uniform across the country. It also imposes special additional excise duty (SAED) and agriculture infrastructure and development cess. State government levies by way of VAT/sales tax vary significantly from state to state, typically 15 percent to even above 30 percent on top of the base price and excise duty. Some states such as Andhra Pradesh adds additional road development cess. There are other charges too. They include dealer commissions which cover retail profit margins, workers’ wages and maintenance costs. Petrol and diesel are not covered under the Goods and Services Tax (GST) framework. As a result, total levies vary wildly, with petrol prices per litre exceeding Rs.109 in some states. Petrol and diesel taxes and levies have been contributing significantly to the revenue receipts of both central and state governments.

The central government may have taken a hit on its revenue on account of the latest excise duty cut on petrol and diesel, but it is unlikely to have any favourable impact on the economy, at least for now. According to former deputy managing director of the International Monetary Fund (IMF), Gita Gopinath, India’s economic outlook is facing fresh uncertainty as global tensions push oil prices higher. She has warned that the impact on India’s growth could be “closer to half a percent” if current trends continue. That warning highlights how deeply global energy markets influence domestic stability. Higher crude prices mean rising fuel costs, inflation pressure, and stress on household budgets. At the same time, remittances from Indians working in the Gulf could also face disruption if the conflict drags on. Gopinath called the current moment a “very uncertain outlook” and a “tough time to be a policymaker,” as governments juggle multiple economic risks. Her solution is rooted in domestic strength — improving reforms, boosting resilience, and keeping India’s economic fundamentals strong. Because in a volatile world, internal stability remains the strongest defence against external shocks.

The petroleum minister’s recent statement seems to rather carry a political overtone. The minister said in a post on X that the government “has taken a huge hit on its taxation revenues to ensure very high losses of oil companies (approximately 24 Rs/litre for petrol and 30 Rs/litre for diesel) at this time of sky-high international prices are reduced. At the same time, export tax has been levied as international prices of petrol and diesel have skyrocketed and any refinery exporting to foreign nations will have to pay export tax. My gratitude to Hon’ble PM Narendra Modi Ji and Hon’ble FM @nsitharaman Ji for this very timely, bold and visionary decision!”

In fact, for consumers and the economy, in particular, the government has done a much better job by acting fast and smart to ensure foreign crude supplies to India, which is nearly 90 percent dependent on imports, following massive uncertainty of oil and gas coming from West Asia. It has contacted far and wide – from 20,000 kms away Argentina to all-weather-friend Russia – to ensure normal supplies as the country grapples with a severe liquified petroleum gas (LPG) shortage triggered by the ongoing Gulf war. The disruption in maritime traffic through the Strait of Hormuz has significantly impacted India’s energy supply chain, forcing New Delhi to accelerate efforts to diversify sourcing. Argentina has emerged as an unexpected yet crucial partner. During the first quarter of this year, Argentina exported 50,000 tonnes of LPG to India. An additional 11,000 tonnes were dispatched on March 5, underscoring Buenos Aires’ willingness to support India during the crisis.

Russia continues to be a key supplier to help India mitigate a potential fuel crisis. Russia has expressed readiness to meet India’s energy needs, including LPG, crude oil, and LNG, to counter shortages from the Gulf region. Recently, Russian tankers were redirected to India to provide immediate relief. This support reinforces Russia’s position as a reliable energy partner for India, helping to diversify imports away from high-risk areas. Around 80-90 percent of India’s LPG imports historically originate from West Asia. Escalating US-Iran hostilities have threatened these supply chains, prompting India to look for alternatives. India is proactively sourcing LPG from Russia, as well as the US and Japan, to ensure domestic availability for its 33 crore customers. The government has activated 24×7 control rooms, increased domestic LPG output, and activated strategic reserves to manage the crisis. This intervention is expected to stabilize LPG prices and supply, which had been under pressure due to the conflict-related shipping disruptions.

It must be admitted that the government is managing the potential fuel crisis well by leveraging roughly 60–74 days of secured stocks (crude and products) and diversifying import sources to mitigate West Asia conflict risks. The government has assured stable supplies, dismissed shortage fears, and is acting against hoarding, even as minor, isolated panic-buying occurred. Oil refineries are operating at over 100 percent capacity utilisation, with secured procurement for the next two months. The government is focusing on quick, 24-hour approvals for piped natural gas (PNG) to reduce reliance on imported LPG. There is no immediate fear of oil and gas supplies at the retail level although their future prices continue to be a concern. (IPA Service)

The article Petrol, Diesel Levies Need Drastic Cuts For Inflation Control, Economic Growth appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Petrol, Diesel Levies Need Drastic Cuts For Inflation Control, Economic Growth appeared first on Arabian Post.

The article No End Of Iran-US-Israel War Is In Sight appeared first on Arabian Post.

By Nantoo Banerjee

Notwithstanding the assurance given in Parliament last week by Union Petroleum and Natural Gas Minister Hardeep Singh Puri on India’s ‘robust’ energy supplies, fuel and gas prices in the country are expected to shoot up soon in keeping with the global trend. The minister’s statement appears to be substantially political having little connection with reality. It may have more to do with the ensuing elections in four of India’s highly politically-sensitive states – West Bengal, Kerala, Assam and Tamil Nadu – than the on-ground situation. Barring Assam, three other states are governed by political parties strongly opposed to the Bharatiya Janata Party, which rules the national government. A domestic oil price surge may be temporarily suppressed but it is bound to spike in due course as the country is 90 percent import dependent for oil and gas. India is also a major importer of fertiliser. Fuel and fertiliser prices and their availability are a big concern for India.

Even import from Russia is going to be costly. Thanks to the worldwide oil and fertiliser supply disruptions due to the US-Israel led war against Iran, Russian oil prices are also shooting up. Just over the last fortnight, Russian crude oil prices have experienced a sharp increase, with the flagship Urals grade spiking from around $45 to over $76 per barrel. This has caused Russian oil to trade at a premium to global benchmarks in certain markets, reversing the heavy discounts seen earlier in the year. However, it is still cheaper than the generally recorded prices of crude oil sold by suppliers from the other parts of the world surpassing $100 per barrel due to escalating tensions in West Asia as Iran continues to pound bombs, ballistic missiles and drone strikes on the US-protected Arab nations and Israel. The Iran-Israel war has effectively shut the Strait of Hormuz, the narrow shipping lane between Iran and Oman through which around a fifth of the world’s daily oil and liquefied natural gas (LNG) supply passes. The world is currently fixating on the Strait of Hormuz as one of the most strategic choke points on Earth, and on what is being described as one of the most serious disruptions to global energy supply ever experienced.

The depleting liquefied natural gas availability has already become a big concern among Indian consumers despite the government assurance that LNG and liquefied petroleum gas (LPG) supplies for domestic household use are protected and prioritized, in spite of significant import disruptions. There have been constant media reports of shortages in commercial LPG although the government has maintained that household supplies are stable. The government has invoked the Essential Commodities Act, making domestic piped natural gas (PNG) and household LPG the top priority to ensure uninterrupted supply. To counter the disruption of shipments through the Strait of Hormuz, India is sourcing additional LNG from alternative suppliers, including the US and Russia. The supply constraints have already hit commercial LPG users such as restaurants and hotels. They have been urged to switch to alternative fuels or piped natural gas where available.

Qatar, the world’s second largest exporter of LNG behind the USA and India’s key supply source, has stopped production, following the massive Iranian attacks on its facilities. LNG tankers are also being diverted away from the region. A disruption in LNG supplies is bound to jack up natural gas prices and hit consumers in India, industrial and domestic, hard. LNG prices are moving up across the world. The news of Qatar’s state-run energy company, QatarEnergy’s shutdown of operating facilities, with the firm providing no timetable for output resumption, led to skyrocketing natural gas futures in Europe and other parts of the world. Several Indian companies, particularly in the fertilizer and industrial sectors, have been forced to shut down production or drastically reduce operations due to a severe LNG shortage.

Gujarat-based Indian Farmers Fertiliser Cooperative (IFFCO), India’s largest urea producer, and Kribhco Fertilizers have reported shutting down plants or bringing forward annual maintenance due to the scarcity of LNG, which is the primary feedstock for urea. ONGC Petro Additions has been operating its Dahej gas cracker at a “drastically” lower capacity. Small steel producers and other manufacturing units in Gujarat and Maharashtra have experienced significant production cuts. In Chhatrapati Sambhajinagar (Aurangabad), industries including the Sanjeev Auto Group and companies supplying components to major automobile manufacturers reported that they might have to temporarily shut down due to LNG supply shortage.

Hindalco Industries, part of the Aditya Birla group, has halted production of extruded aluminium products due to a critical shortage of natural gas, stemming from supply disruptions. Adani Total Gas Ltd (ATGL) reported receiving upstream gas curtailments, leading to near-tripling of industrial gas prices to around Rs 119/scm, forcing companies to seek alternatives. Major suppliers such as GAIL and Indian Oil Corp (IOC) informed customers of 10 to 30 percent cuts in natural gas allocations. The scarcity has forced suppliers to look for costly spot purchases to bridge the gap. Restoration of normal production facilities by the affected industrial units could take a month or so even after normal LNG supplies are restored, posing a significant risk of inflation and production shortages for fertilisers, steel, and manufactured goods.

The domestic concerns for shrinking availability of oil and gas and rising prices are real due India’s near total dependence on foreign supplies. High energy costs are bound to impact the country’s economy and growth. The inflation rate is moving up. The trade gap may expand substantially unless the government severely cuts the imports of non-essential items. Import tax may need to be rejigged, especially for gold, the country’s second largest item of import after petroleum. Both the central and state governments must sit together to reduce taxes and levies on petro-fuel, which now works to be around 50 percent of the retail prices. High government taxes will further raise the prices of fuel. Some countries such as Serbia and Portugal have cut domestic fuel tax. The situation is grave. The energy minister’s assurance of India’s robust energy supplies appears to be vague if not incredible. (IPA Service)

The article Petro Products Prices In Import-Dependent India May Surge Further appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Petro Products Prices In Import-Dependent India May Surge Further appeared first on Arabian Post.

By Nantoo Banerjee

The all-out war in West Asia, involving the US-Israel combine and Iran and covering 10 countries in the region, is expected to have a big economic backlash on India. At stake are India’s $120-billion trade in this region, huge oil imports, overall balance of payments, inflow of external investments, foreign repatriation and Rupee’s exchange rate stability among several others. The government may have to rewrite its annual budget expenditure and income projections for the next financial year. The crude oil prices are already up by over 20 percent in a week’s time. The country’s vulnerability is more pronounced in the case of supply of liquefied natural gas (LNG), almost 80 percent of which come from West Asia. Higher oil prices are bound to cause higher domestic inflation as they are linked with the cost of transportation, fertiliser output and farm production costs, logistic chains and manufacturing inputs.

The country’s economic links with West Asia run deep. As Iran, boasting the region’s biggest stockpile of ballistic missiles and drones, was liberally hitting its targets across the countries in the region, India’s trade and economic activities came to a standstill. West Asia accounts for 17 percent of India’s exports worth $ 99 billion, 55 percent of its crude oil requirement, 38 percent of remittances, annually. According to reports, around 10 million Indians live and work across the Persian Gulf region, sending home over $51 billion in remittances. For migrant workers and professionals, remittances are more than just financial transactions; they represent livelihoods, family support and economic stability.

The Indian government has reportedly activated emergency provisions to ensure there is no shortage of liquefied petroleum gas (LPG) in wake of the ongoing US-Israel-Iran war that has hit India’s energy imports. India, which was the world’s second-largest LPG importer last year, consumed 33.15 million metric tonnes of the fuel. LPG is a blend primarily composed of propane and butane. On March 7, India raised LPG cylinder prices supposedly due to supply disruptions from West Asian sources. QatarEnergy, a major supplier of liquefied natural gas (LNG) and related products to India, has stopped production at its Ras Laffan facility following Iranian drone strikes. This, combined with the closure of the Strait of Hormuz due to rising West Asia tensions, has significantly impacted energy shipments to India. Qatar supplies nearly half of India’s LNG requirement.

Qatar halted LNG production after its facilities were bombarded by Iran. It declared ‘force majeure’ on affected buyers, including Indian firms like Petronet LNG. The closure of the Strait of Hormuz has disrupted the movement of oil and gas tankers, including those from other Gulf suppliers. Indian petroleum companies, including Gas Authority of India Limited and Indian Oil Corporation, have reported a 10 percent to 30 percent reduction in gas supply to industries, with total supply disruptions reaching up to 40 percent. The situation could be worse in the coming weeks. The 14.2 kg domestic cylinder price rose by Rs. 60, reaching Rs.913 in Delhi. The 19 kg commercial cylinders saw a steeper hike of Rs. 115. This is the first major hike for domestic users since April 2025. The higher prices affect over 33 crore Indian consumers and are expected to raise inflation, with commercial price hikes potentially increasing restaurant and food costs.

Similarly, oil prices are surging. By the end of the week, Brent crude oil prices rose by nearly 30 percent, exceeding per barrel cost for the first time since 2024, mainly due to severe disruptions in the Strait of Hormuz after the US-Israel-Iran war. The West Asian war has already affected 20 percent of global oil supplies. It has forced shippers to avoid the region, driving up shipping costs and threatening further inflationary pressures on global energy. Shipping costs have hit record highs, with freight rates doubling in two weeks. Shipping diversions via the Cape of Good Hope significantly raise transit times by up to two weeks, increase fuel consumption, and skyrocket shipping costs for South and East Asian economies. This alternative route, taken for safety, causes container shortages and higher trade and energy import costs. The journey adds roughly 8,900 km to voyages, dramatically increasing fuel usage and insurance premiums, contributing to higher, inflationary costs for goods in the region.

The US-Israel-Iran war threatens to cause an energy crisis and an overall price inflation in India. With almost 40 percent of the country’s oil imports passing through the affected region, higher crude oil prices are bound to push up food and energy inflation. The Indian Rupee is also facing a big pressure, hitting record lows, which further increases the domestic cost of imports. Shipping, freight, and insurance costs are moving up due to regional insecurity, impacting trade with the Gulf. If high prices persist, India’s GDP growth for the next fiscal year could slow down from an earlier estimate of over seven percent to even below 6.5 percent. Although India is not involved in the war, the country’s deep economic integration with Gulf energy supplies, using the trade corridor, remittance flows, shipping and aviation route connections and currency movements are already impacting its businesses, trade, stock markets, external debt stress and domestic and foreign investments among others. The risks are immediate and multi-dimensional. For India, the impacts of the war translate directly into a wider trade deficit, pressure on the current account, higher input costs across industries and potential fiscal strain through fuel tax adjustments.

To tackle the immediate economic impact of the escalating Iran-US-Israel war, India must focus on securing energy supplies, managing logistics, and protect its trade balance by drastically cutting imports of non-essential items. For the present, it must diversify oil imports away from the Strait of Hormuz, using strategic reserves, and manage currency volatility. Currently, India is believed to have about 50 days of crude oil and product stocks, with roughly 100 million barrels in refinery and commercial inventories. India should step up purchases from Russia, the Atlantic Basin (USA, West Africa), and Latin America (Brazil, Venezuela) to bypass the Strait. Indian refiners may utilize Russian oil stored in the Indian Ocean and Arabian Sea as an immediate buffer. As India holds limited strategic LPG reserves, the government may prioritize securing quick shipments from alternative, non-Hormuz suppliers. To handle potential disruptions in agricultural exports (like tea and basmati rice to Iran), exporters may be advised to switch from Cost, Insurance, and Freight (CIF) terms to Free on Board (FOB) to manage risks. Time is running out. The government must take quick decisions to combat the trade and economic impact of the continuing cruel gulf war. (IPA Service)

The article Iran War Is Likely To Hit Indian Economy Hard appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Iran War Is Likely To Hit Indian Economy Hard appeared first on Arabian Post.

By Nantoo Banerjee

The global AI impact summit 2026 in Delhi, last week, couldn’t have come at a more appropriate time when the world continues to be somewhat skeptical about adoption of Artificial Intelligence (AI), its limitations and potential consequences. Thanks to the pioneering effort by firms such as Nvidia, Microsoft, Google, Amazon, Meta and Anthropic, the United States is driving global AI adoption primarily through foundational infrastructure, Generative AI (GenAI) integration, and enterprise-wide application. The AI adoption has skyrocketed over the last three years. Yet, there exists widespread skepticism regarding AI adoption reflecting a cautious, almost hesitant, embrace driven by concerns over its limitations, ethical implications, and long-term consequences. Member countries of the European Union, Japan and China are still adopting a cautious, controlled approach to AI development.

For good reasons, India, projected as one of the world’s biggest markets in terms of AI adoption, is navigating a critical balance in the process, aiming to harness its potential for economic growth in sectors like agriculture and healthcare while managing risks related to employment, data privacy, and ethical concerns. While some suggest a slower, more cautious approach due to high energy consumption and labour market shifts, the others think that the country should not go slow in AI adoption while focusing on responsible adoption, using AI to solve deep-seated productivity issues. India must address issues such as severe talent shortages, as of now, heavy reliance on foreign technology/chips, and data security vulnerabilities, protection against sophisticated cyberattacks (agentic AI), and prevention of job displacement, especially in the IT sector.

With global giants such as IBM, Accenture, Palantir Technologies, Abode and DataRobot focussing on integrating AI into business processes to improve efficiency and decision making, enterprises are already experiencing specialisation in governed, responsible AI for regulated industries (banking, energy, government). Major US firms like Amazon, Anthropic, Google, IBM, Meta, Microsoft, Nvidia and OpenAI have formed the Partnership for Global Inclusivity on AI (PGIAI) to deploy AI for sustainable development. AI is no longer a futuristic concept. It is a powerful, albeit immature, technology that requires urgent, rigorous governance. The current skepticism is pushing the industry toward “a human-in-the-loop” approach “, where AI is used to augment rather than replace human decision-making, aiming for responsible rather than blind adoption. AI cannot entirely replace human intelligence, but it will significantly reshape industries by automating routine tasks and acting as a powerful, complementary tool. While AI excels in speed, data processing, and efficiency, it lacks consciousness, emotional intelligence, creativity, and moral reasoning.

The latest AI Impact Summit was extremely useful to understand the issues concerning AI adoptions especially in fast growing new economies such as India as well as in developed countries, which should be able to write their own script in keeping with their individual requirements, problems and prospects. AI cannot totally replace human intelligence. However, it will significantly reshape industries by automating routine tasks and acting as a powerful, complementary tool. While AI excels in speed, data processing, and efficiency, it lacks consciousness, emotional intelligence, creativity, and moral reasoning. It was nice to note that global leaders like Prime Minister Narendra Modi, French President Emmanuel Macron, UN Secretary General António Guterres, Alphabet and Google CEO Sundar Pichai, Open AI CEO Sam Altman, DeepMind CEO Demis Hassabis, Anthropic CEO Dario Amodei outlined a global roadmap for responsible and inclusive artificial intelligence governance. While praising India’s AI potential, tech leaders warned against an “AI divide” and called for ethical innovation, child safety and global cooperation.

Currently, India’s key concerns regarding rapid AI adoption focus on massive investments required for additional electricity generation, bridging a critical, widening talent gap (below three percent of engineers are AI-ready), ensuring data security against AI-driven cyber threats, and reducing high-cost reliance on foreign hardware. The possible change of business fate of India’s globally-acclaimed infotech companies and ITes such as Tata Consultancy Services (TCS), Infosys, HCL Tech, Wipro, Tech Mahindra and LTIMindtree due to AI invasion is also a major cause of concern as thousands of software personnel serving the industry stand to lose their jobs. Rapid AI adoption poses an existential shift to India’s traditional IT services industry, leading to a sizable cut in their revenue income in the next three to four years. AI will act as a “deflationary” force threatening to automate, rather than just augment, routine tasks previously handled by human workforce.

The country faces significant challenges in building sovereign AI infrastructure, ensuring inclusive growth, and preventing job displacement amidst rapid automation. To be AI-ready, India faces a big surge in electricity demand to power the infrastructure necessary for data centres, with projections indicating an additional requirement of 40-50 TWh (Terawatt hours) of power by 2030. The country’s data centre capacity is expected to grow from roughly 1.6 GW in 2024 to 8-10 GW by 2030, driven by rapid AI adoption. Interestingly, some of the country’s top industrial houses, including the Gautam Adani group and Reliance Industries, are already working on large infrastructure investments to build AI infrastructure. The Adani group has projected investments to create a $250 billion AI infrastructure ecosystem in the country over the decade. RIL and its digital subsidiary Jio Platforms plan to invest $110 billion into sovereign infrastructure over a seven-year period.

Notably, India is witnessing a fast growth of AI adoption. Key sectors driving this growth—contributing roughly 60 percent of AI’s value-add—are banking (BFSI), healthcare, retail & consumer packaged goods (CPG), and industrial/automotive. Major areas include generative AI for customer service, data analytics for decision-making, and AI in agriculture/governance. Banking and financial services lead in adoption (over 68 percent), followed by healthcare and pharma showing adoption rate of over 52 percent with utilisation for drug discovery, diagnostic imaging, and telemedicine. India ranks first in generative AI leadership meaning GenAI adoption at work, with high usage in conversational tools. The government is establishing a national AI compute infrastructure, including GPU marketplaces for startups and researchers. While India looks at AI as a new opportunity, marking an era where humans and intelligent systems co-create, co-work, and co-evolve, making work smarter, more efficient, and more impactful, it must adopt ‘trustworthy’ AI tools that are reasonably safe and transparent. (IPA Service)

The article India Should Adopt ‘Trustworthy’ AI Tools To Stay Safe And Transparent appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article India Should Adopt ‘Trustworthy’ AI Tools To Stay Safe And Transparent appeared first on Arabian Post.

By Nantoo Banerjee

There is little to be excited about the defence ministry’s latest clearance for the acquisition of 114 Rafale fighter jets from France at a huge cost of Rs.3.25 lakh crore (nearly $40 billion), branded as ‘mother of all defence deals’. It is a matter of major concern that even 78 years after the country’s independence, India, like Ukraine, has to rely on imported arms to defend its sovereignty – Rafale from France, Poseidon jets from the US, and S-400 Triumf from Russia among several others. Even in areas where India is manufacturing defence equipment with foreign collaborations, the country remains highly dependent on overseas subsystems.

While the platform such as aircraft and ships might be assembled in India, critical high-end components are still imported making the supply chain vulnerable. Over the years, India has made multiple Rafale deals. They include 36 jets worth around €7.87 billion (Rs.58,891 Crore) and a more recent one for 26 naval variants for the Indian Navy costing Rs.64,000 crore. India cancelled a deal to buy 126 Rafale fighters from France in 2015 after years of negotiations over quality assurance issues with Indian-manufactured jets.

In 1950, neighbouring China’s economy and defence were much weaker than India’s. Today, China boasts itself as one of the world’s most self-propelled lethal military powers, after the US and Russia. Thanks to India’s import happy political rulers, the country continues to face major gaps in developing advanced military technology, specifically jet engines, active electronically scanned array (AESA) radars, missile seekers, and stealth technology. India’s defence R&D spending is abysmally low compared to peers, with the DRDO receiving only 3.94 percent of the total defence budget in 2025-26.

Lengthy procurement cycles and inordinate delays in R&D projects have been hampering modernization. The LCA Tejas program took over two decades from approval to prototype. The programme was initiated as early as in 1984 to develop indigenous, lightweight, multirole fighter jets to replace MiG-21 fleet. India also lacks sufficient, world-class testing infrastructure for advanced technology like UAVs, electronic warfare, and electro-optics slowing down the development and certification of indigenous products.

With about 80 percent of India’s defence equipment being of Russian origin, Russia remains a cornerstone of the country’s defence capabilities. Russia came into the picture when western military powers practically refused to supply high-end arms to India. The Indo-Russian defence partnership spans, evolving from a pure buyer-seller relationship to joint development and production. Major lethal Russian platforms in India include Sukhoi Su-30MKI (made in India with Russian help), T-905 “Bhishma” and T-22 main battle tanks, BrahMos cruise missile, Russian origin submarines, including leased nuclear-powered vessels (Akula-II), and aircraft carriers like INS Vikramaditya and widely used Mi-17 transport helicopters.

For a long time, India did not allow its private sector in defence production although it was always happy to deal with foreign private enterprises for import of arms and ammunition. Incidentally, Dassault Aviation is primarily owned by a French family holding company, the Groupe Industriel Marcel Dassault (GIMD). The company is tightly controlled by the family, holding nearly 67 percent of the equity shares. Airbus holds around 10 percent. The private sector participation in defence manufacturing in India accounted for only 23 percent of total output in 2024-25, mostly low-end products. Lack of sufficient, world-class testing infrastructure for advanced technology like UAVs, electronic warfare, and electro-optics slows down the development and certification of indigenous products.

Initially, China too was dependent on Russian defence supplies. But, the communist regime provided a high priority to self-sufficiency in defence production and, over the years, became a major worldwide contender for high-end manufacturing of defence products. China’s transition from a low-tech arms importer to a high-end, indigenous defence manufacturer and exporter has been driven by a long-term, state-led strategy combining massive investments in research and development, intense military-civil fusion (MCF), and targeted acquisition of foreign technology. Over the last decade, China has emerged as the world’s third-largest arms exporter, with capabilities in stealth fighters (J-20, J-35), aircraft carriers (Fujian), and hypersonic missiles that challenge Western technological superiority.

A cornerstone of the reform, the Chinese strategy eliminated barriers between civilian and military sectors, allowing the People’s Liberation Army (PLA) to tap into the fast-paced innovation of the country’s massive commercial tech sector, particularly in artificial intelligence (AI), unmanned systems, and quantum technology. China invests billions in R&D, accounting for roughly 20 percent of global R&D spending, which has fuelled the development of homegrown, advanced weapons. Although China originally relied on Russia for advanced systems, it had systematically used reverse-engineering on imported gear (like Su-27 fighters) and engaged in cyber-espionage to acquire blueprints for advanced technologies, such as the F-35 and C-17. Beijing had successfully lured many talented engineers and scientists back from the US and Europe to strengthen its domestic defence industry.

Based on Stockholm International Peace Research Institute (SIPRI) data regarding global arms transfers, export volumes, and the development of advanced military technology, the top 10 countries producing high-end defence equipment (2020–2024) are dominated by major powers investing heavily in aerospace, naval, and missile technologies. The countries are: the United States, France, Russia, China, Germany, Italy, the United Kingdom, Israel, Spain and South Korea. Of them, the emergence of China, tiny Israel and South Korea as major high-end military manufacturers in the last few decades shows that with strong will any country can become a defence production major. Israel is a leader in high-tech military machines, focusing on air defence systems (Iron Dome), Unmanned Aerial Vehicles (UAVs), and advanced electronics/cyber warfare. South Korea has become a rapidly emerging exporter of high-end equipment, including K2 tanks, FA-50 aircraft, and K9 self-propelled howitzers.

However, India continues to remain heavily foreign nirbhar (dependent) to protect its borders against highly belligerent neighbours such as China and Pakistan. Despite the so-called push for indigenization, India remains substantially dependent on foreign suppliers for advanced weaponry for critical tech, jets, and electronics to counter twin threats from China and Pakistan. This dependency persists alongside border disputes, cross-border terrorism, and a volatile neighbourhood. While tension on the 3,488 km India-China border (LAC) has been persisting for years, the cross-border terrorism from Pakistan requires constant readiness. It is time that India invests big in high-end domestic defence manufacturing to protect its borders. Bridging the gap in high-end military tech poses a real challenge for the country now. (IPA Service)

The article India’s Reliance On Imported Arms For Defence Is A Concern appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article India’s Reliance On Imported Arms For Defence Is A Concern appeared first on Arabian Post.

By Nantoo Banerjee

The excitement over the finalization of the first tranche of the Indo-US trade deal during last weekend after months of negotiations and uncertainties may be irrational, if not too early, as it remains unclear about the US attitude towards India’s multi-alignment global trade and economic strategy combining countries such as Russia and Iran and how it could impact the trade deal. The US, the largest importer of merchandise from China, has been comparatively soft on China despite the latter’s strong trade and diplomatic ties with major US adversary nations, including Russia, Iran, North Korea, Cuba and Venezuela. With Russia, India has long been enjoying a strong multi-dimensional relationship, covering civil nuclear and defence sectors among others. India is also an investor in oil exploration and production in Russia. India’s trade deal with the US must not alter or impact its attempt to leverage its position as a “swing state” to gain maximum advantage from all sides while protecting its own security and developmental interests.

It is good that the United States has ultimately decided to lower “reciprocal tariffs” on Indian exports to 18 percent. In return, India will slash levies on several items of imports from the US. The trade deal also witnessed the US scrapping the 25 percent penalty on Indian exports for Russian oil purchases although it is not clear if it sought to prevent India altogether from buying oil from Russia. The deal will benefit India’s two major export groups – one comprising textiles, leather, chemicals and marine products; and the other including pharmaceuticals and smartphones. The two groups currently account for 56 percent of India’s exports to the US. The trade deal is expected to be more beneficial to the US exports of high-value industrial goods, over 90 percent of which will enjoy several concessions including tariff eliminations, duty cuts over 10 years and reduction based on quotas.

The trade deal appears to be somewhat mischievously over optimistic about India’s imports from the US growing up to $500 billion in the next five years. India is not a front ranking trading nation. Among the global trading nations, India ranks 10th as importer and 13th as exporter. Its manufacturing and consumption capabilities of high-value manufactured products have remained limited. In the last fiscal year, India’s goods imports from the US were valued at only around $45.33 billion. Expecting these imports to jack up by over 10 times to $500 billion in the next five years looks illogical despite new concessions. India is running huge international trade deficits year after year. Its economy could be rattled by such massive imports from a single country unless India decides to severely cut imports from other countries to contain its annual trade deficits. In 2024-25, India’s total merchandise imports from over 50 countries amounted to $720.24 billion while exports earned only $ 437.42 billion, leading to a merchandise trade deficit of US$ 282.83 billion.

The newly finalised framework for the first phase of a bilateral trade agreement with the US, committing a $500 billion annual import over the next five years, will focus on energy products (oil, LNG, LPG), commercial aircraft and parts (notably from Boeing), coking coal, precious metals, and high-tech products like Graphic Processing Units (GPUs) for data centres. Interestingly, Union Commerce Minister Piyush Goyal described this $500 billion figure as “conservative,” noting that India’s total import demand is projected to reach roughly $2 trillion over the next five years. That sounds truly tall. Much will depend on the growth rate of the economy, the purchasing power of its people and consumption. The $500 billion figure may include existing orders (such as previous aircraft orders) and new purchasing commitments. Ironically, India is in the process of signing a Rs.3.24 lakh crore deal with France to acquire 114 Rafale fighter jets, ahead of French President Emmanuel Macron’s visit to New Delhi on February 18 for the India-AI Impact Summit. If cleared, the deal will mark one of India’s biggest-ever defence procurements, deepening the India–France strategic partnership under the Make-in-India framework. France’s civilian aircraft manufacturer, Airbus Industrie, is the biggest supplier of passenger aircraft to India.

Thanks to the massive delay in inking a trade pact with the US, India signed last month a mega trade and economic cooperation agreement with the European Union which it branded as the “mother of all deals”. It allowed 93 percent duty-free EU exports over the next 10 years, covering 97.5 percent of overall EU trade value with India. The deal provides access for 99 percent of Indian exports, offering a strategic pivot away from reliance on the US market. Simultaneously, the EU and India concluded a wide-ranging security and defence partnership agreement, committing to closer counter-terror cooperation, stronger engagement in the Indo-Pacific region and joint development of military capabilities. Now, the Indo-US trade deal, largely on similar lines, threatens to prune the scope and the size of both the agreements accommodating India’s trade interests with the two giant trade blocks, the US and the EU. As mentioned earlier, India is not a major trading nation, globally. The appetite of the world’s most populous nation continues to be limited as of now. The pressure of imports from both the US and EU may further jack up India’s international trade deficits to destabilise the country’s economy unless India is able to significantly cut down imports from China, Russia, the United Arab Emirates, Saudi Arabia, Singapore and the Netherlands.

The latest trade pact with the US may open more challenges than opportunities before India, which itself is looking forward to becoming one of the world’s three top economic powers by 2047 competing neck-and-neck with each other. The turbulent trade disputes with the US through the last one year had forced India to consider reframing its relationship with its traditional key partners, including the US, focusing on technology, defence, and strategic collaboration, rather than blind trust. Instead of getting itself encompassed in the US trade trap, India would do well to continue to navigate the complex, high-stakes landscape characterized by intense great-power rivalries, economic nationalism, and the need to maintain strategic autonomy. The country should actively redefine its foreign policy, moving from passive non-alignment to an active, multi-aligned, and, at times, more assertive approach, driven by its ambition to become a leading global power within the next two decades. (IPA Service)

The article Indo-US Trade Deal Promises To Be Contentious appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Indo-US Trade Deal Promises To Be Contentious appeared first on Arabian Post.

By Nantoo Banerjee

India’s transport sector, combining road, rail, air and water, is ready for a significant job boom, with the logistics industry alone projected to grow at a 10.7 percent compound annual growth rate (CAGR) through the current year. The national budget for 2026-27, which is scheduled to be placed in Parliament on February 1, should strongly focus on the transport sector, especially on the under-tapped civil aviation field, and incentivize enthusiastic private entrepreneurs to play a growing role in this highly potential area of industry. The sector offers a tremendous opportunity to entrepreneurs – big, medium or small. The forthcoming budget should provide further stimulus to tap the opportunity, creating millions of new jobs, with the logistics sector specifically aiming to add up to 10 million job opportunities over the next two years.

There has been a big surge of private entrants in the transport sector alongside the traditional operators, led by the Tatas. Lately, the Adani Group is significantly expanding its transport sector footprint beyond airports, sea ports and shipping. The group is venturing into aircraft manufacturing, with Embraer of Brazil for regional jets, establishing major engine MRO (maintenance, repair, overhaul) and passenger-to-freighter conversion services. The Adani group is strengthening pilot training via its latest Rs.820-crore acquisition of a majority stake in the Flight Simulation Technique Centre (FSTC), the country’s leading independent pilot training provider, all supported by massive infrastructure investments to capitalize on India’s booming air travel demand. This holistic strategy positions Adani as a key player across the entire aviation value chain, complementing its existing airport operations.

Other major private entrepreneurs in the country’s transport sector include Vijay and Anand Sankeshwar-led VRL Logistics, Mahindra Logistics, Allcargo Logistics and innovators such as Sahil Barua’s Delhivery, Rajesh Yabaji’s Blackbuck, Blue Dart – all focusing on digital, express, and multimodal solutions, with figures like the Sankeshwars driving traditional road freight and newer tech founders transforming logistics. The industry is witnessing a high demand for logistics specialists, supply chain managers, warehouse managers, and delivery associates. Rapid adoption of electric vehicles (EVs) is driving hiring in battery technology, hydrogen fuel systems, and charging infrastructure development. The government’s production linked incentive (PLI) scheme for automobiles and auto components is expected to generate significant employment by the end of this year.

The ongoing large capital expenditure on highways, rural road connectivity, and modernisation of railways having dedicated freight corridors are boosting demand for engineers and construction personnel. Automation, Artificial Intelligence (AI), and Machine Learning (ML) are being integrated into logistics, driving demand for specialized tech roles. The logistics industry’s record growth is expected to create several million new jobs by the end of next year in sectors such as roadways, railways, airways, shipping, EV Manufacturing, Warehousing, and E-commerce. Among the major investment areas are roads and highways (aiming for 200,000 kms of national highway); private manufacturing of wagons, coaches, digital signalling, station redevelopment, DFC logistics parks; upgrading airports and creating new civil aviation enclaves such as Varanasi, Bihta and Bagdogra; development of dedicated container transshipment ports (Vizhinjam); and improving urban mobility through regional rapid transit systems and metro projects. The Bihta Airport is a new civil aviation hub being developed near Patna, expected to open around August, next year, featuring a large terminal with modern facilities and capacity for millions of passengers, aiming to boost regional connectivity for domestic and potentially international flights.

The country’s booming transport sector is leveraging robust public support and strategic policy to unlock substantial private capital for transformative infrastructure development, focusing on both physical assets and digital/sustainable solutions on a massive scale. The infrastructure construction market is fast expanding with the transport sector poised for a rapid and lasting boom and growing broader logistics market driven by public investment and digital initiatives like Gati Shakti, aiming to lower costs and boost multimodal transport, with roads dominating freight (around 70 percent) but air/waterways seeing rapid growth. The logistics sector is acting as a backbone for growth by creating millions of jobs, boosting trade competitiveness, attracting investment, and enabling the “Make in India” initiative through improved infrastructure, digitalization, and policy reforms, with projections showing significant growth towards a potential $800 billion market by 2030. By modernizing infrastructure, adopting technology, and streamlining policies, India’s logistics sector is poised to become a massive catalyst for sustained economic growth, supporting its ambition to become a developed economy.

Currently, the Indian aviation sector employs around 369,700 people directly. The domestic passenger market, the world’s third largest, can grow much faster with additional support from the government by encouraging more private participation and making land acquisition for new airports and for expansion of existing runways easy. Land acquisition remains a major hurdle for airport expansion, causing significant project delays, accounting for a large portion of unresolved infrastructure issues, and necessitating better compensation and resettlement strategies. Continued high demand for skilled professionals across various segments due to aggressive fleet expansion by airlines and the development of new airports poses another problem. Employment in the civil aviation sector is projected to exceed 25 million by 2047.

The continued expansion of the civil aviation sector is creating a high demand for talent across several specialized fields. The induction of new aircraft is driving consistent demand for pilots (especially captains and first officers), cabin crew, and flight operations personnel. Airport expansion under the UDAN scheme is increasing demand for ground staff, security personnel, operations coordinators, and cargo and logistics staff. There is a rising demand for licensed aircraft maintenance engineers and technicians. However, the industry is faced with a challenge in finding enough job-ready, skilled talent. There are significant annual shortfalls of pilots, aircraft maintenance technicians, and air traffic controllers. The long training lead times and high attrition rates mean employers are focusing on pipeline-based recruitment and continuous upskilling for professionals. Overall, the union budget, therefore, should support industry-wide capability building with training programmes linked to the transport sector, providing fiscal incentives for mechanisation and modern construction technologies (equipment pooling and leasing organisation), and structured skilling initiatives for operation and maintenance (O&M). A structured growth of the transport sector can change the face of the economy. The union budget should stay focussed on the growth of this sector. (IPA Service)

The article Union Budget Should Focus On Transport Sector As India’s Most Potential Growth Engine appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Union Budget Should Focus On Transport Sector As India’s Most Potential Growth Engine appeared first on Arabian Post.

By Nantoo Banerjee

The theatres of state-sponsored piracy are expanding, from the traditional Red Sea, Gulf of Oman, Somali Basin to the Black Sea and now the Atlantic. The recent US seizure of Russian-flagged oil tanker, Marinera, originally known as the Bella-1, after pursuing the vessel for weeks across the Atlantic, may be considered as an act of piracy on the high seas. The US military action to seize a Russian flag carrier, the first time in recent memory, is said to be as part of Washington’s efforts to block Venezuelan oil exports.

The US forces boarded and seized several tankers in the Atlantic Ocean, including the Marinera and the Guyana flag-carrier Skipper. They seized as many as five oil tankers, including one meant for China, linked to Venezuela. The US defended the seizures pursuant to federal court warrants for alleged violations of American sanctions laws. It ignored the condemnations by Venezuela, China and Russia calling the act a “theft and hijacking of private vessels” and an “act of international piracy”. Russia and China protested the move as illegal under international maritime law.

Ironically, the US has little respect for international law. Under President Trump, the US is highly obsessed with the policy of self-aggrandizement when it comes to dealing with the outside world. It can organise a midnight raid on the residence of another country’s president, kill dozens of soldiers and civilians, take him to the US as a captive, seize total control of its most vital fuel mineral, block its export and impose piracy charges on importers. It can take over another country on the grounds of national security.

The US seems to create and follow its own laws and doctrines to deal with another country to suit its convenience, be it Venezuela, Greenland, Canada, Panama, Colombia or Mexico. Historically, US interventions range from electoral interference (Italy, Philippines) to regime change (Iran, Cuba) and large-scale conflicts (Afghanistan, Iraq) to secure interests, often citing national security or spreading democracy, but leading to accusations of imperialism. The US president is pushing forward an absurd argument in defence of his desire to take over Greenland, a self-governing, autonomous territory within the Kingdom of Denmark, saying that it is meant to block a possible occupation of the strategic territory by either China or Russia.

The US global relationship is characterized by a significant retreat from multilateral agreements and increasing accusations from the international community of “wanton disregard” for global legal norms. The President Trump-led US seems to be little bothered about the growing criticism for its unilateral military actions which is considered as illegal by many international legal experts and global leaders. UN Secretary-General António Guterres and other officials stated that these actions did not respect international law or the UN charter, which prohibits the threat or use of force against the territorial integrity of any state. President Trump states that he does not “need international law” and relies instead on his “own morality” to guide his policies. He does not mind if his actions are described by some as a return to an “age of imperialism”. Last year, the US reportedly carried out bombings in seven countries, including Iran, Iraq, Somalia, and Yemen, without authorization from the UN Security Council, of which it is an important member.

To avoid explanations for his unilateral actions involving global trade, commerce, defence and diplomacy, Trump’s US has chosen to withdraw from a number of international treaties and organisations. Following a systematic review of all international commitments, the US began a massive withdrawal, this year, from as many as 66 international organisations and treaties, including the UN Framework Convention on Climate Change and the Paris Agreement, the UN Population Fund, the UN Conference on Trade and Development (UNCTAD), the World Health Organisation (WHO) and the United Nations Educational, Scientific and Cultural Organization (UNESCO), a highly specialized UN agency with the aim of promoting world peace and security through international cooperation in education, arts, sciences and culture. The US seems to prefer bilateralism to multilateralism in order to promote a new world order. It strongly believes in the proverb that self-help is the best help and plans to make the US military the world’s deadliest combat force.

President Trump has already called for a massive 50 percent increase in US military spending next year. He proposes to raise the US defence budget by over 50 percent in 2027 to $1.5 trillion in view of what he called “these very troubled and dangerous times.” The country’s military budget for the current year is worth $901 billion, which was approved by the US Congress last month. “This will allow us to build the ‘Dream Military’ that we have long been entitled to and, more importantly, that will keep us SAFE and SECURE, regardless of foe,” Trump said on social media earlier this month. To make sure of timely delivery by major defence contractors, he said he would crack down on payouts to bosses and shareholders of major US defence contractors unless the firms speed up deliveries of armaments and build new manufacturing plants.

The US gunboat diplomacy threatens to change the world order with resourceful countries being forced to spend more and more on defence and domestic manufacturing to be ready to face possible external attacks on trade, economy and sovereignty. State-sponsored sea piracy by using strong naval force and forcing regime change in another country on the ground of protecting national security by the aggressor may be the order of the day. Trump has made it clear to Colombia, Mexico, Cuba, Greenland – and Denmark – that they need to be nervous about where his appetite will take him next. The US has already escalated tensions by suggesting military intervention in Iran should the Ali Hosseini Khamenei regime continue to violently repress the public demonstrations. The US president has laid out a vision of power restrained by ‘my own morality.’ It is a wake-up call especially for the world’s four other military-economic powers, namely China, Russia, India and South Korea. (IPA Service)

The article US Gunboat Diplomacy Challenges The World Order appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article US Gunboat Diplomacy Challenges The World Order appeared first on Arabian Post.

By Nantoo Banerjee

It does not make sense for India to deplete its hard-earned foreign currency reserves to temporarily protect the Rupee’s exchange value. In fact, Indian Rupee’s downturn vis-à-vis other major currencies has not adversely impacted the country’s impressive economic growth, at least for the present. On the contrary, it has made exports cheaper and imports dearer. This should help the country reduce its overall large annual trade deficits although increasing imports of cheap non-essential items from China continues to be a major concern. The country’s export growth in 2025 shows positive momentum, with significant year-on-year jumps in late 2025, particularly in November, reaching nearly 20 percent for merchandise, driven by key sectors like electronics, agricultural products, and services, despite some global trade challenges, leading to cumulative growth of over five percent for the April-November period. India should not be too concerned about its Rupee exchange-rate fall as long as it does not hurt the economic growth.

India’s central bank intervened aggressively in currency markets during December, selling dollars to prop up the rupee, echoing its earlier heavy-handed efforts to stem a one-way decline in the currency rate. The rupee rallied to an intraday high of 89.75 against the US dollar on the interbank order matching system, from near 91.00 seen prior to the intervention. It was last trading at 90.28. The Indian Rupee’s downturn has outpaced the US Dollar’s own decline since April, 2025. In October, the RBI sold a net $11.9 billion to support the Rupee. As in the past, it proved to be only temporarily effective. The RBI intervention has failed to arrest the Rupee’s decline. The exchange value of INR in 2025 showed a much bigger loss to other major global currencies such as EURO (21 percent), Pound Sterling, Australian $, Japanese Yen, and UAE’s Dirham than US$. It may be time for Indian exporters to seriously try to tap these markets to push Indian goods and services while containing higher priced (in Rupee) non-essential imports.

At the same time, it must be appreciated that the RBI has been trying to continuously bolster India’s foreign exchange reserves which saw a significant increase of $1.68 billion, reaching $688.94 billion, in the third week of December. It was primarily driven by higher gold holdings and a modest rise in foreign currency assets. The country’s gold reserves strengthened considerably, reflecting a diversification strategy. Special Drawing Rights (SDR) and the IMF reserve position also saw slight upticks. As of last September, the RBI held approximately 880 tonnes of gold, with a significant portion (around 575.8 tonnes) now stored domestically in India — marking a major shift towards onshoring reserves — while about 290.3 tonnes remain with the Bank of England (BoE) and Bank of International Settlements (BIS). This increased domestic storage reflects a strategic move to secure assets amid global financial uncertainties, with the RBI bringing back 274 tonnes since March 2023.

The massive hot money outflow from the Indian market during the year is principally responsible for the decline of INR’s exchange value by over six percent against US$. Foreign Portfolio Investors (FPIs) have sold Indian equities worth over Rs 14,000 crore so far in December, taking total outflows in 2025 to Rs 1,57,860 crore. This is more than 50 percent of their total investment in the Indian market. There is nothing unusual for such a large hot money movement although globally big hot money outflows often lead to devaluation of domestic currency. They could also cause inflation and hurt financial stability by disrupting local credit markets. Fortunately, the continuous hot money outflow from the Indian market through 2025 failed to disrupt the country’s economy and the stock market. The hot money exit failed to create much market volatility in India. Notably, the country’s current inflation level is among the lowest in recent memory. The reasons are good enough for the RBI not to deplete its foreign reserves to temporarily protect the exchange value of Rupee. For now, the RBI would do well to protect its forex reserves and not become too concerned about protecting the Rupee.

Foreign investors may have pulled out billions from Indian markets in 2025, but domestic funds continue to push stocks higher. The year witnessed massive and consistent investment in the Indian stock market by domestic mutual funds, driven by strong and resilient Systematic Investment Plan (SIP) inflows from retail investors. This surge in domestic flows has been a key stabilizing force, often counterbalancing significant FPI outflows. Mutual funds have injected over Rs.400,000 crore into equities in 2025, with projections suggesting the total could surpass Rs.500,000 crore by the year-end. This marks the fifth consecutive year of positive net equity flows from domestic mutual funds. The exit of large foreign portfolio investments (FPI) or speculative capital from the market should not be a matter of concern for the economy.

Instead, the government should go all out to attract long-term foreign direct investment (FDI) as it recently did in the case of 100 percent foreign equity in insurance. Despite the continuing good economic growth and high domestic consumption benefiting almost all foreign manufacturing and services companies in India, the net FDI inflow into the country continues to be weak. To give an example, Apple Inc, a recent entrant with manufacturing facility, showed a strong growth in FY25, with revenue hitting around Rs.79,000 crore and net profit rising 16 percent to Rs.3,196 crore, driven by robust iPhone demand (especially iPhone 16/17 series), increased local manufacturing (“Make in India”), and expanding retail footprint, solidifying India as a key market with record iPhone shipments and market share gains despite global slowdowns.

Yet, India witnessed a very low, even negative, rate of net FDI inflow in several months of the current year, meaning more FDI flowed out (repatriation/outward investment) than came in, despite good gross inflows, due to factors like high outflows, global uncertainty, and shifting investor sentiment. This contrasts with gross inflows which remained strong, but repatriation and Indian companies investing abroad significantly reduced the net figure, leading to sharp drops and negative months. A high rate of net FDI inflow will substantially help stabilise the exchange value of the INR. (IPA Service)

The article Rupee Decline May Not Be Bad For Economy Now appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Rupee Decline May Not Be Bad For Economy Now appeared first on Arabian Post.

By Nantoo Banerjee

US President Donald Trump may have problems with Russia, Venezuela and a host of other states and has every right to decide on the US trade and diplomatic policies to deal with those countries. But he has no right to thrust upon other free nations his likes, dislikes and prejudices. Unfortunately, he is doing exactly that. Trump’s administration has undermined the World Trade Organization (WTO), the body established to promote free trade and arbitrate disputes. The US has blocked appointments to the WTO’s Appellate Body, effectively paralyzing its ability to issue binding rulings on trade disputes since late 2019. This has forced other nations to create alternative, interim arbitration arrangements. The US president’s international trade policies, characterised by reckless tariffs, forcing countries to boycott trade with its adversaries in a total disregard for the rules-based global trading system, have already created significant global trade disruption and uncertainty. They are becoming a major threat to the stability and predictability of the global economy.

Trump’s diplomatic and trade policies against oil-rich Venezuela to ramp up pressure on President Nicolás Maduro to resign by holding a naval blockade of all sanctioned oil tankers entering and leaving Venezuela have put several countries and its leading trade partners such as China, Brazil, Turkey, Colombia and India in a fix. Venezuela’s trade is mainly driven by oil exports to Asia and Europe and imports of food, technology and machinery. US crude futures climbed over one percent to $55.96 a barrel in Asian trading after Trump’s announcement of naval blockade. Oil prices settled at $55.27 a barrel, last week, the lowest close since February 2021. India’s Reliance Industries (RIL), a major buyer of Venezuelan crude, is believed to have stopped oil imports from that country. Lately, RIL also stopped importing Russian crude oil into its export-focused SEZ refinery in Jamnagar from November 20, to comply with EU sanctions on products made from Russian oil, shifting to non-Russian crudes for its global export market ahead of the January 2026 deadline.

The US president shows a strong preference for bilateral trade agreements over the multilateral system, replacing a predictable, rules-based order with a power-based system where larger economies can exert more pressure. This approach makes the US a less reliable partner in the eyes of many of its allies. The US policy is causing global trade uncertainty as the country is constantly shifting trade policies and using the threat of new tariffs to create market instability making long-term planning difficult for businesses. International trade experts have warned that such a policy could lead to a fragmentation of the global economy into competing trade blocs, potentially resulting in economic chaos reminiscent of the 1930s. The new US approach, under President Trump fundamentally challenges and disrupts the post-WWII global trading system.

The latest US policy has made India’s planned oil imports from Venezuela for 2025-26 totally uncertain and volatile, shifting from high volumes of over 250,000 barrels per day during earlier this year to significant reductions due to new US tariffs (25% on nations buying Venezuelan oil) imposed in March 2025, causing major Indian refiner Reliance to halt purchases. India, the economy of which is nearly 90 percent dependent on imported oil, has been continuously seeking diversified energy sources like Iran and Venezuela to offset the Western embargo on Russian oil trade. This is making specific future volumes hard to predict amid complex geopolitical factors. India’s 2026 oil import plans from Iran aren’t finalized as they hinge on geopolitical shifts, particularly US sanctions. India has told the US that it needs Iranian (and Venezuelan) oil if it significantly cuts Russian imports to avoid price spikes.

India is currently importing a lot of oil from the US though Iran offers favourable discounts and credit terms which India seeks to leverage. India wants cheap oil from any source, aiming for energy security, but relies on US approval for sanctioned suppliers, making 2026 uncertain. India is looking for affordable oil, potentially balancing US, Russian, and Iranian supplies to ensure stability. India’s crude oil imports from the US increased significantly this year, reaching record highs around October with about 568,000-575,000 barrels per day (bpd), reflecting India’s strategy to reduce reliance on traditional suppliers and align with US energy initiatives. In 2026, India’s oil import plan from the US focuses largely on liquified petroleum gas (LPG). The country’s public sector oil refiners have agreed to import around 2.2 million tonnes of LPG in the coming year. It covers around 10 percent of India’s total LPG needs in the first ever term deal with the US.

Trump is still unhappy. He wants more. The Trump administration is applying significant pressure on its allies as well as adversaries to buy more from the US. The trade and tariff disruptions of the second Donald Trump administration have caused trade partners around the world to reconsider their economic policies and supply chains. Fuelled by uncertainty over global growth, capital market volatility threatens to chill inward investment and strain liquidity. The energy sector, a critical anchor for Gulf economies as well as large consumers like India and China, faces layered risks. US shale oil competitiveness could pressure Organization for Petroleum Exporting Countries (OPEC+) production coordination. Further, any shift in global trade routes away from Gulf maritime chokepoints could impact regional transit revenues.

Aiming to reduce trade deficits and boost domestic industry through measures such as universal tariffs, reciprocal duties, and restrictions on key imports, leading to retaliations and complex global trade negotiations, President Trump plans to sizeable ramp up the US economy using tariffs and economic pressure to force countries like China, India, Canada, and Mexico to align with its trade policies and objectives. It has firmly stood against Venezuela’s bid to deepen economic ties with India at a time when the South American country has expressed a strong desire to enhance economic cooperation with India, aiming to broaden the relationship beyond the traditional oil trade. The US is using trade and tariff coercion to push its economic agenda. Consequently, fast growing economies like India are opting for bilateral trade deals to deal with the situation. (IPA Service)

The article Trump Has Become A Threat To Free Trade appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Trump Has Become A Threat To Free Trade appeared first on Arabian Post.

By Nantoo Banerjee

It is difficult to explain why the government took nearly 17 years to decide on launching a bill in Parliament to allow private participation in India’s nuclear power generation programme. The proposed Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill to amend the civil liability law to shield plant operators and cap nuclear equipment suppliers’ liability along with redesigning operator insurance to Rs. 1,500 crore per incident under Indian Nuclear Insurance Pool finally comes several years after the landmark 2008 Indo-US Civil Nuclear Deal.

The bill proposes up to 49 percent foreign direct investment (FDI) and creation of a unified legal framework for atomic energy, including a specialized nuclear tribunal. The government must explain the reason for the delay in promulgating such an act to facilitate private entry in the country’s slow-growth nuclear energy programme. In the last 17 years, numerous nuclear power reactors have been connected to the grid globally. China recorded the fastest rate of nuclear power growth since 2008.

The existing Atomic Energy Act bars private enterprises and state governments from operating nuclear power plants. The central public sector Nuclear Power Corporation of India is the country’s sole generator of atomic power. It runs 24 commercial reactors. Over the last two decades, several units have been connected. They include Kaiga 4, Rajasthan 5 & 6, Kudankulam 1 & 2, and Kakrapar 3 & 4. The contribution of nuclear power to the country’s overall electricity generation is only around 3 percent. According to an official statement, the present installed capacity of nuclear power is 8.78 GW (excluding RAPS-1, 100 MW). Now, indigenous PHWR technology has matured for larger size reactors of 700 MW.

With the deployment of indigenous 700 MW reactors and 1000 MW reactors with international cooperation, the present capacity will increase to 22.38 GW (excluding RAPS-1, 100 MW) by 2031-32 on progressive completion of ongoing projects. Further, the Government has also announced the Nuclear Energy Mission to reach 100 GW by 2047. Under the existing policy, FDI in atomic energy is prohibited. China leads the world in new reactor commissioning, with numerous units brought online since 2008, including at sites like Hongyanhe, Ningde, Fuqing, Tianwan, Yangjiang, Sanmen, Haiyang, Taishan, and Fangchenggang. India wasted nearly two decades to create a right legal framework to strongly expand its nuclear power generation.

During Dr. Manmohan Singh’s premiership, the Indo-US Civil Nuclear Deal seemingly ended India’s nuclear isolation and allowed the country to access civilian nuclear technology and fuel. The agreement, finalized after complex negotiations with the US, enabled India to pursue its energy demands through international cooperation while maintaining its strategic nuclear deterrent. It was seen as a crowning achievement of his time in office. The deal involved a complex separation plan for India’s nuclear facilities, where civilian power plants were brought under IAEA (International Atomic Energy Agency) safeguards, while the country’s nuclear weapons programme remained outside of these safeguards. The deal ended decades of international isolation and sanctions against India’s nuclear programme. It fundamentally changed India’s relationship with the US, opening avenues for strategic cooperation in areas beyond nuclear energy, including defence and high-technology trade.

However, the Indo-US Civil Nuclear Deal failed to deliver on its commercial promises largely due to significant legal, economic, and regulatory barriers. While the deal succeeded in ending India’s nuclear isolation and transforming the strategic partnership between the two nations, no US-built nuclear power plants have been constructed in India to date. Although the agreement led to India being recognized as a responsible nuclear weapon state and facilitated its engagement with international non-proliferation regimes, it failed to deliver the desired objectives for several reasons, including conflicts over India’s nuclear liability law which deterred foreign suppliers and bankruptcy of Westinghouse, a key partner. India’s Civil Liability for Nuclear Damage Act, 2010, acted as the most significant barrier, as it makes equipment suppliers, in addition to the operator, liable for damages in the event of a nuclear accident. It diverged from the international norm, where liability rests solely with the operator. Foreign firms, including General Electric and Westinghouse, were unwilling to invest in India with the risk of potentially unlimited financial liability.

In the process, India remained a laggard in pollution-free nuclear power generation while major atomic power producing countries went on rapidly increasing their nuclear energy capacities. The global nuclear power generation is projected to hit a record high in 2025, driven by China, Japan’s restarts, and France’s maintenance recovery, adding to the clean energy mix alongside renewables and gas, as countries seek low-carbon energy solutions. The World Nuclear Association noted that generation reached a new peak in 2024, with expectations for continued growth into 2025 and 2026. Nuclear power is seen as a crucial, reliable, 24/7 partner to renewables for decarbonization, powering low-carbon transitions. Global investment in atomic power has grown substantially, with new reactors coming online, contributing to a global fleet of nearly 420 reactors. Nuclear provides nearly 16 percent of global electricity, second only to hydropower for low-emission energy. This growth supports rising electricity demand from electric vehicles and heat pumps.

The top ten nuclear power-producing countries by generation in 2025 are: the US, China, France, Russia, South Korea, Japan, Canada, Ukraine, the United Kingdom, and Spain. Five of them – the US, France, China, Russia and South Korea — account for more than two-thirds of the world’s total nuclear electricity generation capacity. Globally, 416 nuclear power reactors are operating in 31 countries, with a total installed capacity of 376 gigawatts (GW). The US leads in both total capacity and generation, followed by China and France, according to recent World Population Review and the US Energy Information Administration (EIA) data. This month, the US government plans to buy and own as many as 10 new, large nuclear reactors that could be paid for using Japan’s $550 billion funding pledge, part of a push to meet surging demand for electricity.

Hopefully, SHANTI will help India peacefully raise its nuclear power capacity substantially in the coming years. As of 2024, India generated approximately 49.9 TWh of nuclear electricity. Currently, it operates 23 reactors across 7 nuclear power plants. India plans to increase its nuclear capacity by 70 percent by 2030 with the addition of 7 new reactors. The country has ambitious plans to become a major nuclear power generator by 2040 and beyond, aiming for 100 GW capacity by 2047, driven by energy security, climate goals (net-zero by 2070), and reducing fossil fuel reliance, with significant investment, indigenous tech focus, and public-private partnerships paving the way, despite past performance challenges. However, to execute the ambitious plan the union government and private nuclear power plant promoters will require full cooperation of states. Land is primarily a state subject in India and so is the law and order issue. Promoters of new private sector nuclear power plants will require full support and assistance of state governments to set up and operate their units without any trouble. (IPA Service)

The article ‘SHANTI’ Act Alone May Not Fully Protect Nuclear Plants Against Liabilities appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article ‘SHANTI’ Act Alone May Not Fully Protect Nuclear Plants Against Liabilities appeared first on Arabian Post.

By Nantoo Banerjee

India’s domestic civil aviation market, the world’s third largest after the United States and China, nearly collapsed last week as its major private airline, IndiGo, boasting nearly 70 percent of traffic share, suddenly cancelled hundreds of flights on the ground of pilot shortages after it failed to adapt to new flight crew rostering rules, leaving thousands of passengers stranded in the airports across the country. If the airline is to be trusted, its operations will return to full normalcy only by the second week of next month. The airline has sought temporary relief on the new rules that call for more rest hours and restricted night-duty for pilots. Clearly, IndiGo’s action was unacceptable. The government must relax cabotage rules to allow chosen foreign airlines to undertake domestic operations in India without delay. Cabotage rules restrict domestic transport within a country to its own flagged carriers. This is the country’s peak domestic flying season for both local fliers and foreign tourists coming to India.

It is time that the government should relax cabotage rules to allow chosen foreign airlines to undertake domestic operations in India without delay. Also, the government must ensure that no domestic airline exceeds 30 percent passenger share of the market. According to reports, IndiGo has been manipulating the market and the government, the civil aviation regulator DGCA, for years to create a near operational monopoly situation through various questionable means. It allegedly constrained domestic rivals over the years by leveraging its so-called ultra-low-cost model, single aircraft type from the Airbus a320 family, and placement of massive aircraft acquisition orders, squeezing its competitors financially and operationally and forcing rivals like SpiceJet and Jet Airways to submission. It flexed its financial muscle to outlast weaker players, creating near-monopoly situations in high-traffic markets. IndiGo went to invest heavily in new aircraft (like a 500-plane Airbus order in 2023) and absorb shocks, while rivals struggled with debt and funding. It dominated the skies with scale, efficiency, and deep pockets, effectively limiting its rivals’ ability to acquire new aircraft and grow, creating an environment where it became the dominant, almost monopolistic, player in India’s domestic aviation, all under the government’s nose.

Surprisingly, the DGCA helplessly watched and continuously bent before IndiGo’s pressure tactics. It would appear that the civil aviation authority had been playing in the hands of IndiGo, yielding to pressure from the dominant airline by granting temporary exemptions to new, stricter pilot duty/rest rules (FDTL) after IndiGo’s widespread flight cancellations caused passenger chaos, leading to accusations of commercial pressure overriding safety. The DGCA had framed the rules for public good. Now, its reverse action undermines the very safety norms for a major carrier. Effective from November, the new FDTL rules aimed to reduce pilot fatigue, which IndiGo violated. The airline failed to comply with the rule citing planning gaps, leading to over 1,000 flight cancellations and significant passenger disruption, last week. The DGCA readily granted IndiGo temporary exemptions (until February 2026) from certain night duty and weekly rest rules ignoring the passenger safety aspect that was behind framing such rules. Other domestic airlines are following the DGCA rules.

The Airline Pilots’ Association of India (ALPA), a major aviation safety body and welfare association for Indian pilots, representing them globally through IFALPA, focused on safety, pilot welfare, and regulatory engagement, raised safety concerns with the DGCA over the exemption of the duty roster rules and accused the DGCA of caving in to IndiGo’s monopoly and compromising passenger safety for commercial convenience. The DGCA exemption now allows IndiGo to ignore the night-duty rule until February 10 while other Indian domestic airlines have been following the rule and operating their flights normally. The ALPA accused IndiGo of engineering the current crisis. The ALPA said the widespread flight disruptions stemmed from IndiGo’s failure to engage in proactive resource planning, despite having a two-year window to prepare for the full implementation of the revised Flight Duty Time Limitation (FDTL) rules.

The pilots’ body alleged that the situation pointed to an “artificial pilot-shortage narrative” created by the airline’s “lean manpower strategy” to force the DGCA to grant exemptions from the stricter new norms. The Pilots’ body has strongly objected to the DGCA granting IndiGo temporary exemptions, calling the decision “selective, unsafe,” and a “dangerous precedent” that compromises passenger and crew safety. It claimed that the airline expanded its winter schedule while fully aware of the upcoming FDTL norms and that the current chaos is an “immature pressure tactic” to secure commercial benefits by bypassing safety regulations. The ALPA appears to be absolutely right. The DGCA and the government have clearly failed to regulate and they are equally responsible for the current chaos during the peak season of the business. Foreign tourists travelling through India are totally flabbergasted. IndiGo flight cancellations caught those, who are already in India, totally wrong footed. IndiGo’s indignant action has come at a time when India expects a strong tourism growth, potentially exceeding 10-10.5 million visitors in 2025, driven by the US, UK, and growing Asian interest.

If anything is to be learnt from IndiGo’s latest action taking the country’s air travellers for a ride, it is that the government should immediately step in to break IndiGo’s near monopoly status in the domestic civil aviation sector. The government must frame a law that will restrict the market share of a domestic airline to 30 percent. IndiGo’s overwhelming local market share of around 70 percent by operating around 2,000 flights daily across some 100 domestic destinations could even pose a potential security risk for the country in times of war. For now, the airline deserves exemplary punishment from the government for its unacceptable business behaviour. The situation also gives an opportunity to the government to prove that it is not hand in gloves with private operators.

Historically, the civil aviation department is perceived as one of the government’s most corrupt wings. In his book “An Outsider Everywhere – Revelations by an Insider” (Konark Publishers), former civil aviation secretary M K Kaw detailed how in 1997, then civil aviation minister C.M. Ibrahim acted under pressure from Jet Airways to thwart the Tata group’s bid to start an airline in India in association with Singapore Airlines. More recently, India’s Central Bureau of Investigation (CBI) closed a corruption case against former Civil Aviation Minister Praful Patel who is now a BJP ally. (IPA Service)

The article India Must Clip IndiGo’s Wings To Protect Fast-Growing Domestic Aviation Market appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article India Must Clip IndiGo’s Wings To Protect Fast-Growing Domestic Aviation Market appeared first on Arabian Post.

By Nantoo Banerjee

It is encouraging to note that the government has decided to invest large sums of money in support of rare earth magnet manufacturing and substantially improve the country’s rare earth-based metals production to escape China’s global chokehold in this strategic sector. Presently, there are a few small Indian companies engaged in manufacturing rare earth magnets. The industry needs a big push to feed the new generation of industries – from electric vehicles to fighter aircraft engines, wind turbines, and laptops to mention a few. Lately, it has come into a big focus as the world is moving towards electric vehicles. Rare earth magnet is a crucial component of electric vehicles (EVs). Fortunately, India has large rare earth deposits. Globally, it ranks third after China and Brazil.

Last week, the union cabinet’s clearance of a Rs 7,280-crore rare earth permanent magnet scheme to cut import dependence on China came at a time when China — by far the world’s largest owner of rare earth deposits, component manufacturer and exporter — used the magnet to make US President Donald Trump swiftly swallow his US-China trade tariff tantrums to strike a new bilateral trade deal. President Trump even offered to visit China to hold a summit meeting with his Chinese counterpart, Xi Jinping.

Trump plans to visit Beijing in April and invited Chinese President Xi Jinping for a state visit later next year, following a phone call between the two leaders. The US hi-tech industry is heavily dependent on China for rare earth magnets due to China’s dominance in the complex processing and refining of these materials. The reliance on China strongly impacts various sectors of the US industry, from consumer electronics and electric vehicles to defence systems such as fighter jets and missiles, creating vulnerabilities for the US supply chain through significant investment and production efforts.

The US is making efforts to develop a domestic rare earth supply chain through significant investment and production initiatives although the country is placed lowly in terms of global rare earth deposits. China controls a vast majority of around 90 percent of the world’s rare earth element refining capacity, which is a complex and crucial step in making the elements usable for manufacturing. Even rare earth materials mined in the US are often sent to China for processing. This dependence makes US industries vulnerable to potential supply disruptions, as seen in the past when China implemented export restrictions during trade tensions.

India, aspiring itself to become a global player in manufacturing new-age consumer electronics products, electric vehicles and defence systems, has finally undertaken a bold scheme to support the production of sintered rare earth permanent magnets with an expected installed capacity of 6,000 tonnes per annum. Under the model approved, five beneficiaries will be selected through a global competitive bidding process with each allotted a production capacity of up to 1,200 tonnes per annum. The scheme will run for seven years from the date of the award of contract. It will include two years for the setting up of full-scale manufacturing facilities and five years during which beneficiaries will receive incentives linked to sales.

The demand for rare earth magnets in India is expected to increase sharply in the coming years, driven by the expansion of EV manufacturing, increasing electronics output, defence production, industrial automation and renewable energy generation. For the present, the country uses rare earth magnets to the extent of 4,000 tonnes per year, mostly through imports. Among the companies currently manufacturing rare earth magnets in India are: IREL (India) Limited, Permanent Magnets Limited, Ashvini Magnets Private Limited, Star Trace, Eriez Magnets, Kumar Magnet, Sonal Magnetics, A to Z Magnet Mfg. Co. and Pragati Enterprises. The demand for rare earth magnets is projected to double by 2030. Lately, China has imposed restrictions on exports. Earlier this year, China slapped export licenses for seven types of rare earth elements and derivative products.

Hopefully, the latest government initiative will induce Indian entrepreneurs to use the country’s capability to emerge as a global player in manufacturing and even exporter of rare earth magnets considering the fact that it has a reasonably good deposits of rare earth spread across the country. Key locations include Kerala, Tamil Nadu, Odisha, and Andhra Pradesh. Hard rock deposits are located in Gujarat and Rajasthan. Smaller occurrences have been reported in states such as West Bengal and Jharkhand. The Atomic Minerals Directorate for Exploration and Research is believed to be actively exploring for rare earths in various terrains across the country, including coastal, inland, riverine, and hard rock areas. As of now, India’s proven rare earth reserves are estimated at 6.9 million tonnes, though far behind China’s reserves of 44 million tonnes and second-ranked Brazil’s 21 million tonnes. India had reportedly produced 2,900 tonnes of rare earth in 2024.

Brazil is also planning to gradually exploit its rare earth resources for industrial conversion. The country’s rare earths company, Serra Verde, began the first phase commercial production from its PelaEma deposits in 2024. By the end of next year, the mining firm hopes to produce 5,000 tonnes of rare-earth oxide annually. PelaEma is billed as one of the world’s largest ionic clay deposits. The company will produce four critical magnet rare earth elements: neodymium, praseodymium, terbium and dysprosium. Serra Verde claims that it is the only rare earths operation outside of China to produce all four of those magnet rare earths.

Sitting on the world’s third largest rare earth deposits, it does not make sense for India to spend crores of rupees on import of highly strategic rare earth magnets. In 2024-25, the country imported 53,748 metric tons of rare earth magnets, valued at Rs.1,744 crore, which is an 88 percent increase in quantity from the previous fiscal. This massive surge in imports might have been linked with China’s April 2024 export restrictions on rare earth elements. The development is expected to cause a supply crunch in India in due course. In effect, the country’s push for self-reliance in rare earth magnet manufacturing is a significant strategic move, aimed at securing a critical component for high-tech industries and reducing dependence on predominantly China-centred global supply chains. Right now, almost all permanent magnets used in the country are imported. The latest rare earth magnet manufacturing programme will hopefully make the country totally self-reliant in this vital area. (IPA Service)

The article India’s Push For Self-Reliance In Rare Earth Magnet Making Is Laudable appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article India’s Push For Self-Reliance In Rare Earth Magnet Making Is Laudable appeared first on Arabian Post.

By Nantoo Banerjee

The government may disagree but India’s persistent trade deficit is ruining the country’s economy despite its impressive growth. Last month, import-happy India’s trade deficit reached a record high level of US$41 billion as exports witnessed the sharpest monthly decline over a year. Unfortunately, a big surge in gold imports during October by the country, having the world’s largest number of people living in acute poverty (234 million individuals) as recorded by the 2024 Global Multidimensional Poverty Index (MPI), is a reason behind the massive trade deficit.

The continuous trade deficit is pushing the country toward more external borrowings, diminishing the value of Indian Rupee (INR). The country’s external debt had gone up to nearly $718 billion at the end of December 2024, which was an increase of $69.2 billion from December 2023, pushing up the external debt to GDP ratio to 19.1 percent. By the end of June, this year, the external debt surged to $747.2 billion.

The question is: why is the country not drastically compressing import of non-essentials such as gold, silver, precious metals, consumer electronics and gadgets, products like air-conditioners, headphones, footwear, plastic-based items, furniture and home décor, and food products like apples, almonds, and cashew nuts? In fact, the country is witnessing a continuous rise in non-essential goods imports, driven by consumer demand from the rich and upper middle-class, and also by industry, which are contributing to a widening trade deficit.

Although the government is believed to be lately monitoring some of these imports, including electronics, and certain consumer durables, the steps taken to curb their import growth through measures like higher import duties, implementing Quality Control Orders (QCOs), and imposing restrictions on certain goods like laptops and phones, are simply not restrictive enough. A massive forex saving out of the import of oil from Russia at a discounted rate had little impact on the overall trade deficit because of the growing imports of non-essential goods.

Surprisingly, gold has been left out of the recent selective increase in import duties to the delight of Mumbai’s Zaveri Bazar-based India Bullion and Jewellers Association. The association operates nationwide and plays a key role in determining daily gold rates in the country. A significant portion of India’s historical and current bullion trade has strong ties to the Gujarati community, and major entities like the Gujarat Bullion Refinery in Ahmedabad. India’s gold import has a strong Swiss connection. A leading supplier of gold to India, Switzerland accounts for a significant portion of India’s total gold imports.

The recently ratified India-EFTA (European Free Trade Association) Trade and Economic Partnership Agreement is expected to further boost trade and investment between India and Switzerland. Ironically, India’s export to Switzerland has always been a bare minimum. In 2024-25, India’s total exports to Switzerland were valued at only around $1.51 billion while imports stood at $22.4 billion, resulting in a significant trade deficit for India. The vast majority of India’s imports from Switzerland consists of gold. The trade volume with Switzerland grew at an annual compound rate of 4.62 percent between 2020-21 and 2024-25.

India’s persistently large trade deficits and substantially growing external debt have been putting significant downward pressure on INR’s value as demand for foreign currency such as the US dollar has been constantly going up to pay for higher and higher imports and also debt servicing. Historically, the country has been heavily relying on imports of crude oil, gold, and electronics. Large trade deficits are impacting the balance of payments (BoP). A persistent trade deficit leads to a wider current account deficit (CAD), which is often perceived as a sign of economic instability by foreign investors, further pressuring the domestic currency.

This explains why foreign investors are not showing enough enthusiasm to invest in India despite its large and expanding market and impressive economic growth. INR has been constantly under pressure. In 2014, when the NDA government came to power, the INR-US$ exchange rate was: Rs.60.95 for US$1. Last Friday, it surpassed Rs. 90 for a US$. The month is yet to end. The INR weakened significantly in 2025, not due to poor economic fundamentals (which remain strong), but primarily because of a sharp decline in capital inflows, including lacklustre FDI and $16 billion in FPI outflows.

The constant Rupee depreciation has created a vicious cycle, making imports more expensive in terms of INR and servicing foreign debts becomes more expensive with eroding exchange value of the domestic currency. The amount in INR required to service and repay foreign currency-denominated debt increases significantly. This strains the finances of the government and Indian business corporations with foreign loans. Exchange rate fluctuations directly impact the cost of debt servicing.

A sudden or sharp depreciation can lead to an unexpected and substantial increase in the debt burden. Such a situation is bound to negatively impact investors’ confidence. Rising levels of foreign debt, especially short-term debt, can signal potential vulnerability to global economic shocks or debt crises. This can deter foreign portfolio investors (FPIs) and foreign direct investors (FDI). In fact, the situation is leading to capital outflows further weakening INR.

It is time that the government takes a strong position to link the country’s import of non-essentials with its export earnings. India must provide a strong policy boost over a period of time to improve its export manufacturing and global competitiveness. The character of India’s exports also needs a change in keeping with the world market trend. India has faced a persistent trade deficit for many years, largely driven by its reliance on imports for energy (especially crude oil), gold, and electronics.

The country does not import oil from China. Yet, India has a very large and growing trade deficit with China, which reached a record $99 billion in FY25, due to high imports of electronics and industrial inputs. China does not encourage imports from India. India’s oil imports accounted for only 29.24 percent of its total merchandise imports in FY 2024-25. It’s a pity that the government is failing to control the import of non-essential goods despite the increasing trade deficit burden and its impact on the country’s foreign borrowing and inward foreign investment. (IPA Service)

The article Behind India’s Rising Foreign Debt Is Growing Trade Deficit appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Behind India’s Rising Foreign Debt Is Growing Trade Deficit appeared first on Arabian Post.

By Nantoo Banerjee

It is difficult to grasp the fact that even 78 years after its independence, India, the world’s most populous country, continues to be heavily dependent on imported fertilizer to produce crops to feed its 1.46 billion-plus population. The prospect of a sudden fertiliser price surge ahead of its most important Rabi (winter) crop season, following suspension of exports by China since mid-October, is bound to impact especially the production and price of wheat along with other crops such as gram, peas, mustard and barley. India is the world’s second largest producer of wheat, after China. Rabi crops are sown in autumn (October-November) and harvested in spring (March-April). India continues to be the world’s largest fertiliser importer while China has been the world’s second biggest exporter of fertiliser after Russia.

China has suspended the export of fertiliser until further notice. There will be no supplies from China of speciality fertilisers such as TMAP (Technical Monoammonium Phosphate) and urea-solution products like AdBlue as well as conventional soil nutrients, including DAP (Diammonium Phosphate) and urea. India is said to be importing almost 95 percent of speciality fertilisers from China. The country consumes annually some 2,50,000 tonnes of speciality fertilisers, of which nearly 65 percent are used during the Rabi season. Alternative supply sources include South Africa, Chile and Croatia.

So deficient is India in chemical fertiliser production that the country’s import of even the most commonly used urea has more than doubled to 58.62 lakh tonnes during the first seven months of the current financial year. During the same period, last year, India imported 24.76 lakh tonnes. According to the Ministry of Chemicals and Fertilisers, imports of some 17.5 lakh tonnes are lined up for this month and December. To bridge the shortage of fertilisers, the government is said to be making significant efforts to boost imports in the face of China’s export suspension not only to meet the growing domestic demand but also to build a buffer stock for the immediate future. Based on the recent export value data, the major import sources of fertilisers are Russia, Canada, the US, Morocco, Saudi Arabia and the Netherlands.

India imports several varieties of fertilizers such as urea, di-ammonium phosphate (DAP), and muriate of potash (MOP), along with various NPK complex fertilizers to maintain its robust agricultural production to feed its people. The government’s primary free foodgrain supply plan provides free foodgrains to approximately 81.35 crore beneficiaries covered under the National Food Security Act (NFSA). The scheme has been extended until December 2028.

The food grains (rice, wheat, or coarse grains) are provided completely free of cost. It is fully funded by the central government, with an estimated financial outlay of around Rs. 11.80 lakh crore over the period. This calls for a continuous growth of agricultural production. Thanks to the country’s massive import of fertilisers year after year, the agricultural production has been experiencing robust growth. The farm production showed a record 5.4 percent growth in FY 2025. For 2025-26, the growth target is 3.5 percent. The large-scale fertiliser imports and government’s cash support to farmers through programmes like the Minimum Support Price (MSP) have helped boost the food production.

However, it is hardly a likable situation for India to make its agricultural production highly dependent on imported fertiliser. The country must raise the domestic production of chemical fertilisers. While the existing fertiliser producers need to be induced to vastly expand their respective capacities, new units should be given attractive incentives to come up fast. Strategically, it would be wrong to make India’s agricultural production, which is linked with food security, substantially dependent on imported fertilisers. This is particularly so when the key import sources are limited. These sources include Russia, Saudi Arabia, Oman, Morocco, and China, depending on the requirement of specific types of fertilizer.

India has a number of fertiliser companies such as Coromandel International, Chambal Fertilisers, National Fertilisers, Rashtriya Chemicals and Fertilisers, Gujarat State Fertilisers and Chemicals, Fertilisers and Chemicals Travancore Limited, Paradeep Phosphates. In addition, there are two large cooperatives, namely Indian Farmers Fertiliser Cooperative Limited (IFFCO) and Krishak Bharati Cooperative (KRIBHCO). Marked by strong government support, India’s fertilizer producers continue to be through a challenging but transformative period. Despite facing a supply crunch and volatile global prices since the middle of the current year, there are positive developments including long-term supply agreements. Supply issues occurred in mid-2025, with declining domestic production and imports leading to sharp stock depletion of key fertilizers like urea and DAP.

A global supply stranglehold, particularly for imported DAP, resulted in significant price spurt in mid-2025, stretching producer margins and increasing official subsidy costs. The government is working to bridge the gap between domestic production and demand through increased imports, but also with a strategic push to reduce dependence on urea and promote balanced nutrient use. The domestic industry received significant budgetary support, with a notable increase in the fertilizer subsidy allocation for 2024-25. The cabinet has also approved rates for the Rabi 2025-26 season to ensure affordability. The country has signed long-term agreements, such as a deal with Saudi Arabia’s Maaden, to secure a stable supply of DAP for the next five years. The domestic fertiliser industry is strategically shifting towards balanced nutrient use. The latter may lead to a slight dip in overall urea production but a healthier, more sustainable agricultural ecosystem in the long run.

A predominantly agricultural country with a large portion of its population depending on agriculture for their livelihood, and the sector’s significant role in its economy, the country can’t afford to leave the fate of its agriculture on imported fertilisers. In fact, agriculture is a strategic sector. Around 42 percent of India’s workforce is employed in agriculture, and it contributes approximately 17-18 percent to the country’s GDP. The country must end its overwhelming dependence on fertiliser imports by boosting domestic production, judiciously using fertilisers, and innovating through initiatives like indigenous technology development. The country must make strong efforts to revive old fertiliser plants and build new ones, developing alternatives like nano urea, and fostering a shift toward more balanced, organic farming practices. (IPA Service)

The article Fertiliser Import Price Surge May Hit India’s Rabi Crop Output appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Fertiliser Import Price Surge May Hit India’s Rabi Crop Output appeared first on Arabian Post.

By Nantoo Banerjee

The majority government-owned Life Insurance Corporation of India’s detailed rebuttal to The Washington Post report claiming that the government directed LIC to invest $3.9 billion in the Adani group seems to lack the punch. A comparison of the lately sprouted Adani Group with some of India’s age-old business conglomerates such as the Tatas, Aditya Birla Enterprises,  ITC, HDFC Bank and SBI in terms of LIC’s wider corporate investments was probably avoidable, if not totally unnecessary.

All major corporate and institutional investment decisions are based on policies okayed by the board, after due diligence. No one questions the LIC board’s standard desk work in defence of its latest investment decision in the Adani group. The issue is different. Could the investment decision have been influenced by the Government of India? It is unlikely that The Washington Post, the third largest US newspaper after The New York Times and The Wall Street Journal, had put up a totally fake story on the Adani-government connect.

The Washington Post report was specific. It alleged that government officials “drafted and pushed through a proposal to direct about $3.9 billion of LIC funds into Adani Group companies, in coordination with LIC and NITI Aayog – at a time when the Adani Group was dealing with rising debt and reduced access to major western banks. According to reports, as of mid-2025, the Adani Group’s total debt was around Rs.2.6 lakh crore, a 20 percent rise in the 12 months ended June, last. A significant portion of this debt, roughly half, comes from domestic banks and financial institutions, mostly under the government control.

The Adani group’s debt came only second to Reliance Industries (RIL), which reported gross debt of Rs. 3,47,530 crore. RIL’s net debt was Rs.1,17,083 crore. The century old Tata group’s total debt as of the current year could be much less, varying by company and reporting period. For instance, Tata Motors reported a total debt of Rs.62,499 crore as of March 2025, while Tata Consultancy Services (TCS) had a total debt of Rs.10,900 crore as of September 30, this year. Tata Steel reported a net debt of Rs.84,835 crore as of June 30, last.

Notably, the Adani Group has never defaulted on its debt servicing obligations. That could attract the attention of term investors, including LIC. Also, there seems to be nothing wrong if the government-controlled LIC (under the union finance ministry) management consults its principal stakeholders before making a big corporate investment. Key considerations before financial investors in an enterprise include risk tolerance, desired return, income needs and investment horizon. A combination of both equity and debt is often used to balance risk and return.

Incidentally, not all the Adani Group companies’ credit ratings, which vary by rating agencies, appear to be very attractive. The Adani Ports and Special Economic Zone (APSEZ) debt enjoys a AAA credit rating from several domestic credit rating agencies although its international rating from agencies like S&P and Moody’s is lower, seen as stable or improving outlooks. Ratings can be complex, and these are often influenced by the specific debt instrument, the financial performance of the subsidiary, and the strength of the parent company. Overall, a stable outlook is being reaffirmed by major agencies like S&P, Moody’s, and Fitch for several key Adani entities.

However, it is the meteoric rise of the Adani group since the Narendra Modi government came to power at the Centre in May, 2014, that seems to attract the attention of the business as well as political circles across the country as also in some parts of the world. Interestingly, Adani’s acquisitions of government projects are numerous and span various sectors, including energy, airports, and ports.

Examples include winning bids for a 2,400 MW power plant in Bihar, acquiring stakes in airports through a government privatization initiative, and gaining a lease on land for a solar park in Rajasthan. Some acquisitions have been controversial, such as allegations of favourable land deals in Bihar and a single-bidder scenario for a coal block, while others were achieved through government tenders and policy changes, such as the port concession rules that allowed for equity divestment.

According to reports, Adani Power received a letter of intent for a 2,400 MW thermal power plant in Bihar, which includes a 1,050-acre land lease from the Bihar government for a nominal cost. The project has been criticized by the Bihar Congress for being a handout to the company. The Adani Group got ownership of the Gondbahera-Ujjaini coal block in 2022 as a sole bidder in the government’s auction. The Rajasthan government leased 1,600 hectares of land to Adani Group for a 1,500 MW solar park.

The group acquired stakes in several airports, including Mumbai International Airport, during a government privatization initiative. A Shiv Sena-Congress-NCP government in Maharashtra handed over the Dighi port to Adani to develop a new gateway. The group was given a 49 percent stake in the Maharashtra Border Check Post Network. The Jharkhand government awarded Adani Group an SEZ (Special Economic Zone) covering over 425 hectares. Adani Power won a power supply contract from the Punjab government.

The group’s expansion since 2014 has been enormous. In 2013, the Adani Group reportedly had a turnover of only Rs.47,000 crore. The Group’s consolidated revenue for FY2025 was Rs.2,71,664 crore. In September 2013, the combined market capitalization of its three listed entities (Adani Enterprises, Adani Power, and Adani Port and Special Economic Zone) was Rs.51,573 crore. By May 2014, due to a stock rally that began in September 2013, the group had become the ninth most-valued corporate house in India.

The group’s size and rapid expansion drew comparisons to the early growth phase of the Reliance group under Dhirubhai Ambani, which also attracted a lot of critical attention at home and abroad. Incidentally, the book “The Polyester Prince: The Rise of Dhirubhai Ambani” by Hamish McDonald is effectively banned in India due to legal threats from the Ambani family who sought an injunction based on “anticipatory defamation”. The book’s Indian publisher, Harper Collins, withdrew the book before its official release in 1997, leading to it being unavailable in Indian bookshops.

Yet, the fact remains that an industry-government relationship, pleasant or hostile, is not unique to India. The Tata Iron and Steel Company, now a global entity and the world’s eighth largest steel producer, was not allowed to expand by the government in the 1970s. It also faced a nationalisation threat from the government. In fact, the industry-government link is a global phenomenon. Throughout history and around the world, various forms of interaction, cooperation, and conflict have characterized the relationship between industry and government. The massive government bailout for Vodafone Idea through two major debt-to-equity conversions in 2023 and 2025, giving the Indian government a controlling stake of nearly 49 percent in the company, is designed to prevent the collapse of one of India’s few remaining telecom players and preserve market competition. Few will contest the fact that a possible Adani-government link has proved to be beneficial to the country’s much-needed infrastructure and power sector growth. (IPA Service)

The article Adani Group’s Striking Rise Since 2014 Sparks Global Speculation appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article Adani Group’s Striking Rise Since 2014 Sparks Global Speculation appeared first on Arabian Post.

By Nantoo Banerjee

If global oil giant BP plc’s ‘Energy Outlook 2025’ proves to be true, India will be a global leader in energy consumption, outpacing all other countries by 2050. The country will account for 12 percent of the global demand, up from seven percent from 2023, according to BP’s chief economist Spencer Dale. The total energy consumption at current prices will be close to Rs. 36,000 billion. However, the changing geopolitical situation remains a matter of concern. The sudden punitive action by the United States against Russian oil exporters, last week, is expected to hit India hard. India has been the biggest importer of discounted Russian oil since 2024. The country has to return back to its traditional suppliers in West Asia and the US. The global oil price has already started moving up.

The question is: how well is the country prepared to meet such a massive expenditure, especially considering that India is nearly 90 percent import dependent for oil at present. The situation is extremely tricky. India needs to plan and implement a more vigorous economic growth strategy in the face of its massive energy shortage and growing import dependence. It is important that India must work on a policy that will provide an overall balance in its foreign trade and foreign investment into its economy, and preserve the exchange value of the domestic currency, Rupee. The task is not easy. Hopefully, the government is fully aware of the situation and engaged in preparing a plan of action over the next two decades.

Currently, India is the world’s third largest oil importer and consumer. And, it is the fourth largest LNG (liquified natural gas) importer. LNG is cooled natural gas to a liquid state, reducing its volume by about 600 times, making it easier and safer to transport and store in large quantities. India’s natural gas consumption is projected to more than double by 2050, from the present level of 63 billion cubic meters (bcm) to 153 billion bcm. The country’s oil demand is projected to grow from 5.4 million barrels per day to 9.1 million barrels by 2050. It may be noted that India’s domestic crude oil production during the fiscal 2024-25 was around 26.5 million metric tonnes (MMT), a decline of about 2.5 percent from the previous year. As per available official records, India’s gross domestic natural gas production for the financial year 2023-2024 was only 36.44 billion cubic meters (BCM).

At the same time, the India Brand Equity Foundation (IBEF) projected that India’s oil demand will register a 2x growth to reach 11 million barrels per day by 2045. The demand for diesel is expected to double to 163 MT by 2029-30.  Diesel and gasoline are projected to cover 58 percent of India’s oil demand by 2045. The country’s natural gas consumption is projected to grow by nearly 60 percent by 2030, reaching 297 million standard cubic metres per day (mmscmd), up from 188 mmscmd in FY24. IBEF projects that India’s oil and gas consumption will significantly increase through 2050, driven by strong economic growth and rising urbanisation. India’s oil consumption is forecast to rise from four million barrels per day (MBPD) in FY22 to 7.2 MBPD by 2030 and 9.2 MBPD by 2050. The natural gas consumption is projected to increase at a compound annual growth rate (CAGR) of 12.2 percent.

While China is one of the world’s fastest growing major economies, BP’s chief economist Spencer Dale said India is growing more rapidly. Dale argued that at a conservative five percent annual economic growth between 2023 and 2050, which amounts to double the projected global economic growth, India’s primary energy consumption is going to remain strong. “When we look ahead, India is the fastest-growing energy market in the world…. So when we think about what is driving global energy, India is at the heart of the process,” Dale pointed out. Electricity continues to play an increasingly important role in meeting India’s energy needs.

The two important questions that naturally arise in this context are: (a) will India be able to deliver an average annual economic growth rate of five percent through the next 25 years, and (b) does the country’s growing energy import dependence pose a risk. According to eminent global researchers, a five percent average annual economic growth for India until 2050 is a feasible and moderate projection. Major financial institutions like the World Bank, EY and Greater Pacific Capital predict India could maintain growth rates between five and eight percent over the next few decades, potentially becoming a $30 trillion economy by 2050. Recent reports from EY suggest the Indian economy is expected to grow at 6.7 percent in FY26, driven by strong first-quarter performance and GST reforms, but facing headwinds from global trade. Longer-term projections suggest India could become the world’s second-largest economy by 2038, reaching a GDP of $34.2 trillion in PPP terms by then, supported by its young population, high savings, and structural reforms.

The factors projected in support of India’s strong economic growth in the coming decades include favourable demographics, strong domestic demand, robust services sector, encouraging government policies and reforms, infrastructure development, and digital transformation. India has one of the world’s youngest populations, providing a demographic dividend that is expected to last for decades. In contrast, competitor economies such as China and developed Western nations are experiencing aging populations and shrinking workforces. The country’s expanding digital economy and widespread adoption of digital payments will foster innovation, improve business efficiency, and increase tax compliance.

Yet, going by the current economic situation, there are risks and challenges to continuously achieving high-end economic growth, the biggest of them being the lack of investment in manufacturing. Despite government initiatives attracting private investment into manufacturing, the result is yet to be encouraging. India’s reluctance to fully integrate into global value chains with lower tariff barriers are standing in the way of competitiveness. The job creation has not kept pace with the growing workforce, particularly in the manufacturing sector. Automation and AI may further exacerbate this issue. The persisting high levels of income inequality, with a large portion of the population remaining outside the formal economy, is also a matter of concern. Unless this issue is addressed, it could limit consumption and create social instability. India’s external dependencies for critical items such as oil and natural gas, and rare earths make it vulnerable to global headwinds, including economic slowdowns in major trading partners, geopolitical conflicts, and high oil prices. Unequal access to quality education, skill development, and healthcare, particularly in rural areas, could hinder productivity and undermine the country’s demographic dividend. (IPA Service)

The article India Is At The Heart Of Driving The Global Energy Process appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article India Is At The Heart Of Driving The Global Energy Process appeared first on Arabian Post.

By Nantoo Banerjee

There is nothing to be particularly shocked about Tata Capital stocks declining 2.4 percent below the company’s IPO issue price of Rs. 326 per share a day after its debut in intraday trade on the Bombay Stock Exchange. Tata Capital, a Tata Sons subsidiary, made a flat debut on Dalal Street on Monday, October 13. In fact, eight of the 12 mainboard IPOs that hit the market this month were trading below their issue price. As of this month, numerous companies in the Indian market that went public in 2024 and 2025 are trading well below their initial public offering (IPO) price.

As usual this trend is attributed to market volatility, investor caution, and, in many cases, aggressive IPO pricing. Few can blame ordinary investors if they point fingers at the country’s securities and exchange board (SEBI) for failing in its most important function of protecting investors while promoting the development of the securities market, and regulating its activities.

Between January and September, this year, a total of 56 IPOs raised Rs 75,384 crore as against Rs 64,011 crore raised in the same period of last year. The current year’s major deals include HDB Financial Services (Rs 12,500 crore), Hexaware Technologies (Rs 8,750 crore), and NSDL (Rs 4,010 crore). The IPO market is booming in India. In the last 12 months, new share issues by companies raised nearly Rs, 1.7 lakh crore.

The IPO market is experiencing a remarkable surge, despite a generally struggling broader stock market. This is a matter of concern. Punters are jumping on the bandwagon. The bettors are following the crowd rather than making an independent choice based on personal research or conviction. The sentiment is generally pejorative, suggesting that these followers are driven by opportunism rather than genuine belief. In financial markets, this herd-like behaviour can lead to price bubbles, where the price of a security rises simply because many investors are buying it, attracting even more buyers.

Shares of a number of companies that recently went public are now trading at a big discount, varying from 50 percent as in the case of Gurunanak Agri to Solarworld Energy (10 percent). Others include Glottis (42 percent down from its issue price), BMW Ventures (38 percent down), Chiraharit (38 percent down), Om Freight Forward (28 percent), NSB BPO (21 percent), Mittal Sections (28 percent), Ganesh Consumer (12 percent). The share price of the much-hyped Joro Institute was down 24 percent from its issue price of Rs. 890. At the same time, at least a dozen companies that had their IPOs in 2024 continue to underperform through the current year.

The current market price of the Capital Small Finance Bank’s shares is over 32 percent down from the issue price of Rs.468. Carraro India’s shares are down 49 percent from the company’s IPO price of Rs.704. The shares of Popular Vehicles and Services are now down 58 percent from the company’s IPO price of Rs.295. Bazar Style’s shares are down 42 percent from its IPO price of Rs.389. The Godavari Biorefineries’ stocks are down around 51 percent from the company’s IPO price of Rs.352. The market price of Western Carriers (India) is 45 percent down from its IPO price of Rs.172. Tolins Tyres’ shares are down 42 percent from its IPO price of Rs.226. Other such underperformers in the market include Akme Fintrade India, Ecos India Mobility Hospitality, Saraswati Saree Depot, and Norther ARC Capital. Few will disagree that the stocks of these companies were highly overvalued at the time of making the IPO.

Unfortunately, the underperformance of many early 2025 listings failed to influence investors to become more selective and valuation-conscious. SEBI does not directly control or fix the price of an Initial Public Offering. Maybe, it believes that the market, based on a book-building process, should determine the correct price despite the fact that SEBI had time and again implemented regulations to ensure fair pricing and protect investors from potentially overpriced IPOs. SEBI’s regulations are meant to promote fair IPO pricing through a disclosure-based regime.

Most IPOs in India use the book-building process, where the final share price is determined based on the bids received from institutional and retail investors within a pre-announced price band. Companies are supposed to provide extensive information in their Draft Red Herring Prospectus (DRHP), including business operations, financial health, risk factors, and pricing methodology, allowing investors to make informed decisions. SEBI mandates lock-in periods for promoters, significant shareholders, and anchor investors. This prevents early exits that could cause sharp price drops after listing. As of 2025, a portion of anchor investor shares must be locked in for 90 days. The regulator is also supposed to crack down on inflated IPO subscription figures.

However, many feel that SEBI should more directly control IPO pricing. SEBI’s direct intervention could shield inexperienced retail investors from “faddish” or overly hyped IPOs that list at unsustainable valuations, like the Paytm IPO in 2021. It may be time to also hold merchant bankers accountable for overvaluation as they are heavily involved in such an exercise.  Stricter price controls could put pressure on merchant bankers to be more realistic rather than setting aggressive prices to secure an exit for early investors.

Many discreet investors, who take a long-term approach to investing focussed on sustainable growth and the preservation of wealth across generations, rather than focusing on short-term market fluctuations, feel that Indian stock prices have little link with companies’ financial performance. A company’s financial health is a crucial determinant of its stock price over time. The securities watchdog would do well to be more focussed on enhanced disclosure and investor protection mechanisms instead of a “hands-off” approach to price-setting. (IPA Service)

The article SEBI Fails To Prevent Aggressive IPO Pricing To Protect Investors appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article SEBI Fails To Prevent Aggressive IPO Pricing To Protect Investors appeared first on Arabian Post.

By Nantoo Banerjee

There is little to be excited about the recent inauguration of predominantly mountainous Arunachal Pradesh’s first commercial coal mine at Namchik-Namphuk in the Changlang district jointly by Union Coal & Mines Minister G Kishan Reddy and Arunachal Chief Minister Pema Khandu, marking the state’s first coal mine project. With an officially estimated reserve of only 15 million tonnes existing in Arunachal Pradesh as against India’s total of 389.42 billion tonnes as of April 1, last year, it makes little sense to mine the ‘dirty’ mineral in an ecologically fragile Himalayan region, featuring diverse topography, including snow-capped peaks in the north, hilly terrains, and wide valleys along its rivers, with elevations ranging from snow-covered mountains to the Brahmaputra plains in the south. The so-called statutory and environmental clearances don’t make the project a worthwhile venture. Coal mining in Arunachal may ultimately prospect more losses than gains.

There is no dearth of coal in India. Yet, the fact is that coal is not India’s desirable long-term energy choice although it remains a practical necessity in the near-to-medium term. Projects like the Namchik-Namphuk coal mine give a wrong signal to the nation and the world at a time when India is pursuing ambitious and successful renewable energy initiatives in keeping with the global trend. Arunachal Pradesh does not need coal for power generation. The state is set to become home to India’s first fully indigenous 50-kilowatt geothermal power plant, located in Tawang district. This project is being funded by the Ministry of New and Renewable Energy and is expected to be completed in three years. The state also uses other sources, including small hydro power stations, solar photovoltaic, and biomass power plants. It can ignore the small coal deposit at Changlang for power generation.

The state has a host of other more substantial and lucrative proven mineral deposits such as petroleum and natural gas (also in the Changlang district), limestone, dolomite, graphite, marble, iron ore, quartz, placer gold (in its rivers), lead and zinc, marble, copper, vanadium, and rare earth elements. It is not clear why the central and the state government are so excited about the tiny coal mine project. Chief Minister Prema khandu, who has led the Bharatiya Janata Party to victory in the Arunachal Pradesh Assembly elections multiple times, including a massive win in the 2024 elections where the BJP secured 46 out of 60 seats, would have probably done better by concentrating more on the state’s infrastructure development, creation of food parks, and employment-oriented micro, small and medium enterprises such as horticulture, kiwi, ‘Wakro’ oranges, leveraging indigenous strengths in cane, bamboo, and handloom production and connectivity improvements.

Despite the country’s growing energy demand, coal is not being considered as the most viable energy option in the long run. It may be wrong to ignore the fact that Indian coal is of notoriously low-quality, carrying high ash content and leading to severe air pollution that causes premature deaths and health problems. Burning this “dirty coal” results in high emissions of pollutants like particulate matter, sulphur dioxide, nitrogen oxides, contributing to climate change and environmental degradation. It would be wrong on the part of the country to rely heavily on fossil fuels making India vulnerable to volatile international prices and geopolitical risks. On the contrary, higher domestic renewable energy production will enhance the country’s long-term energy security. It may be noted that India has made remarkable progress in the area of clean energy deployment, ranking among the world’s top 10 countries for installed renewable energy capacity. Key targets include achieving 500 GW of non-fossil fuel capacity by 2030 and net-zero emissions by 2070.

India currently ranks fourth among major countries in terms of installed renewable energy capacity. The world’s top 10 countries by installed renewable energy capacity as of mid-2025 are China, the United States, Brazil, India, Germany, Japan, Canada, Spain, France, and Italy. Notably, China leads them all significantly with 1,827.3 gigawatts, followed by the US with 428.4 gigawatts, Brazil with 213.9 gigawatts, and then India 204.3 gigawatts, according to Statista data from July 2025. Other major achievers in this regard are: Germany 178.7 gigawatts, Japan 132.3 gigawatts, Canada 110.5 gigawatts, Spain 88.5 gigawatts, France 74.3 gigawatts and Italy 72.1 gigawatts. The cost of power generation from solar and wind sources has dropped significantly, making new renewable energy projects increasingly competitive with or even cheaper than new coal-fired power plants.

The country is promoting new technologies, such as green hydrogen, battery energy storage systems, and coal gasification, to support the energy transition and reduce dependence on conventional coal combustion. India is consistently placed as the world’s fourth largest energy consumer after the US, China, and Russia. Recent reports from both the International Energy Agency and Statista recognise India’s position as a leading global energy consumer. However, there is no denying the fact that India’s energy needs are rising sharply and, as of now, coal provides the consistent, reliable “baseload” power that variable renewable sources like solar and wind are yet to provide on a large scale. Also, coal-fired power plants are essential for balancing the grid and compensating for the intermittent nature of renewable energy, ensuring a stable and uninterrupted power supply. The country will require massive investment in new technologies, grid modernization, and transmission infrastructure to move away from coal-fired power. Financial challenges, an unstable regulatory environment, and India’s reliance on imported critical minerals can slow the pace of transition.

Therefore, the country is pursuing a balanced and pragmatic energy strategy. They include scaling-up of solar, wind, and other clean sources; focusing on battery storage and pumped hydro to address the intermittency of renewables; improving coal efficiency by retiring older, inefficient coal plants while using high-efficiency, low-emission technology for necessary new capacity; and enhancing environmental controls through the use of technologies like Flue Gas Desulfurization (FGD) and Carbon Capture, Utilization, and Storage (CCUS) on existing plants to reduce pollution.

Currently, the biggest challenge before the country is the extraction of the mineral from the new-found Deocha-Pachmi-Harinsingha-Dewanganj coal block in West Bengal’s Birbhum district containing approximately 2,170 million tonnes of coal. This is India’s biggest and the world’s second-largest coal block. The mining has been delayed by significant quantities of basalt rock that must be extracted first. Union Coal Minister G Kishan Reddy will do well to work with West Bengal Chief Minister Mamata Banerjee to tap the country’s massive coal reserve in a single block instead of encouraging the mining of very small quantities of coal in the highly eco-sensitive mountainous Himalayan state of Arunachal Pradesh. (IPA Service)

The article India Must Cut Down Coal Consumption appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The article India Must Cut Down Coal Consumption appeared first on Arabian Post.

By Nantoo Banerjee

Few will disagree that India should keep investing substantially in both onshore and offshore oil search as the country is becoming increasingly dependent on the import of petroleum crude to meet its energy needs. Currently, almost 86 percent of India’s annual crude petroleum needs are being met through imports. During his recent visit to Assam, Prime Minister Narendra Modi expressed his concern over the fact that the country, one of the world’s fastest growing economies, is heavily dependent on foreign nations for crude oil and gas. He said the country is making strong efforts to discover new reserves of crude oil and gas while enhancing its green energy capabilities. Unfortunately, the government’s latest action to raise the goods and services tax (GST) by 50 percent on oil and gas exploration gives a totally contradictory message. The higher GST is bound to slow down the country’s search for fossil fuel.

Surprisingly, the new GST on oil and gas exploration and drilling services — raised from 12 percent to 18 percent – comes into effect from September 22, only a week after the prime minister spoke about the need for stepping up the search for oil and gas in the country. Such a high increase in the GST rate is bound to raise the costs for oil and gas exploration companies covering services like seismic surveys, drilling operations, and offshore support vessels. While the input tax credit (ITC) is available for these services, the exclusion of crude oil and natural gas from GST means producers will face higher overall costs and potentially reduced profitability. It may discourage the country’s fossil fuel search initiatives, especially in the context of poor global exploration success rate for conventional wildcat wells, which are the first wells drilled in a new area. The success rate has been almost constantly declining, hitting a low of 10.6 percent in 2020.

In fact, the combination of higher operating costs and potentially falling global crude and gas prices may further squeeze profit margins for oil exploration companies in India. The rising cost burden raises concerns about the potential of such measures to restrict investment in domestic oil and gas exploration and production activities. The oil exploration industry as well as the market have already reacted strongly against the government decision as the stock prices of major oil and gas companies, including ONGC and Oil India had dripped. Analysts have warned that the sudden big GST hike on oil and gas exploration, coupled with falling international prices, presents a difficult scenario for the sector. The industry’s expectation to attract Rs. 218,475 crore (US$ 25 billion) investment in exploration and production looks unlikely to fructify under such circumstances. Oil exploration efforts have always proved to be a big gamble. Making explorers pay high taxes on investment in such high-risk initiatives makes little sense.

In the last five years, the overall global exploration success rate was approximately 32 percent, although Infrastructure-led exploration achieved a higher success rate of 42 percent. The success in oil exploration rarely came easy. Drilling in ultra-deep waters (depths greater than 2,500 meters) has shown disappointing results, with very few commercial discoveries in recent years. The commercial success rate in high-impact wells is just around five percent. The success rates from targeting larger oil reserve finds have lately seen a downturn, with some analyses indicating extremely low achievement rates for supermajors. Drilling in ultra-deep waters (depths greater than 2,500 meters) has shown disappointing results, with very few commercial discoveries in recent years. With exploration companies now subjected to a much higher GST rate, not many hydrocarbon explorers would be ready to gamble big with their investment. The higher GST rate effectively goes against the prime minister’s latest focus on exploration. It looks like that a section in the government is happier to import oil than to spend on uncertain domestic oil search.

The India Brand Equity Foundation (IBEF) has projected that the country’s oil demand will register a 2x growth to reach 11 million barrels per day by 2045. Diesel demand in India is expected to double to 163 MT by 2029-30, with diesel and gasoline covering 58 percent of India’s oil demand by 2045. India’s crude oil imports increased by 4.2 percent to 242.4 MT in FY25. The country’s natural gas consumption is projected to grow by nearly 60 percent by 2030, reaching 297 million standard cubic metres per day (mmscmd), up from 188 mmscmd in FY24. In the absence of higher local supplies of crude oil and gas, the country will be even more dependent on imported hydrocarbons bringing further pressure on India’s energy security. The country must not forget its experience during 1971 Bangladesh liberation war when the then pro-Pakistan US government tried to choke oil supplies in India for its active support to the Bangladesh Liberation Army. It is in the country’s strategic interest that it should vigorously pursue expensive domestic oil and gas exploration efforts despite low success rates.

Lately, India’s oil discoveries in the Andaman Sea by ONGC and OIL have been quite encouraging. Initial findings from deep-water drilling indicate an active petroleum system, comparable to successful regions in Myanmar and Sumatra. ONGC has made hydrocarbon discoveries in 20 blocks, estimating reserves of around 75 million metric tonnes of oil equivalent (MMTOE). OIL has reported seven discoveries in the past four years, with an additional 9.8 million barrels of oil and over 2,700 million standard cubic meters of gas. The country has significantly raised its exploration acreage by opening nearly one million square kilometres of previously restricted offshore areas.

Last April, the government amended the Oilfields (Regulation and Development) Act in order to modernise the regulatory framework and offer policy stability for oil and gas producers. The approval process for exploration and production has been simplified, reducing the number of necessary approvals. More recently, the onshore oil searches by ONGC have also produced encouraging results in Uttar Pradesh and West Bengal. Latest reports suggest that ONGC’s crude oil discoveries include a potentially large reserve in Ballia, Uttar Pradesh, with drilling initiated at a depth of 3,000 meters. In West Bengal, the ONGC has also made several discoveries at Ashok Nagar in the North 24 Parganas district. Both ONGC and OIL are increasing seismic surveys. In 2023-24, altogether 741 wells were spudded, and 12 discoveries made in the nomination and contractual sectors.

Under such circumstances, the sudden decision to make a steep increase in the GST rate on oil and gas exploration is quite surprising and gives wrong signals. The immediate primary impact will be an increase in operational expenses for oil and gas companies. The higher cost burden raises concerns about its potential to restrict investment in domestic oil and gas exploration and production activities. Industry analysts have warned that this tax hike, coupled with falling international prices, presents a difficult scenario for the domestic oil exploration sector. One wonders if the prime minister, who recently made a strong statement in Assam on the need for focussing on domestic oil exploration to cut oil imports, was properly briefed by the finance minister or the union cabinet about the latest hike in the GST rate on oil search operations and the reasons behind such an unexpected move. (IPA Service)

The article Higher GST Will Hurt Oil-Starved India’s Exploration Drills appeared first on Latest India news, analysis and reports on IPA Newspack.

The article Higher GST Will Hurt Oil-Starved India’s Exploration Drills appeared first on Arabian Post.

By Nantoo Banerjee

Union Labour and Employment Minister Mansukh Mandaviya’s recent claim of the country’s unemployment rate being the lowest among the G20 nations at two percent seems to lack credibility as per the records available with various government and non-government agencies connected with the matter. Mandaviya’s reference to India’s low unemployment rate came during his address before a gathering on the occasion of signing of MoUs between his ministry and digital mentorship platform ‘Mentor Together’ and classifieds online site ‘Quikr’ for enhancing employment opportunities and well as youth employability on the National Career Service portal.

Mandaviya’s labour and employment ministry may not be fully aware of the survey records on the subject by another government department, the Ministry of Statistics and Programme Implementation (MoSPI), which recorded a much higher figure of unemployment for last year at 3.2 percent. The variation between the two figures is as high as 60 percent. The Periodic Labour Force Survey (PLFS} data shows that India’s official unemployment rate for 2024 was 3.2 percent, representing a slight increase from the previous year’s level of 3.1 percent. The higher unemployment rate was largely attributed to a modest decline in the female Labour Force Participation Rate, while the male participation rate showed a slight growth.

The PLFS data shows that while the overall unemployment rate was 3.2 percent, the labour force participation rate (LFPR) declined to 59.6 percent and the female LFPR dropped to 40.3 percent from 41.3 percent in the previous year. The male LFPR was up from 78.3 percent to 79.2 percent. The PLFS is a key survey by the Ministry of Statistics and Programme Implementation. Its methodology is based on the principal and subsidiary status, providing a different picture than the Current Weekly Status (CWS), which saw a drop in unemployment to 4.9 percent in 2024. The data shows varied trends across regions and genders, with an overall decrease in rural unemployment, but a fall in female participation, particularly in rural areas.

It may also be noted that the International Labour Organisation (ILO) found a drop in India’s overall unemployment rate in 2024, though reports vary on the exact figure and the trends for men and women. The ILO report highlighted a declining real wage for regular and self-employed workers, while the formal sector witnessed increased youth employment and more women joining the workforce. The eShram portal initiative continues to build a database for unorganized workers and integrate social security schemes, with over 30.5 crore workers registered by December 2024.

The eShram portal is a central hub for integrating various social security schemes. Among the key takeaways from the ILO Report are: net additions to EPFO (Employee Provident Fund Organisation) subscriptions, signalling a shift towards formal employment; young people (under 29) accounting for a large portion of the net payroll additions in the organised sector; notable increase in the Female Labour Force Participation Rate (FLFPR); higher proportion of self-employed workers, indicating a trend toward entrepreneurial activities and flexible work; and stagnated or declined real wages for regular and self-employed workers, with only casual labourers seeing a modest upward trend.

The contradictory unemployment figures still don’t explain the growing numbers of India’s jobless people who are provided with only a 100-day job guarantee in a year. The minimum average daily wage rate under the programme was only Rs.279 in 2024-25. It is not clear what happens to those job seekers during the remaining 265 days of a year? Where do they find employment? How many more days do they manage to work? During the last financial year, the government allocated Rs.86,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the highest budget estimate in the scheme’s history. In the first five months of the financial year, nearly 60 percent of the budget was consumed indicating the high demand for such low-paid jobs.

On the other hand, the Centre for Monitoring Indian Economy (CMIE), one of the country’s leading non-government organisations, provides a totally different picture of unemployment in India. The CMIE estimates India’s current unemployment rate at 7.1 percent. According to the CMIE data of monthly unemployment rate, it was 7.6 percent in March, 7.7 percent in April, 6.9 percent in May, 6.8 percent in July and 7.1 percent in August, this year. Reporting the recent employment trends, the CMIE said that during March, this year, the Indian labour market shrank, with an estimated 4.2 million people either losing their jobs or stopping their search for employment. The rise in unemployment seen during last June was concentrated in rural India. The unemployment rates keep fluctuating. For instance, in June, last year, the unemployment rate went up to 9.2 percent driven by issues in both rural and urban sectors, and later a slight decline by November to eight percent.

In fact, the recent CMIE data shows even a much higher state of joblessness. It says that as many as 44.5 percent of Indians aged in the 20–24 bracket are unemployed, despite many of them holding graduate or even postgraduate degrees. According to the ‘India Skills’ Report 2025, only 54.8 percent of Indian graduates are considered employable. Contrasting official and independent data on unemployment often obscure the true extent of the problem. Unfortunately, the unemployment data from various government agencies seem to undermine the gravity of the serious and complex problem. Little is mentioned about the severe youth unemployment or underemployment. The unemployment rate for youth aged 15–29 stood at 15.3 percent in June 2025. The urban youth unemployment rate reached 18.8 percent. A report last May found that many unemployed youths have become “discouraged workers” and stopped looking for jobs altogether. In 2023, the jobless rate for graduates was 29.1 percent, compared to just 3.4 percent for those who could not read or write.

New jobs in the organised sector are few. The job market is being increasingly dominated by the informal economy where much of the workforce operates with low wages and poor job security, leading to high levels of underemployment or disguised unemployment. The large and fluid informal sector makes accurate unemployment measurement practically impossible. Surprisingly, the official data provides a totally different picture projecting high acceleration of employment creation with 4.67 crore jobs in 2023-24 and the pace of job creation continuing through 2024-25, with growth observed in both formal and informal sectors. This is despite the fact India’s Employees’ Provident Fund Organisation (EPFO) registrations are falling. The matter is quite confusing. The job data from various sources, official and non-government, are simply not tallying. Maybe it’s time that Employment Minister Mansukh Mandaviya makes a statement on the subject in Parliament to provide a somewhat reliable picture of the country’s unemployment situation. (IPA Service)

The article India’s Jobless Poor Are Trapped In Contradictory Data Details appeared first on Arabian Post.

By Nantoo Banerjee

One’s pain could be another’s gain. The phrase aptly describes those big business gainers across the world out of the three-and-a-half-year-old Russia-Ukraine war, killing thousands of soldiers and civilians on both sides. The list of such gainers may be short but very impressive. They include some of the giant US defence manufacturers such as Lockheed Martin, Boeing, and Raytheon and oil firms like ExxonMobil and Chevron; Russia’s Rosneft, Novatek and Sibur and Russian fertiliser exporters Uralchem and PhosAgro; Communist China’s major refineries; and India’s own Reliance Industries Limited (RIL). During the first six months of the current year, RIL is believed to have made or saved nearly $571 million from Russian crude oil purchases. RIL may be easily the biggest Indian business gainer of the ongoing Russia-Ukraine war and NATO trade and financial sanctions on Russia.

White House trade counsellor Peter Navarro may not be entirely wrong to say that “Brahmins (a metaphor of elites) are profiteering at the expense of Indian people.” The cheaper import of Russian oil since last year by Indian refineries, including the country’s state sector oil companies, did not benefit India’s millions of domestic petrol and diesel consumers although the oil refiners made big profits. RIL sold around 35 percent of its products, including refined oil, in the Indian market in fiscal year 2024. Recent reports indicate that RIL’s Jamnagar refinery sold 33 percent of its production in the domestic market. India’s other major private refiner, Nayara Energy, in which Russian investors hold a single majority stake, sells approximately 70-75 percent of its refined oil products in the Indian market. The rest are exported. Nayara’s domestic focus is supported by its network of over 6,500 fuel stations across the country.

While the two private petroleum crude refiners consumed a significant portion India’s total import of Russian oil, the country’s state-owned refiners like Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) purchase Russian oil from the spot market. They too benefited from the discounted price of Russian oil. India, as a whole, saved about $3.8 billion from Russian oil purchases during the current year alone. However, there was no effort on the part of the government to induce the oil refineries to even partly pass on the benefit to the country’s consumers. The last time India reduced the retail price of fuel was on March 14, 2024, just before the Lok Sabha elections. The prices were cut by only Rs.2 per litre. This came after a period of price freezes that began on May 22, 2022. Clearly, a handful of Indian oil refineries, led by RIL, are pocketing the high profits from purchases of discounted Russian oil.

In fact, the latest reports suggest that Russian crude has become even cheaper as the India government is faced with sustained pressure from the Trump administration to cut oil trade with Russia. Lately, the price of Russian Urals crude has dipped to a discount of $3 to $4 a barrel to Brent on a delivery basis. Imported primarily by the two private refiners, RIL and Nayara, India’s purchase of Ural crude is significant and ongoing. During the first six months of the current year, India imported over 231 million barrels of crude oil. The two private refiners have secured a long-term deal with the Russian producers and are now the largest buyers of Urals. India purchased about 80 percent of Russia’s seaborne Urals exports this year, a policy driven by commercial viability and national interest amidst Western pressure. RIL and Nayara Energy account for 45 percent of India’s Urals imports, with Reliance’s Urals share rising to 36 percent of its total crude purchases and Nayara’s at 72 percent. Incidentally, the prices of US Brent crude are edging up as the US crude stocks drop.

Earlier this year, RIL signed a 10-year deal with Rosneft to increase its purchases of Russian crude up to 500,000 barrels per day, making the Indian company the world’s largest buyer of Urals. The 10-year agreement between the two amounts to 0.5 percent of global oil supply and is valued at roughly $13 billion per year at current prices. The deal is supposed to ensure stability in crude oil flows. For Rosneft, it means a major effort to expand its presence in India.

The access to cheaper crude has boosted RIL’s gross refining margin (GRM), a key indicator of profitability in the refining business. RIL’s GRM was $8.5 per barrel in FY2025, outperforming its domestic peers. It is not clear why India’s state-owned oil refiners have been lacking initiative in buying Russian crude as aggressively as RIL. India’s government-controlled refiners collectively have a much larger refining capacity than RIL, which operates the world’s largest single-site refinery. With nine refineries, the public sector Indian Oil Corporation is a major player, accounting for a significant portion of the country’s total refining capacity.

As mentioned earlier, the Russia-Ukraine war has many global business benefactors of which India’s RIL is one. The conflict has created significant new business opportunities across Asia and the western world. Global oil and gas majors such as ExxonMobil, Chevron, BP, and Shell have recorded massive profits since the Russian invasion. The European bid to cut dependence on Russian energy has redirected demand toward other suppliers from countries like the US (supplying liquefied natural gas or LNG), Qatar, and Norway. Companies like Lockheed Martin, Raytheon, Northrop Grumman, and General Dynamics have profited from high demand for weapons and munitions, such as Javelin missiles and HIMARS. Some of the world’s top agricultural commodity traders, such as ADM, Bunge, Cargill, and Louis Dreyfus — known as the “ABCD” quartet – are having big profit surge by rerouting and managing global grain flows.

The Russia-Ukraine war has benefited Russian businesses as well, from import substitution to the acquisition of highly discounted foreign assets as those Western operators exited the Russian market. Russian billionaires profited by acquiring such assets left behind by departing Western companies in sectors like energy, retail, and technology. Russian industries, including pharmaceuticals, retail, and manufacturing, have grown by filling the market void created by the exit of foreign competitors. Cybersecurity firm Kaspersky Lab took over software infrastructure development from existing foreign companies.

Russian retailer Gloria Jeans expanded by acquiring prime retail locations vacated by companies like H&M and Zara. The realignment of trade flows has also created opportunities for many countries. West Asian energy producers are witnessing an increase in export revenues and economic benefits. Turkey has become a potential energy hub for European imports and a hub for re-exporting Russian energy. In addition to increasing its purchase of Russian oil, China also resold its own shipments of liquefied natural gas (LNG) to Europe at a profit. Obviously, these business establishments may wish the Russia-Ukraine war to continue as long as possible for their commercial benefits. (IPA Service)

The article Mukesh Ambani’s RIL Is India’s Biggest Beneficiary Of Discounted Russian Crude Oil appeared first on Arabian Post.

By Nantoo Banerjee

Notwithstanding India’s current trade tariff spat with the United States, India should apply caution to further open up imports from China with which it already suffers from massive trade deficits – nearly $100 billion last year when China had severely cut down imports from India. The latter should also avoid the Chinese trade trap promoting the Yuan (Renminbi) as an alternative to the US dollar for trade, investment, and reserves, citing political shifts and market fluctuations. A China-India bilateral trade is most welcome in each other’s currencies as it is being done in the case of Russia-India trade now leading to a big boost to India’s oil import from Russia. Over 90 percent of Russia-India trade is now settled in Roubles and Rupees, reducing reliance on the US dollar, enhancing financial sovereignty for both nations.

At the same time, India should raise its own production of fertilisers, rare earths and drug intermediaries among others. India imports nearly 2,000 commodities from China. There are some 600 items where over two-thirds of imports come from China. In 416 categories alone, worth $25.2 billion, India’s dependence has severely increased compared to pre-pandemic levels. India also imports nearly 90 percent of its rare earth magnets from China. This is despite the fact that India has the world’s third largest reserve of rare earth elements after China (44 million tons) and Brazil (21 million tons). India’s reserve of rare earth elements is estimated at 6.9 million tons. Last April, China announced export controls on a broad range of rare earths and related magnets as a response to US President Donald Trump’s broader tariffs on goods.

India has too many uncomfortable issues with China, from border disputes to China’s strong military alliance with two of India’s difficult neighbours – Pakistan and Bangladesh. Last week, China agreed to enhance its strategic relations with both Pakistan and Bangladesh. In fact, China’s offer to stand by India on the issue of the punitive 50 percent import tariff on India imposed by the US could be intended to further ignite the Indi-US trade tension. China is trying to take full advantage of the latest trade bickering between the US and India by spicing it up with warning against the US action, portraying the US as a “bully” and standing with India to uphold the World Trade Organization (WTO) framework. China is out to capitalise on the present India-US diplomatic strains to counter US influence in Asia. It aims to weaken the US-India relationship, force New Delhi to get closer to Beijing, and enhance China’s own strategic position in the region, especially in the context of shared concerns about Washington’s unpredictable foreign policy.

India will make a big mistake if it trusts China’s cunning mind and its hand of friendship amid the country’s current rift with the US. Incidentally, the Chinese state-controlled media has openly celebrated the friction between the US and India, considering it as beneficial to China’s interests. The political strategists in China view the penal US tariffs on Indian goods as an opportunity to potentially raise a wedge between India and the US, a key element of America’s Indo-Pacific strategy aimed at counterbalancing China’s rise. China wants to benefit from a breakdown of political trust between the US and India. Lately, Chinese Foreign Minister Wang Yi’s rush to Islamabad soon after his visit to New Delhi conveyed a clear message that it attaches a much greater importance to the growing China-Pakistan relationship. During Wang Yi’s Delhi visit, China tried to play a trick on India on the Taiwan issue as its ‘One-China’ resolve and tried to drag India in its support. Last week, China expressed “surprise” over clarification by India over External Affairs Minister S Jaishankar’s reported comments related to the One-China policy during his talks with Chinese Foreign Minister Wang Yi. India said there is no change in its position on Taiwan, and New Delhi’s relationship with Taiwan focused on economic, technology and cultural ties. It clearly shows that India needs to be extremely cautious with the latest Chinese gestures. Wang Yi had soon left Delhi for Islamabad to attend the annual strategic dialogue to review all-weather ties with Pakistan and attend the sixth round of China-Pakistan Foreign Ministers’ Strategic Dialogue with Pakistani Deputy Prime Minister and Foreign Minister Ishaq Dar.

China is desperately trying to exploit the US-India trade rift by trying to make India see China as “partners” rather than “adversaries.” It was quick to ease export restrictions on goods critical to India such as fertilizers, rare earth magnets, and industrial equipment. For a change, China has welcomed Indian investment in its country while hoping for a “fair, just and non-discriminatory business environment” for Chinese enterprises operating in India. Chinese Ambassador Xu also stressed the need to view the border dispute between the two countries separately from the broader relationship, suggesting that cooperation can progress alongside addressing the border issue. India needs to navigate these dynamics cautiously, pursuing its strategic interests while managing relations with both the US and China as the long-term impact on the global trade landscape remains uncertain.

However, there is no denying the fact that of late China is seemingly trying to improve diplomatic relations with India while maintaining strong ties with Pakistan and Bangladesh. For example, Prime Minister Narendra Modi and President Xi Jinping met on the sidelines of the BRICS summit in Kazan, Russia, on 23 October 2024. There have also been visits by India’s Foreign Secretary Vikram Misri, Defence Minister Rajnath Singh and national security adviser Ajit Doval for key bilateral meetings to comprehensively resolve border issues and take steps to stabilise ties between the two countries.

Yet, China’s well calculated change in approach in dealing with India, especially after the US-India trade rift, makes the people of India somewhat sceptical of China’s intentions, particularly with regard to many of Beijing’s activities such as building a giant dam on the source of the Brahmaputra River in the Tibet Autonomous Region that will control the river’s flows through China before entering India. China has been protecting terrorist leaders like Masood Azhar in Pakistan to support the Islamist network there. Now there is a fear that Beijing can quietly promote fundamentalists in Bangladesh too. Such activities affect India’s economic lifeline and national security. India must exercise trade and diplomatic options warily. (IPA Service)

The article Trump’s USA Is Unreliable, Xi’s China Could Be Worse appeared first on Arabian Post.

By Nantoo Banerjee

Come August 27, the picture of the Indo-US trade may show a considerable change. India’s merchandise exports to the US will be generally subjected to a 50 percent import tax from that date. A few categories, including drugs and pharmaceuticals, have been exempted. The reason advanced by US President Donald Trump for imposing the punitive tax rate on India is India’s large oil import from Russia helping the latter financially to keep fighting against Ukraine. Everyone including President Trump knows the assumption is flawed. India is the world’s second-largest importer of crude oil to meet its energy needs, with over 85 percent of the country’s oil consumption coming from foreign sources. China, the world’s biggest crude oil importer, is the second largest buyer of Russian oil. Turkey and Brazil also import significant quantities of Russian oil products. They all import oil from Russia for commercial reasons. Russian oil and gas are available at much discounted rates.

Thanks to the EU and NATO trade and financial sanctions coupled with the fixation of Russia’s oil export price, Russian crude has become the world’s cheapest. India would buy crude oil from any country if its landed import cost works out cheaper than that of Russian oil. India is upset with the US for singling it out for penal tax while sparing China, at least for now, and Turkey. Interestingly, Pakistan, a new found Trump friend, skips Russia while importing roughly 85 percent of its crude oil needs. It imports crude oil primarily from Saudi Arabia, the United Arab Emirates, and the United States. In a recent development, Pakistan has agreed to import crude oil from the US for the first time, marking a shift in its traditional reliance on West Asian energy sources. This new import deal is part of Pakistan’s broader effort to deepen trade and geopolitical ties with the US.

Recently, the US issued an executive order suspending the heightened tariffs on Chinese imports until November 10, this year. The current 10 percent US reciprocal tariff with China remains in effect during this suspension period. The US has also suspended additional tariffs on imports from Mexico, a major supplier of merchandise goods to the US along with another US neighbour, Canada, for 90 days. The US has imposed 35 percent import tax on Canada and 25 percent on Mexico covering goods that are not compliant with the Canada-US-Mexico agreement.

Though Turkey was spared with only a baseline 10 percent tariff in US President Donald Trump’s trade announcement, compared with higher tariffs for many other countries, for unknown reasons, it is unlikely to bring much benefit to the country. Turkey has free trade agreements with as many as 54 countries outside the US and the EU. Thanks to those FTAs, 68 percent of Turkey’s exports go to these countries. Turkey has a customs union with the European Union that removes trade restrictions. While the US has imposed a 50 percent import tax for goods from Brazil, which stand for only 1.3 percent share of US imports, it has also punished Switzerland with an import tax of 39 percent and South Africa 30 percent.

Clearly, India, which accounts for 2.7 percent share of US imports, does not need to panic immediately on the punitive US import tariff linked with the country’s recent spurt in cheaper oil imports from Russia. The only concern is that till now the US has been India’s biggest source of trade surplus and the higher import tariff could substantially reduce its positive trade balance with the US. While the US can ignore India, which does not feature even among the top 10 of the global US trade partners, the US market is extremely important for India as the country has been traditionally suffering from large annual trade deficits with a host of other nations, led by China.

The US has not spared even its traditionally important trade allies such as Mexico, Canada, China, Japan, Germany, South Korea, Vietnam, Taiwan, the Netherlands with its import tariff mostly ranging from 15 to 20 percent. China’s case is very special for the US as the country accounts for the second largest share (13.4 percent) of US imports, just behind Mexico’s share of 15.5 percent. Canada’s share of US imports is 12.6 percent. Both Canada and Mexico, the two large US neighbours, have attracted punitive import tax rates.

For the present, India needs to exercise caution and patience to deal with the extremely unpredictable and moody US president. Considering that India’s export trade with the US is under threat, the country must use diplomatic tools to reduce tension between the two nations. In fact, India’s diplomatic relations with the US have been growing fast, marked by increased cooperation in defence and technology. India must focus on strengthening strategic partnership, address shared challenges, and promote a free and open Indo-Pacific.

The fact which needs to be focused on is India’s significant increase in defence cooperation with the US designating India as a major defence partner and granting Strategic Trade Authorization-1. This includes foundational defence agreements and joint military exercises. India needs to focus on the US-India Initiative on Critical and Emerging Technologies (iCET) launched to foster collaboration in areas like semiconductors, space, and 5G/6G.

India’s current trade tension with the US is most unlikely to last long. Strategically, the two countries are coming increasingly closer to each other. The two countries have been collaborating on various platforms such as the Quadrilateral dialogue (Quad), a strategic partnership with Australia and Japan focused on the Indo-Pacific. India is also cooperating with the US on issues like climate change, pandemic preparedness, and sustainable development. On the other hand, encouraging progress has been made in civil nuclear cooperation, with the removal of certain Indian entities from the US Entity List. India’s current trade tension with the US will hopefully die down soon with a potential thaw in Ukraine-Russia relations, especially after a somewhat encouraging end of the Trump-Putin summit at Alaska, last week, and chances of the international oil market returning back to its old rhythm in due course. (IPA Service)

The article India-US Ties Are Too Strong To Be Rocked By Trade Tariff appeared first on Arabian Post.

By Nantoo Banerjee

The regular news feed by India’s Enforcement Directorate on alleged massive money laundering by the Reliance Anil Ambani Group (RAAG), which is also known as the Anil Dhirubhai Ambani Group (ADAG), seems to have been designed more to create an abominable sensation around the flamboyant entrepreneur than any other serious purpose. The ED probe also covers several associated entities as part of its crack down on large-scale loan frauds. Is the purpose of the widely publicized ED probe meant to merely tarnish the image of Anil Ambani and his aggressive, cunning, or even somewhat immoral method of managing business, or to genuinely fix him for his financial misadventures using large public funds?

Has any bank or lender lodged an FIR against the group listing the details behind the criminal intent of the business group’s financial fraud? Or, has the ED opened the case on the basis of its own suspicion? If the ED has strong reasons behind its suspicion, why is it not arresting Anil Ambani? Else, it must stop regular media feeding on the progress of the investigation.

Under the Prevention of Money Laundering Act (PMLA), the ED has the power to arrest individuals based on “reasons to believe” that they have committed a PMLA offence, which must be recorded in writing. The ED has to inform the arrested person or persons of the grounds for arrest as soon as possible. Under the law, a copy of the arrest order and related materials has to be forwarded to the adjudicating authority. The arrested person must be produced before a special court or magistrate within 24 hours.

The ED has recently arrested one Partha Sarathi Biswal, managing director of little-known Biswal Tradelink Private Limited (BTPL), the first such arrest in the alleged Rs. 3,000-crore loan fraud case against the Anil Ambani group. The main allegation against Biswal is that his firm allegedly received Rs 5.4 crore from Anil Ambani-owned Reliance Power for arranging fake bank guarantees worth Rs 68.2 crore. The case involves money laundering, forged SBI endorsements, and fabricated emails linked to a tender floated by the government-owned Solar Energy Corporation of India (SECI). Anil Ambani’s net worth is currently estimated at $1 Billion as of June 26, 2025.

The financial trail is an important element linking BTPL’s fraudulent operations to Ambani’s corporate network. According to media reports, the ED investigation has further revealed that BTPL maintained multiple undisclosed bank accounts and carried out financial transactions that were grossly disproportionate to its reported turnover. Authorities have traced proceeds of the crime running into crores of rupees across at least seven hidden bank accounts. The investigative agency claimed that statutory records, including books of accounts and shareholder registers, were missing from the company’s registered office. The ED suspects the use of dummy directors to mask true ownership and enable the laundering of funds. In response, the Anil Ambani group said that all its subsidiaries acted bona fide and were victims of fraud, forgery, and a cheating conspiracy. Last week, the ED had summoned Anil Ambani for questioning in connection with the case. The question is: if he is the prime suspect why is he not being arrested? Or, why are his assets still not attached?

Nearly three years ago, in a written response to the Rajya Sabha on the increasing incidence of such frauds, the government disclosed that the ED’s investigation was linked to two cases registered by the CBI in September 2022. The ED initiated its investigation through an Enforcement Case Information Report (ECIR) on July 22, targeting multiple entities and individuals, including Reliance Home Finance Ltd. (RHFL), Reliance Commercial Finance Ltd. (RCFL) & former Yes Bank MD and CEO Rana Kapoor, among others. The details shared in Parliament showed RHFL and RCFL disbursed loans totalling Rs 12,524 crore, a significant portion of which was extended to entities classified as either shell companies or closely linked affiliates of ADAG group firms. What is the progress of this case? Investors in the ADAG group of companies may be interested to know more on any new development in this matter rather than another fresh ED investigation in another case.

Meanwhile, there are other reports which suggest that the ADAG group’s Reliance Infrastructure recently reached a significant milestone by reducing its standalone net debt to zero. This was accomplished by clearing approximately Rs 3,300 crore of debt from banks and financial institutions during FY25. While Reliance Communications, another ADAG company, has also been reducing its debt, it still has a large amount outstanding. Reliance Comms reported a total financial indebtedness of Rs.40,413 crore as of March 31, 2025, according to a regulatory filing with the stock exchanges. This amount excludes accrued interest and NCD interest. Enigmatic Anil Ambani continues to grow despite these debts and several alleged financial wrongdoings over the years seemingly with patronage from the government and nationalised banks.

During the current year, the ADAG is actively involved in several key projects, primarily focused on renewable energy and defence sectors. Reliance Power is expanding its solar and battery storage capacity, including a large project in partnership with SECI. Reliance Infrastructure is strengthening its presence in defence manufacturing and aerospace, with partnerships for aircraft maintenance, repair, and overhaul, and munition production. Reliance NU Suntech, a Reliance Power subsidiary, signed a 25-year power purchase agreement (PPA) with SECI, a Navaratna company, for a large-scale solar and battery energy storage project.

The project, involving 930 MW of solar power and a 465 MW/1,860 MWh battery energy storage system, will be Asia’s largest integrated solar facility. It will be developed within 24 months with an investment of up to Rs 100 billion. With the ADAG under the ED attack, how is that the government or the SECI finds it safe to go with an Anil Ambani firm to set up such a prestigious project? Further, the Anil Ambani group has partnered with Bhutan’s Druk Holding and Investments to develop a 500-MW solar plant and 770-MW Chamkharchhu-1 hydroelectric project.

Hopefully, the Anil Ambani group’s latest initiatives in the defence and aerospace sectors enjoy the government’s blessings. The group’s Reliance Infrastructure has partnered with France’s Dassault Aviation for aircraft manufacturing and Coastal Mechanics for maintenance, repair, and operations. The company has also collaborated with Germany’s Rheinmetall AG to produce artillery ammunition and explosives. Its strategic partnership with another leading German defence firm, Diehl Defence GmbH, focuses on guided munition and terminally guided munition (TGM).

Anil Ambani has launched the Reliance Group Corporate Centre as part of the group’s 2030 growth strategy. It is intended to guide the group companies in pursuing new opportunities and technological advancements, leveraging the expertise of seasoned leaders. Could the various ED probes into some of the ADAG enterprises be linked with corporate rivalry? In the past, several Indian industrial groups, including the Tatas and Essar, led by the Ruia brothers, Ravi and Sashi, were believed to have been victims of corporate rivalry.

It is time that the government restrains the ED from making motivated media leaks of its investigations before it files a chargesheet against the accused. While the judicial conviction rate of the ED’s chargesheets against accused is abysmally low, its hyper media trial during investigations tends to destroy the image and business prospects of its victims. Last week, a three-judge bench of the Supreme Court of India lambasted the ED’s approach to PMLA investigations, cautioning the agency to act “within legal boundaries.” Justice Ujjal Bhuyan, one of the judges, said: “You can’t act like a crook. You have to act within the four corners of the law.” On the face of it, the detestable routine media leaks of the ED’s ongoing investigations into the Anil Ambani group would appear to be repugnantly hateful. The government must act against its probe agency to stop such media campaigns during investigations. (IPA Service)

The article ED Probe Into Anil Ambani Group Is Creating Loathsome Sensation appeared first on Arabian Post.

By Nantoo Banerjee

US President Donald Trump is becoming increasingly unpredictable, if not crazy, with his freakish combination of styles to deal with countries and issues – from trade to diplomacy. The 25 percent import tariff on India since last Friday may not considerably hurt India’s export trade with the US, but it threatens to develop a crack, or maybe even distrust, in the well-developed India-US diplomatic relations over the past several years. And, that should be a bigger concern before the democratic institutions in both India and the US. Trump is most unlikely to remain as the effective US president after the November 2028 election though he is selling “Trump 2028” caps suggesting there may be loopholes to the president’s two-term limit. He seems to be hell-bent on creating enough confusion around the so-called US allies for the next president to repair them easily.

India is not a trade surplus country. Its global merchandise trade deficit has been growing year after year. In 2024-25, the country’s trade deficit jumped to $282.83 billion from $241 billion in the previous fiscal year. The Indian government does not seem to be quite concerned. The US too is a big trade deficit country. Last year, the US recorded a historic $1.2-trillion goods trade deficit. Ironically, behind the ballooning trade gap of both the US and India is China. India’s goods trade surplus with the US may have doubled over the last decade, rising from $20 billion in 2015 to $40 billion in 2025, but its trade deficit with China has more than doubled during this period, reaching a record high of $99.2 billion in 2024-25. According to the UN COMTRADE database on international trade, China had slashed down imports from India to merely $18 billion, last year. India neither protested nor took action to drastically cut imports from China.

If China’s anti-India import policy does not hurt the sentiments of the import-insensitive Indian government, the dumping of a mere 25 percent import tariff on India by President Trump on certain select items such as textiles, telecom, gems and jewellery, oil and gas, and food and agriculture with effect from this month should not unduly concern India. Unfortunately, the Indian government and the local media have always been more focussed and sensitive on US policies than Chinese practices. While the US trade policy has always been linked with its foreign policy, India’s trade policy seems to totally ignore China’s highly aggressive foreign policy that seeks to surround India with its growing military presence all around the country. The so-called Atmanirbhar Bharat (self-reliant India) continues to import more and more from China. India imports a very large range of low-cost products from China, including electronics, fashion apparel, toys, and industrial machinery despite concerns over their potential impact on India’s domestic industries and employment. Massive imports from China are primarily responsible for growing unemployment in India.

India has been a major importer of Chinese smartphones, laptops, televisions, and other low-cost electronic devices such as clothing and textiles including activewear, casual wear, and children’s fashion, to meet the country’s growing local demand. India’s significant portion of toy imports come from China. The current size of India’s toy market is worth over $1.2 billion. Chinese manufacturers offer a wide variety of affordable and innovative toys. India also imports a wide range of other low-cost products from China, including household goods, kitchenware, baby carriages, and consumer products. The influx of cheap Chinese imports is challenging India’s domestic manufacturers, potentially impacting their competitiveness and production. Leave alone the domestic job loss.

Trump’s trade tantrums apart, India could import a lot more from the US, instead of China, especially in areas where the US has a competitive advantage. A shift in India’s trade approach could be driven by factors such as diversification of supply chains, reducing dependence on China, and potentially leveraging the US’s technological and manufacturing prowess. The country’s reliance on China, particularly in areas like electronics and pharmaceuticals, creates strategic vulnerabilities. India should import more from the US where it has an intrinsic strength that could help India reduce its dependence on China and build more resilient supply chains. The US continues to be a major global exporter of goods across various sectors, including machinery, electronics, and pharmaceuticals. In fact, India could utilise the services of many top US companies which are present in India and doing very good business in the country as well as exporting their wares to influence US trade and business decisions.

A number of prominent US multinational companies have significant manufacturing operations in India. They include Ford (exporting engines from its Chennai plant, and making software development), General Electric (GE), Honeywell, Apple, Cisco, Cognizant and Cummins to mention a few. These US giants have chosen India for its skilled workforce and growing market. GE has a long-standing relationship with India. It manufactures various products and technologies across different sectors. Honeywell has a strong manufacturing footprint in India, focusing on aerospace, building technologies, and performance materials. Cummins, a global power technology leader, manufactures engines and related components in India. Apple Inc. has so far ignored the Trump threat to expand India operations and export back to the US.

The 3M, a diversified science company, has invested in manufacturing in India to serve both the domestic and export markets. The Boeing company has been expanding its manufacturing activities, leveraging the country’s growing aerospace industry. Boeing is using India’s capability to outsource products and services with a network of some 300 Indian suppliers. The business is worth $1.25 billion annually. Boeing’s engineering and technology centre in Bengaluru is one of its largest outside the US. Apple has also ramped up its manufacturing in India, partnering with such global leaders such as Wistron and Foxconn to produce iPhones. The US e-commerce giant Amazon has invested big in India, creating its own infrastructure and supply chain to support the growing online marketplace. Cisco, a global US leader in networking and cybersecurity, has a strong presence in the country, which covers manufacturing and research and development among others.

Whimsical Trump’s bid to strongly disturb the matured India-US economic and diplomatic relations may have something to do with his age. President Trump will reach 80 in next June. This may somewhat explain his growing capricious nature in dealing with the complex international issues and markedly strange utterances and suggestions slamming India and Russia as ‘dead economies’ after tariff stand-off and the US drilling oil in Pakistan which is 85 percent import dependent to meet its energy needs. Having road-tested a hardball tactic in his first term (January 20, 2017 to January 20, 2021), President Trump seems to have taken it to new levels. Earlier this year, a global survey found that India was the most upbeat of any nation about what a second Donald Trump presidency would mean for the country. The survey panel must be having second thoughts now. For India, it must strongly avoid falling into a Trump trap and continue to play cool. (IPA Service)

The article India Must Ignore Trump’s Trade Tariff Trap appeared first on Arabian Post.

By Nantoo Banerjee

The European Union seems to have arrogated itself with extrajudicial power to prevent outside nations from purchasing Russian oil. It has no locus standi to impose its will on countries which are not members of EU. Thus, the latest expansion of the EU sanctions targeting Russian energy exports can legally cover only its 27 member countries and entities operating within the EU and not beyond. It is free to implement such decisions as fixing price caps and restrictions on shipping and insurance for Russian oil sold to EU countries, it cannot legally prohibit non-EU countries from buying Russian oil on the global market using non-EU flag carriers and insurers. The EU has no jurisdiction over countries such as India and China. Together, the two countries accounted for around 85 percent of Russia’s crude oil exports in the month of June, last.

It is also illegal if the EU tries to shut down the Gujarat-based Nayara Energy (formerly Essar Oil), in which Rosneft, the Russian oil giant, holds a 49.13 percent stake, or tries to prevent Indian oil refineries from importing crude oil from Russia. Reliance Industries (RIL) is India’s largest importer of Russian crude oil for processing and exporting refined products. RIL shipped an average of 2.83 million barrels of diesel and 1.5 million barrels of jet fuel per month to Europe in the first seven months of this year, according to London Stock Exchange Group (LSEG) ship tracking data. Rosneft is present in Singapore through its subsidiary, Rosneft Singapore Pte. Ltd., to manage regional projects and develop international trade in oil and petroleum products as part of Rosneft’s strategic focus on the Asia-Pacific region, which is expected to see significant growth in energy consumption. It also has a joint venture with PetroChina to build a refinery and petrochemical complex in Tianjin, China.

The EU, in its 18th package of sanctions against Russia, approved on July 18, has banned imports of refined petroleum products made from Russian crude coming from third countries although it excluded a handful of Western nations, including Norway, the UK, Switzerland, Canada and the US. It banned vessels from accessing EU ports and docks, or undertaking ship-to-ship transfers of oil in a bid to shut down the so-called “shadow fleet” of older oil tankers which are reportedly used to transport Russian oil and circumvent sanctions. It may be noted that the US has somewhat resisted the action, leaving the EU to move forward on its own, with limited power to enforce the measure because oil is largely traded in dollars, for which payment clearing is controlled by US banks. The EU’s new package of sanctions is most unlikely to hit Russia’s oil and gas exports. India and China are expected to continue buying discounted Russian crude although some Indian refineries, such as RIL, will find it difficult to re-export processed Russian crude to EU member countries.

RIL may have to find new ways or new destinations to re-export processed Russian crude which may be further discounted after the fresh EU sanctions or face a big financial blow. As a whole, the Indian refinery industry will have to find ways to re-export refined Russian crude oil if they desire. This may not be an easy task. India was a supplier of refined petroleum products worth $15 billion annually to Europe. India imported crude oil worth US$50.3 billion from Russia in 2024-25. The share of Russian oil in India’s crude oil basket is more than 44 percent. Several non-EU countries import processed crude oil, particularly refined petroleum products derived from Russian crude. India, China, and Turkey are significant buyers of Russian crude oil and refined products. Other notable processed crude oil importers include South Korea and Taiwan. The latest EU package of sanctions will make Russian crude oil even cheaper. It lowers the price on Russian crude to $47.60 a barrel from $60. The new cap, which takes effect on September 3, also includes a mechanism to ensure it is always 15 percent below average Russian crude prices.

According to the International Energy Agency (IEA), Russia earned around $192 billion last year from selling oil. Cutting a part of that may mean a loss to the country’s export revenue, but it could also be at the cost of the rest of the world with spiking oil prices globally if the export of Russia’s more than seven million barrels of oil per day abruptly disappears. Anyway, India and China, the two top importers of Russian oil, are most unlikely to go by so-called universal ban on import of Russian oil imposed by the EU or the US threat to order such a ban in due course to force a truce in the Russia-Ukraine war. Incidentally, both India and China continue to have good relations with Ukraine. Last year, India’s imports from Ukraine were valued at $1.036 billion, while India’s exports to Ukraine were $0.187 billion. The total trade turnover between the two countries for the same period was $1.224 billion. China’s imports from Ukraine totalled US$2.68 billion, according to the UN COMTRADE database.

So far, both India and China appear to be unfazed by the EU ban on Russia’s oil and gas exports. India’s Petroleum Minister Hardeep Singh Puri thinks the market would more or less continue to operate as usual. The EU lens on Rosneft is a concern. Rosneft was believed to be in talks with some potential Indian buyers, including RIL, to sell off its majority stake in Nayara Energy, even before the EU contemplated further tightening the ban on Russian oil exports. The Indian petroleum minister seems to be generally happy that oil markets have not hardened following the announcement of fresh EU sanctions on Russia. Although India’s $15-billion refined petroproducts export to the EU will take a hit, the country is already exploring new markets for the export of refined petroleum. The export earning, last year, was worth as much as $85 billion. Given the current geopolitical situation, import-based India needs to work out a strong strategy to protect its energy security as well as export trade. (IPA Service)

The article EU Can’t Ban Non-Member India From Buying Russian Oil appeared first on Arabian Post.

By Nantoo Banerjee

Trade unionism seems to have lost focus in India. It has failed to reform itself to keep pace with economic reforms and globalisation, and changing job scenarios. It is also facing the biggest leadership crisis. The poor public and industry response to the nationwide strike call by 10 central trade unions on July 9 once again exposed the irrelevance of such an action in a country where the informal sector employs nearly 44 crore workers today, representing 85 percent of the total workforce. The informal sector encompasses a wide range of activities and workers, including those in agriculture, construction, small factories, domestic work, and various other self-employed and micro-enterprise roles. Workers in this sector don’t enjoy job or wage protection. As a result, the old-style trade unionism has become irrelevant in the present-day scenario.

The so-called central trade unions exist mostly in the public sector where they play some constructive role in the collective bargaining, especially for periodical wage settlement. The shrinking public sector is a matter of concern to them. However, they could do little when the government decided to hand over the control of the country’s largest petrochemical company, Indian Petrochemicals Corporation Limited (IPCL), a highly profit-making public sector enterprise, to the Ambani group’s Reliance Industries. The central TUs also made no attempt to prevent total privatisation of Bharat Aluminium (BALCO) in favour of Anil Agarwal-promoted Sterlite Industries (now Vedanta Limited). Even before the total privatisation of IPCL and BALCO, the government sold the prestigious Videsh Sanchar Nigam Limited (VSNL) to the Tata group. The company has been renamed as Tata Communications. Where were the leaders of the central TUs, then?

Between 2014 and 2024, the government disinvested from as many as 179 central PSEs without any resistance from the trade unions. This explains why workers even from the central PSEs do not trust their trade unions. It could be the key reason behind the near rejection by a vast section of workers of the ‘Bharat Bandh’ call on July 9 by a forum of 10 central trade unions, including the All India Trade Union Congress (AITUC), Indian National Trade Union Congress (INTUC), Centre of Indian Trade Unions (CITU), Hind Mazdoor Sabha (HMS), Self-Employed Women’s Association (SEWA), Labour Progressive Federation (LPF), and United Trade Union Congress (UTUC). Before the failed ‘Bandh’, the forum had claimed that over 250 million workers from diverse sectors—including banking, insurance, postal services, and coal mining—are expected to participate in the nationwide strike to protest against what the unions described as “anti-worker, anti-farmer, and anti-national pro-corporate policies” of the Centre.

Incidentally, this one was the fifth nationwide general strike (Bharat Bandh) since 2015, including a two-day strike on January 8-9, 2019 and another two-day strike on March 28-29, 2022. All the TU strikes had more or less the same old issues, protesting against the government policies such as PSE privatization, erosion of labour rights, the increasing use of contractual labour, anti-worker, anti-farmer, and anti-national pro-corporate agenda, the government’s unwillingness to engage in dialogue with unions, and the proposed amendments to the Trade Union Act, 1926. According to the government, the proposed amendments to the TU Act, 1926, are aimed to modernize and strengthen the framework for trade union registration, recognition, and collective bargaining. Key features include facilitating recognition of trade unions at the central and federal levels, enhancing transparency in the nomination of worker representatives, and potentially reducing industrial unrest. The amendments may also address the number of members required to form a union and the extent of outside leadership.

While the TU Act amendment proposals have understandably created tensions among the traditionally-oriented trade unions, the latter are more upset as the government never consulted with the central trade unions for the purpose. The TUs had submitted a 17-point charter of demands to the Union Labour Minister, Dr. Mansukh Mandaviya, last year. According to the unions, the government paid little attention to their demands and never bothered to convene the annual labour conference in the last 10 years, an omission the trade unions interpret as indifference towards the nation’s toiling labour force.

Unfortunately, today’s trade unions lack the leadership of those in the 1970s such as Sripad Dange, B T Ranadive, Satish Loomba, George Fernandes, Mahesh Desai, who forced the then Prime Minister form the country’s first Bonus Review Committee leading to the amendment of the Bonus Act to raise the minimum bonus from four percent to 8.33 percent and making the Dearness Allowance (DA) Rules for the government employees and pensioners to offset the impact of inflation. Interestingly, some of the state governments are now challenging the age-old DA Rules saying that the payment of DA should be made purely optional and has to be linked with a state government’s capacity to pay.

Few will disagree that currently, the trade union movement in India lacks proper leadership and focus, particularly in the face of economic reforms and globalization, and adopting fast to changing labour landscapes to remain relevant to the situation. The public sector concept has been vastly diluted to provide opportunities for the growth of the generally trade union-resistant private sector. The employment in the public sector has been steadily declining since the 1990s. The effective trade union membership in the organised sector has also declined. Trade unions have become overly politicised. Ruling political parties in states have their own affiliated trade unions. Gone are the days when the TUs such as AITUC, CITU, INTUC AND HMS represented the majority voice of workers at both the levels of states and the centre.

The central TUs have now become ineffective in most of the states of the country. The increasing pressure on unions to adapt to new forms of work, such as gig work and contractual employment, are posing unique challenges. Most of the unions are still controlled by external leaders lacking understanding of the needs of workers. They have not been innovative enough in developing new strategies to address the challenges of a rapidly changing labour market with employers, including the central and state governments and their agencies, going for contractual employment.

Finally, a lack of strong central legislation for union recognition leading to anti-union practices by employers and growing fragmentation among unions are weakening the bargaining power of trade unions. The successive failure of the nationwide strike attempts should serve a wakeup call for the modern-day TU leaders to revitalise their role shifting focus from job preservation to broader issues that concern all workers, including those in the informal sector, and resist fragmentation of unions to present a united front for collective bargaining with employers, including the government. (IPA Service)

The article Indian Trade Unions Need To Reform Themselves To Remain Relevant appeared first on Arabian Post.

By Nantoo Banerjee

It is difficult to believe that India, the world’s fourth largest economy by gross domestic product (GDP) and a major military power, ranks below even the tiny states of Kuwait and Greece when it comes to defence spending as a percentage of GDP. Considering the tricky geo-political situation in the south Asian region with China, India’s No. 1 enemy increasingly surrounding the country with its growing economic and military control over Bangladesh, Sri Lanka, Maldives, Pakistan and Nepal, India does not seem to be spending enough on its defence in the face of a growing China threat. In terms of gross value, India’s annual defence budget may not look that unimpressive, but it accounts for less than one-third of China’s defence expenditure of nearly $267 billion. The US continues to be the biggest defence spender with a budget of $895 billion. Russia’s defence budget is worth around $126 billion. India’s defence budget is estimated at only around $75 billion.

Effectively, India’s defence spending works out 1.9 percent of its GDP. Although China’s defence spending is officially estimated at only 1.5 percent of its economy, it excludes several important expenditures such as weapon imports, funding for the People’s Armed Police, and research and development, according to the orfonline.org. As a result, China’s effective defence expenditure may be largely hidden. Or, it could be significantly higher than the publicly shared estimate. Communist China, the third major global military power after the US and Russia, has been rapidly modernizing its technological capability in the defence sector as it is expanding its presence across the world, only next to the US. It is difficult to assess China’s actual military expenditure as it is also supposed to provide protection to the country’s Belts & Roads Initiative (BRI) investments that cover some 150 countries across the world. The Chinese BRI spans across Asia, Africa, Europe, Latin America, and the Pacific region.

Going by the recent reports, China has a potential base in Sri Lanka, Pakistan, Tanzania, Mauritius, Maldives and Myanmar. China is engaged in developing commercial seaports or free trade zones in the Indian Ocean’s points of these countries. China is also supporting these countries with finalized contracts for conventional arms sales. The US is concerned. And, so is India. This explains the formation of the Quadrilateral Security Dialogue, or Quad, operating as a strategic forum to promote regional security and cooperation in the Indo-Pacific region, with a focus on shared values and a free and open international order based on the rule of law. The Quad member countries are: the US, Japan, Australia, and India. Interestingly, after the latest meeting of the defence ministers of the 10-member Shanghai Cooperation Organisation (SCO), which includes China, India, Pakistan and Iran, Indian Defence Minister Rajnath Singh refused to sign a draft statement that did not mention the Pahalgam terror attack. As a result, no joint declaration was made.

Pakistan’s defence spending is around 2.2 percent of its GDP. For the current fiscal year 2025-26, the country’s defence budget was initially proposed to be 1.97 percent of GDP. However, following the recent four-day India-Pakistan war, indications are that Pakistan’s defence spending, including hidden costs, military pensions and total military-related expenditure, may well exceed four percent of its GDP this year. In recent years, Pakistan’s defence spending has generally remained at around 2.5 percent of GDP. Largely import-dependent on China for critical war equipment stocks, Pakistan appears to be ready to fight proxy war for China in both the South and West Asian regions. China’s BRI investment in Pakistan, primarily through the China-Pakistan Economic Corridor (CPEC), is estimated to cost $62 billion. The CPEC is a key component of the BRI, aiming to enhance connectivity and trade between the two countries.

The 27-member European Union, which appears to be fighting a proxy war in support of Ukraine against Russia, is looking to raise the defence expenditure to as high as five percent of its GDP due to a combination of factors, including Russia’s aggression in Ukraine, a reassessment of security risks, the need to modernize its defence capabilities, and to better align with NATO’s defence plans. According to reports, Ukraine’s prolonged war against Russia is behind the EU’s decision in support of a stronger and more unified European defence, particularly in the face of US President Donald Trump’s lack of interest in continuously fund-feeding the European partners of NATO. The EU defence expenditure target of five percent of GDP includes investments in broader security areas, such as infrastructure upgrades (roads, railways, bridges), cyber defence, and military mobility to facilitate quick reinforcement. Among the world’s top military spenders as percentage of GDP are: Ukraine (34.5 percent), Lebanon (10.5 percent), Israel (8.8 percent), Russia and Saudi Arabia (7.1 percent each), Kuwait (4.8 percent), Poland (4.2 percent) and the US (3.4 percent).

India’s proposed defence spending as a percentage of GDP in the 2025-26 budget, estimated to be 1.9 percent, represents a substantial decrease from its historical levels of around three percent, excluding large defence pensions, in the early 2000s. While the overall budget allocation for defence has increased in recent years, the percentage of GDP allocated for the purpose has remained at a relatively lower level below two percent. This is despite the changing security environment in the region in the last two decades. Recently, even Bangladesh had the guts to threaten India with possible military action to cut off the ‘chicken’s neck’ in the Dooars region to sever India’s land link with its eight north eastern states, namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura. India should not take the first ever Bangladeshi threat of this nature lightly since the country’s import-dependent military is substantially controlled by China. This more than explains why India needs to increase its effective defence spending as a percentage of GDP in the coming years to remain fighting fit to protect the country’s territorial integrity and economic progress in the face of a Chinese proxy war using both Pakistan and Bangladesh against India. (IPA Service)

The article India Needs To Raise Defence Spending Substantially appeared first on Arabian Post.

By Nantoo Banerjee

The techniques of traditional warfare seem to be fast changing. Attack drones are increasingly playing a significant role in military aggression alongside missiles. The 12-day Israel-Iran war and the ongoing Russia-Ukraine battle showed how devastating the role of drones in modern wars is. In one of the most daring attacks, Ukraine said its armed forces used 117 attack drones to target airfields deep inside Russian territory. Ukraine’s “Operation Spider’s Web” run by its officials said the assault required Ukraine to secretly smuggle the drones into Russia over several months. Now, Russia has stepped up its drone production in a big way. Russian government records show that the country’s drone production jumped by 16.9 percent in May compared to the previous month. In April, President Vladimir Putin said over 1.5 million drones of various types were produced last year. Moscow is also developing a new laser-based system to defend against drone attacks.

In the Israel-Iran war, Iran launched around 1,000 drones at Israel during the war, according to the Israel Defence Forces (IDF). Those Iranian drones seemed to have done bigger damage to Israel than the missiles. Iran launched some 550 ballistic missiles at Israel during the war. Most of them were intercepted by Israeli and American air defences at an interception rate of around 90 percent. Iran deployed more than 1,050 drones. Of them, 570 had reportedly reached Israeli territory. Almost all of the world’s top military powers, including the United States, Russia, China, Israel, South Korea, the United Kingdom and France, are using their advanced military technology to manufacture more and more attack drones. Surprisingly, India, considered to be the fourth largest military power, is vastly lagging in production of attack drones.

India’s import-happy defence industry seems to have strongly neglected the area of drone manufacturing. According to ‘Warpower: India’ reports, the total number of attack drones with the country is less than five. Although the precise number is not publicly available, it is estimated that the country’s three military services — Indian Army, Navy, and Air Force — collectively operate a fleet of some 179 drones for ISR (Intelligence, Surveillance, and Reconnaissance) and attack purposes. This includes platforms like the Searcher series, Heron. Various indigenous drones are under development such as TAPAS-BH-201 (Rustom-2). The fleet of reconnaissance and services drones comprises 87 drones. India’s indigenously developed drone technology mostly attaches importance to drones for reconnaissance and surveillance (ISR/Recon). The country is yet to attach much importance to indigenous manufacturing and acquisition of attack drones.

Lately, India has been designing and developing a Medium Altitude Long Endurance (MALE) drone, the TAPAS-BH-201 (Rustom-2), which is a MALE drone for ISR missions. India, the world’s second largest arms importer after Ukraine, seems to prefer imported military-purpose attack drones to domestic manufacturing. It is said to be in the process of acquiring 31 MQ-9B Sea Guardian drones, with 10 each for the three services and one spare. According to Analytics India Magazine, India’s military drone market is projected to grow significantly. The market value is expected to reach $4.082 billion by 2030. It is difficult to understand why the need for indigenous attack drone manufacturing failed to attract the attention of the country’s defence ministry and the government while the major military powers across the world are increasingly emphasising on the development and production of attack drones.

Interestingly, during the last four-day India-Pakistan war, Pakistan had reportedly used as many as 400 drones, acquired mostly from Turkiye. Pakistan is believed to be in possession of a big fleet of drones, with varying roles and capabilities. They include Medium Altitude Long Endurance (MALE) drones, tactical drones for the army and air force, and smaller mini-UAVs. Pakistan has around 60 MALE UAVs. Its Navy operates an equal number of UAVs. The Pakistani Army has roughly 100 tactical UAVs, while its Air Force has around 70.

According to reports, Pakistan deployed 300-400 drones in coordinated attacks against India. One report mentioned the use of “300 to 400 SAR drones,” possibly referring to Turkish-made drones. Another suggests Pakistan may have used 800 to 1000 drones, mostly non-attack drones. Overall, Pakistan’s drone capability is strong. It is being aided by both Turkiye and China. Paradoxically, while India is upset with the Turkish military aid to Pakistan and is against trade and economic cooperation with Turkey, it has remained silent on China, which accounts for over 70 percent of Pakistan’s defence imports including drones.

Pakistan’s drone force consists of both foreign and local solutions. Primary contributions are made by Pakistani defence players as well as its close strategic ally China. It has a quantitative stock of Chinese Wing Loong II attack drones which are fielded alongside the Turkish Anka type. The rest is achieved with general reconnaissance and recon-attack models. China is the world’s second largest manufacturer of attack drones (UCAVs) after the United States. Other major attack drone manufacturers include Israel, Iran and Turkiye. The US has a large and advanced drone fleet, with manufacturers like General Atomics, Lockheed Martin, and Northrop Grumman producing prominent models such as the MQ-9 Reaper.

China has a number of companies manufacturing military drones. Top Chinese attack drone makers include CASC and CAIG offering a range of UCAVs for both domestic use and export. Turkiye has significantly expanded its drone capabilities in recent years, with Baykar Technologies producing the Bayraktar TB2, a widely deployed attack drone. Israel’s Elbit Systems and Rafael Advanced Defence Systems are known for developing and exporting various types of UAVs, including both surveillance and attack models. Iran’s growing presence in the global drone market, with companies like IAIO, is worth noting.

Several Indian companies are currently involved in the design, development, and manufacturing of drones for military applications. They include Hindustan Aeronautics (HAL), IdeaForge Technology, Zen Technologies, Paras Defence and Space Technologies, and Adani Defence & Aerospace. Additionally, companies like Larsen & Toubro (L&T) and Throttle Aerospace Systems are also contributing to the sector. It is high time that India’s armed forces encourage the domestic defence manufacturers to design and produce high quality combat drones. The government must allocate adequate funds to the three services to acquire attack drones, especially from domestic manufacturers.

The HAL manufactures various types of drones, including the ABHYAS high-speed expendable aerial target. The public sector defence firm is also involved in the development of larger, more advanced unmanned combat aerial vehicles (UCAVs). Adani Defence & Aerospace has a collaboration with Elbit Systems, Israel’s largest arms manufacturer, to produce the Skystriker loitering munition drone. It also produces the Drishti (Hermes 900) surveillance drones. L&T makes various drone-related projects for the Indian armed forces, including surveillance and logistics operations. What India badly needs are attack drones. The country is moderately equipped to manufacture and export high-quality missiles, but severely lacks capability in making high precision attack drones to be fully war-fit. (IPA Service)

The article India Must Step Up Attack Drones Production For Its Defence appeared first on Arabian Post.

By Nantoo Banerjee

It may be wrong to believe that Israel and the United States of America are the only two countries strongly against Iran’s bid to become a nuclear-armed country. The entire world is concerned about nuclear proliferation and nuclear smuggling and its falling into the wrong hands. The nature of the Iranian regime has added to the concern. It is probably the only major country in the world run directly under a spiritual leader. This may be the cause of worries for many. The Vatican City state of Rome, a Papal Kingdom, retains only a small ceremonial unit of the Swiss Guard as its defence force, which also serves as the Pope’s personal body guard. The Pope generally preaches love, compassion and world peace.

Iran is ruled by the supreme Shia spiritual cleric, Ayatollah Ali Khamenei, championing the cause of Shia supremacy. Shiite Iran is believed to be aspiring to build a nuclear arsenal ever since Sunni Islamic faction led Pakistan became a nuclear-armed state. Iran is an Islamic republic with a strong theocratic system and a great influencer of Shiite states and Shiites across the world. In contrast, the present Grand Imam of Al-Azhar, Ahmed el-Tayeb, considered to be the highest authority in Sunni Islamic thought and jurisprudence, is not known to be a political person.

Although only three countries across the Muslim world, comprising 57 states (members of the Organization of Islamic Cooperation), have a majority Shia population, the community has significant presence in several other Muslim countries mostly led by the rival Sunni faction. The Shia-Sunni rivalry makes Iran’s ambition to emerge as a nuclear-armed state a major geopolitical concern, especially in West and Central Asia as also in South and South-East Asia and European countries with a good Muslim population. The three Shia majority countries are: Iran, Iraq and Azerbaijan. Significant Shia communities also live in Bahrain, Lebanon, Kuwait, Turkey, Yemen, Saudi Arabia, Afghanistan and the Indian subcontinent.

Sunni community-led Pakistan’s nuclear arsenal has always been a major concern of western democracies as well as India. The late Abdul Qadeer Khan, the “father of Pakistan’s nuclear bomb,” was known for his involvement in smuggling of nuclear technology. He had officially admitted that he was running a nuclear proliferation network. He was initially placed under house arrest in 2004 after admitting to selling nuclear technology to Iran, Libya, and North Korea. A Q Khan was subsequently released in 2009. Most of the existing nuclear states fear that Iran might share nuclear weapons and technology with other countries or non-state actors, including terrorist groups, leading to wider proliferation.

The nature of Iran’s government headed by the supreme Shia spiritual leader and its ambition to emerge as a major nuclear power are what the non-Islamic world are mostly concerned about. The tiny Jewish state of Israel is highly worried as ‘annihilation’ of Israel is said to be the primary agenda of the supreme Iranian clergy. The western world is concerned as Iran’s devastating weapons such as long-range missiles and drones are in the hands of a spiritual cleric. Iran is believed to have the largest and most diverse ballistic missile stockpile in West Asia. Iran is displaying its military strike capabilities as the country’s spiritual head and supreme leader vowed to open “the gates of hell”. Through the best part of last week, waves of Iranian missile and drone barrages had been lighting up the skies across the tiny Jewish state of Israel which is only 1.33 percent geographical size of Iran. Israel’s total population is around 9.8 million as against Iran’s 87 million.

Under Iran’s supreme spiritual leader, the country has been developing sophisticated long-range missiles for decades. From the very beginning, the oil-rich “spiritual fiefdom” wanted to be a strong military power and be seen as the biggest strength of the global Shia community, constituting nearly 15 percent of the global Muslim population of 2.047 billion as estimated by TimesPrayer.com. Islam is the world’s second-largest religion in terms of adherents. The Muslim population has been growing faster than the overall world population, with a 21 percent increase in the number of Muslims between 2010 and 2020, compared to a 10 percent increase for the rest of the world.

Today, Iran possesses a very large number of short-range rockets and potential hypersonic weapons, most of which are locally produced with the blessings of the Ayatollah. Estimates from the US Office of the Director of National Intelligence suggest that Iran possesses around 3,000 ballistic missiles, a figure that surpasses any other regional power, according to the Australian Broadcasting Corporation. They include missiles of various ranges and types, contributing to Iran’s significant military might in the region.

Iran has also emerged as a major manufacturer-exporter of highly sophisticated drones. Last year, the Ukraine government claimed that Russia launched over 8,000 Iran-developed drones during the war. Iran is recognized for its advancements in drone technology, particularly in areas like combat drones and loitering munitions (suicide drones). Iran has been exporting drone technology to various countries, including Sudan, Syria, and Ukraine, and has supplied drones to regional allies and militias.

To the credit of the country’s spiritual leadership, Iran has developed a massive drone industry. It has been relying on indigenous production helped by international sanctions. Iran’s drone industry has focused on local engineering and manufacturing. It has been producing drones like the Ababil, Mohajer, and Shahed series, including the Shahed-136 (also known as Geran-2 in Russia) and the newer Shahed 238. Iran’s Kaman-22 drone resembles the US MQ-9 Reaper. Iranian drones are reshaping the dynamics of conflicts, particularly in West Asia and in the Russia-Ukraine war context.

With Pakistan boasting the Sunni nuke, Iran’s development of Shia nuke arsenal could be only a matter of time. The US-led western world and the Jewish state of Israel are most unlikely to be able to halt the process. In a normal situation, the western world and even Israel, the world’s eighth largest nuclear power, would not have been so hyper about Iran’s nuclear ambition if its purpose were purely in self-defence.

However, under the supreme spiritual leader Ayatollah, Iran is often seen as a “rogue state” by many Western countries, particularly the US, largely due to Iran’s challenging of the US-led world order and its support for groups that oppose American interests in the West Asian region. Iran is known to actively support groups like Hezbollah and Hamas, which are considered terrorist organizations by the US and its allies. Oil-rich Iran turning to be a major nuclear armed state is seen as a major threat to the existing balance of power. The control of the state machinery in the hands of a supreme spiritual leader adds to the cause of worry. (IPA Service)

The article The Western Nations Are Concerned About A Shia Nuke appeared first on Arabian Post.

By Nantoo Banerjee

With the country’s consumer price inflation rate hovering around 3.20 percent in the last two years, the Reserve Bank of India’s latest decision to cut the bank rate by 50 basis points, the third consecutive reduction since February this year, may be understandable. However, it seems to have come at the wrong time. India’s economy is in the midst of the usual annual lean season session, from April to September. The prices of agri-products are shooting up.

The rate cut is unlikely to stimulate borrowing and investment during the current hot summer season, followed by regular monsoon. It never did. Even the RBI does not expect the growth estimate to increase beyond the last year’s level of around 6.4 percent. The decision may unsettle the banking industry’s fixed deposit mobilisation effort. Normally, the bank rate is used as a monetary policy tool to stimulate economic growth. Why lower the lending rates if they do not help stimulate economic growth further? The latest World Bank report has pegged down India’s GDP growth projection for the current year to 6.3 percent.

Although the country’s current economic growth rate is considered to be quite good in comparison with other major world economies, it needs to be continuously held and expanded for several years to improve the livelihood of the world’s most populous country. The per capita consumption in India is significantly lower than those in other major economies. India’s per capita GDP is estimated to be only around $2,880 in 2025. This puts India at the bottom end of the list of “lower middle-income countries”.

Among major economies, Japan’s per capita GDP is $33,900, over 11 times higher than India’s. The United States has a per capita GDP of $89,000. There is a massive difference between the spending patterns of India’s top 15 percent population and the rest. In India, consumption is driven by a smaller segment of the population, while the majority of the population spends on essential goods and services, highlighting a significant income inequality. The rates of unemployment and underemployment in the country are quite high. This explains why the RBI’s repeated reductions in the bank rate have failed to noticeably push up public consumption and domestic investment.

Under the present circumstances, the RBI’s repeated rate cuts may have even an adverse impact on both savings and commercial bank performance. It may be wrong to guess that lower bank rates will induce traditional bank fixed-depositors to save in high-risk stock market instruments. Anyway, only a small percentage of the country’s population actively invests in the stock market. The number is estimated to be only around five percent. The generally preferred investment avenues are fixed deposits and real estates.

Instead of stimulating the economy, repeated central bank rate cuts are likely to have negative consequences, including inflation, weakened currency, and reduced returns on savings. They may also lead to asset bubbles and risk-taking by investors seeking higher yields. While low rates can encourage borrowing and investment, they can also lead to unsustainable expansions if not carefully managed. Low rates also discourage foreign capital investors. Low interest rates can make a country’s currency less attractive to foreign investors, potentially weakening its value against other currencies. Almost all over the world, governments exert pressure on central banks to cut interest rates. The extent and nature of that pressure vary.

In India, the government prefers to appoint a retiring career bureaucrat in the union finance ministry as the governor of the country’s central bank as it often finds it uncomfortable to deal with an economist RBI head to push its political agenda. The government frequently focuses on short term benefits for the country, often as a benchmark of its popularity while the central bank is traditionally concerned about preventing inflation by inhibiting excessive spending.

The trend is common across the free democratic world, inevitably leading to a certain amount of conflict between the executive branch and the central bank. In the United States, President Donald Trump is already seen to follow this tradition. During his first term, the US central bank or the Federal Reserve System (commonly referred to as the ‘Fed’) drew President Trump’s ire by raising interest rates and restricting economic activity. President Trump is having the same problem in his current term, with the Fed deciding to hold rates steady, drawing a sharp rebuke from the president.

In India, the lending rate cuts alone are not going to help investment in domestic production even if they raise the demand for consumption. The fear is the lower cost of funds may further push up merchandise imports. In fact, growing merchandise imports are competing with India’s GDP growth rate. Despite the positioning of the country in the World Bank’s ‘lower middle income’ group, India has been constantly competing with the ‘high income group’ countries such as the United States, China, Germany, Japan, the United Kingdom, the Netherlands, France, Italy, South Korea, Canada, Spain, Australia, Belgium, and Switzerland to remain as one of the world’s top 15 merchandise importing countries.

India holds the eighth position in the list after France and ahead of Italy, South Korea, Canada, Spain, Australia, Belgium and Switzerland. The RBI’s manipulation with bank rates seems to have failed to speed up domestic merchandise production, cut imports and push exports. Thus, the Indian central bank’s role in pushing up domestic production remains somewhat vague in the absence of strong policy support from the government.

Going by the recent history of India’s economic growth rates and inflation, frequent RBI rate cuts at this stage may appear unnecessary, if not confusing. The average inflation rate over the past 10 years has been roughly 5.85 percent. In 2016, 2017, 2018 and 2029, the inflation rate was below four percent. It was higher in 2015, 2020, 2021 and 2022, varying from the highest at 6.45 percent (2015) to 5.53 percent in 2021, according to Trading Economics. The monthly inflation rate has fluctuated, peaking at 12.17 percent in November 2013 and reaching a record low of 1.54 percent in June 2017.

Barring the economic growth contraction (-5.78 percent) in 2020 due to Covid-19 epidemic, the GDP growth rate remained impressive in 2021 (9.69 percent), 2022 (7.61 percent}, and 2023 (8.15 percent) while the bank lending rates remained more or less steady and strong. The economy is showing good growth. There is no need for frequent RBI rate cuts for now which can confuse the market – the lenders, depositors, consumers and even foreign investors. (IPA Service)

The article Bank Rate Cut By RBI Will Have Little Impact On Economy appeared first on Arabian Post.

By Nantoo Banerjee

India’s economic growth figures seem to be getting increasingly delinked with domestic manufacturing, industrial output, and job generation. The manufacturing sector had a very little contribution to the country’s 6.5 percent GDP growth during the last financial year, the slowest in four years. Despite a good monsoon last year, the country’s agriculture sector growth rate in the second quarter (October-March) was 3.5 percent. The industrial growth rate for 2024-25 is estimated to be only four percent, also marking the lowest in the last four years. In April, the country’s industrial output slowed to an eight-month low at 2.7 percent as per the data released by the National Statistical Office (NSO). What is pushing the country’s GDP growth? Obviously, the less reliable estimates of the country’s vast services sector backed substantially by imports.

Ironically, India’s total imports in the last fiscal had grown by 6.85 percent, a little above the country’s GDP growth rate. This may give a somewhat wrong impression that the GDP growth is linked with the import growth. Uncontrolled imports, mainly from China, are dampening India’s domestic production initiative and new job generation agenda. China’s imports from India are rapidly shrinking. In the last fiscal, India’s imports from China grossed over $113 billion, a $11.5 percent rise over the previous fiscal. The top imported products from China included electrical and electronic equipment, machinery, organic chemicals, and plastics, most of which should have been manufactured in India. This increase contributed to a widening trade deficit for India. In contrast, India’s merchandise exports to China collapsed to only $14.25 billion from $16.66 billion, last year. Export-led China does not seem to like to import anything from India.

No one in the government appears to be concerned about the country’s massive import growth year after year, especially from China. Imports are mostly at the cost of domestic production and local jobs. A country does not import merchandise alone. It also imports labour that goes into the manufacturing of imported products. China continued to be India’s top import source, by far the biggest from any single country. In the last fiscal, India’s total imports are estimated to have grown to US$ 915.19 billion. This growth was driven by higher merchandise imports, which reached US$ 720.24 billion, a significant increase compared to the US$ 678.21 billion in the previous fiscal. No department in the government is willing to take the responsibility of the low and slow domestic industrial production and sinking job growth rates since the present BJP-led national government has been in operation. The government has been acting more like a dream merchant often seen busy in forecasting and focussing on India’s long-term economic prospects.

The so-called ‘Make-in-India’ initiative made little success in the absence of the import-happy government’s liberal investment policy, especially in manufacturing, that could strongly induce foreign industrial investors rush to India as they did in Communist China for several years. Foreign investors are not interested in the political colour of a government. In the first three months of 2025, the foreign direct investment (FDI) in China was as much as US$36.9 billion. Consider this against the FDI inflow of a mere $0.4 billion into India during the whole of 2024-25. It was $10.1 billion, a year ago. This is probably the worst performance in the country’s annual FDI inflow records while the government keeps talking about India emerging as a global manufacturing hub. India’s own industrial entrepreneurs are investing little in the country. Instead, they are indulging in investing abroad. During the last financial year, India’s net outward FDI (OFDI) grew 75 percent year on year to $29.2 billion. Singapore, the US, UAE, Mauritius and the Netherlands together accounted for more than half of the rise in OFDI.

The country’s Index of Industrial Production (IIP) expanded by only four percent for the 2024-25 fiscal. This growth is lower than the 5.5 percent recorded in March 2024. The manufacturing sector experienced a further slowdown, with growth at 4.5 percent for the year, down from 12.3 percent in 2023-24. The IIP grew by only three percent in March 2025. The industrial output grew by four percent during the April-October period of the last financial year. The share of manufacturing in India’s GDP continues to be as low as 12 percent. According to Visual Capitalist, the share of manufacturing in China’s GDP is projected to be around 29 percent of global manufacturing output in 2025. This amplifies the significant dominance of China in global manufacturing, potentially matching or exceeding the combined share of the US and its allies. Specifically, China is projected to have a manufacturing output of $4.8 trillion, accounting for 29 percent of the global value.

Less than two months ago, India’s Finance Minister Nirmala Sitharaman said the country plans to raise the share of its manufacturing sector from 12 percent to 23 percent over the next two decades, aiming to create jobs and drive economic growth. While speaking at the Hoover Institution at California’s Stanford University, the finance minister said India is focussing on 14 identified sunrise sectors like semiconductors, renewable energy components, medical devices, batteries and labour-intensive industries, including leather and textile, to enhance the share of manufacturing in GDP.

However, of these industries, semiconductors may only appear to be a sunrise industry in India. Incidentally, the present form of the global semiconductor industry is almost 70-year-old. The first commercially available microprocessor, Intel 4004, was released in 1971. India is expected to launch its first locally produced semiconductor chip, under foreign equity and technical control, by the end of the current year. India is a major importer of semiconductors. Its local end-use market is projected to double from $54 billion in 2025 to $108 billion by 2030. Lately, the government’s highly liberal investment incentives are expected to bring foreign companies to help push up domestic semiconductors production.

Until recently, the government appeared to be rather casual about strengthening the country’s industrial and manufacturing bases. Even in 2014-15, when the Narendra Modi-led government came to power at the centre (May 26, 2014), India’s manufacturing sector contributed 16.3 percent to the country’s GDP. While the government’s much-touted ‘Make-in-India’ policy was launched in September 2014, hoping to fast-forward its share, the manufacturing sector’s contribution to GDP has subsequently declined mainly due to the lack of a strong commitment to the programme and uncontrolled import growth over the years. That may explain why the country’s annual GDP growth rate has generally failed to reflect on its growth of the manufacturing sector and employment. (IPA Service)

The article India’s Industrial Output Sinks Even As GDP Grows appeared first on Arabian Post.

By Nantoo Banerjee

Gaza’s Hamas militants face an unmitigated disaster as Israel is all set to take full control over Gaza strip after a gap of almost 20 years. Simultaneously, Israel seems to be gearing up to annex a substantial portion (Area C) of West Bank ignoring protests from France, the United Kingdom and Sweden and even a section of its own people In Tel Aviv. Last week, Israel said it would establish 22 additional Jewish settlements in the occupied West Bank. Hamas has few genuine supporters in the Arab world barring Iran and pro-Iran Houthis. Gaza may soon become a part of Israel’s extended territory with Palestinian population vastly diminished due to death and displacement during the Israel-Hamas war since October 7, 2023. The present Gaza war follows several unresolved Israeli–Palestinian conflicts in the past, including those in 2008, 2009, 2012, 2014, and 2021.

Ironically, Israel gave up the control of the Gaza strip, one of the world’s most densely populated settlements, in 2005. It withdrew from the Gaza strip and dismantled all its settlements. Israel also withdrew from the Philadelphi Route, a narrow strip of land adjacent to the border with Egypt, after Egypt agreed to secure its side of the border after the Agreement on Movement and Access, known as the Rafah accord. The Israeli army had invaded and took control of the Gaza strip in 1967 following a six-day war. It also captured the West Bank and east Jerusalem. At the time of Israel’s withdrawal from the 40-kilometer-long Gaza strip, its population was as large as 1.3 million. The birth rate in Gaza is among the highest in the world. However, there was little room for a proper Jewish settlement there to govern the place without much tension.

The Palestinian population is expected to be reduced significantly due to death and dislocation by the time of the end of the war, which seems to have reached the final stage. Nearly 70 percent of Gaza’s Palestinian population are refugees, depending mostly on humanitarian assistance for their daily livelihood. The security-linked Israeli blockade of transport movement through the land, air, and sea has forced a good number of the Gaza population to flee the area or die of starvation. In a way, Gaza’s refugee population has long been held captive by the Hamas militants running the show in the narrow strip. Once reacquired, Israel will ensure an adequate presence of Jewish population in Gaza to ensure its smooth management and make the strip economically viable.

Once the Gaza strip is conquered and a good part of the West Bank comes under the full Israeli control, the country is expected to concentrate on realising its long-cherished dream to emerge as one of the world’s top economic and military power. Currently, Israel is West Asia’s most developed and advanced country, boasting the 17th largest foreign-exchange reserves in the world. It has the highest average wealth per adult in the 18-member West Asian region, including those on or near the Arabian Peninsula, as well as Turkey, Egypt, and Iran. Israel ranks 10th worldwide by financial assets per capita. Notably, as many as eight Arab states now openly and unabashedly deal with Israel. They are: Saudi Arabia, the UAE, Egypt, Jordan, Oman, Morocco, Bahrain and Sudan.

Assuming that Israel’s fighting in Gaza and Lebanon will ease soon, the latest economic survey report of the Organisation for Economic Co-operation and Development (OECD) has forecast that the country’s economy will grow at a rate of 3.4 percent in 2025 and 5.5 percent in 2026, which is faster than the OECD’s average growth forecast for the global economy of 3.1 percent in 2025 and three percent in 2026. The OECD’s growth forecast for the current year is lower than the Bank of Israel’s projection of four percent and the Israel Finance Ministry’s 4.4 percent. However, the OECD expects Israel’s economy to rebound this year although it is pessimistic about the pace of growth, citing the risk of war-related spending that continues to take a toll on the country’s finances.

The 2023 US News & World Report ranked Israel among the world’s 10 most powerful countries. It found the Israeli military the fourth strongest globally, behind only the US, China and Russia. The Report said Israel is also the world’s sixth most politically influential power. It should be noted that Israel’s bid to become a leading global economic and military power are multifaceted. They include strengthening of the country’s high-tech sector, continuous innovation in defence technology, and fostering a robust economy. Several multinational corporations are setting up R&D centres in the country. It has a vibrant startup ecosystem, which attracts both local and international investment, and fosters innovation. Israel has a well-established and highly innovative defence manufacturing industry, developing advanced weaponry and technology. The country is a significant exporter of defence equipment.

Israel wants to end the Gaza war as early as possible to concentrate on the country’s economic development. In his first press conference of the year, Israeli Prime Minister Benjamin Netanyahu vowed that by the end of the current war, the entire Gaza strip would be under Israeli security control. Interestingly, Palestinians in the southern Gaza region have lately taken to the streets to protest against Hamas. Those Gaza-based Palestinian demonstrators were seen in videos posted on social media calling for an end to the war and for the removal of the armed group from Gaza. “Out! Out! Out! All of Hamas, out!” they chanted. With the head of the Hamas armed wing, Mohammed Sinwar, killed in an Israeli strike last week, the Gaza war is most unlikely to last long. (IPA Service)

The article Israel Is All Set To Take Over Gaza, West Bank Area appeared first on Arabian Post.

By Nantoo Banerjee

Pakistan is back in the business of pushing Jihadists into India. It is the same old story. Last week, barely 12 days after the announcement of a ceasefire on 10 May, Pakistani terrorists in Jammu & Kashmir’s Kishtwar district killed an Indian soldier in an encounter with the security forces. When were those Pakistani Jihadists pushed to J&K – before, or after the May 10th ceasefire? Has the Pakistani deep state taken seriously India’s warning that the country may resume military attacks on Pakistan if the latter fails to keep a tight rein on its Islamist terror outfits to prevent attacks on India?

Ironically, the latest Pakistani terror attack took place at a time when India’s all-party delegations of Parliamentarians were out to campaign on ‘India’s Operation Sindoor Global Outreach’ to tell the countries across the world that Pakistan only thrives on terrorism. Last week, India’s Permanent Representative to the United Nations, Ambassador Parvathaneni Harish, said that over 20,000 Indians have been killed in terrorist attacks in the last four decades. “Pakistan state-sponsored cross-border terrorism in India seeks to hold hostage the lives of civilians, religious harmony, and economic prosperity,” he said.

According to the South Asia Terrorism Portal, there were reports of as many as 87 incidents of killing involving 273 terrorists across India since January, this year alone. It provided data specifically for Jammu and Kashmir, showing 18 incidents of killing and involvements of 25 insurgents cum extremists. In 2024, India experienced 61 terrorist attacks in J&K. The most agonizing part is that almost all Islamist terror attacks on India are sponsored by the state of Pakistan and its agencies. These attacks include the one on India’s Parliament on December 13, 2001, by five Jaish-e-Mohammed terrorists. Will the state of Pakistan ever rein in its Islamist terror outfits? Most unlikely. The state of Pakistan and its military are said to be deeply linked with the grooming of terrorists and helping them sneak into India through the complex and highly militarized boundary, covering approximately 3,323 kilometres, between the two countries.

The India-Pakistan border covers two parts of India. They include India’s states of Gujarat and Rajasthan, and Pakistan provinces of Sindh and Punjab. The border also includes Sir Creek, a tidal estuary in the Rann of Kutch. The Line of Control (LOC), established in 1972 after the Indo-Pak War, divides the territory into Indian-administered Kashmir (J&K and Ladakh) and Pakistan-administered Azad Kashmir and Gilgit–Baltistan. The India-Pakistan border has always remained a source of high tension and conflict, with numerous cross-border incidents, military standoffs, and wars. The border remains one of the world’s most dangerous international boundaries with Pakistan reported to be constantly pushing trained terrorists into India to unsettle the country’s peace and security.

The continuing Pakistan-sponsored Islamist terrorism may be an extremely unfortunate part of the relationship between the two south Asian nations, but they seem to follow a global pattern as Islamist terrorism is growing across the world. Barely five months passed through the current year, there have already been several notable Islamic terror attacks. A mass stabbing in Iraq on April 1, was attributed to Anti-Assyrian sentiment and the Islamic State insurgents. On April 15, a massive bombing was linked to terrorism in Pakistan and the Balochistan insurgency. From April 13, a series of arson and shooting incidents occurred in Europe for several days, all said to be linked with Islamist terrorism. These events highlight the ongoing nature of Islamist terrorist threats in various regions.

The growing Islamic terrorism has not spared most countries in the world, having a recognisable Islamic population, except China. The latter has shown the world how to control religious violence. A vast majority of Chinese Muslim adults come from 10 ethnic minority groups that traditionally practice Islam, the two largest being those from the Hui community and Uyghurs. Most of China’s Muslims live in the country’s northwestern region, particularly in the areas of Gansu, Qinghai, Ningxia and Xinjiang, bordering Central Asia’s Muslim republics. Unlike in most other countries with Muslim population, China seems to have ensured even a birth control system to contain the Muslim ratio. Paradoxically, China seems to enjoy a fearful respect from all Islamic countries. China practically controls the Islamic states of Pakistan and Bangladesh as also Sri Lanka, a majority Buddhist country, through trade, economic and military cooperation.

Along with innocent civilians, terrorists are also dying in hordes as the countries with significant or growing Muslim populations constantly take innovative measures to tackle terrorism. The latest Global Terrorism Index revealed a significant increase in terrorist deaths, with 8,352 fatalities, the highest since 2017. The recent terrorist attacks were more deadly, particularly in the Central Sahel region of sub-Saharan Africa, a new epicentre of terrorism. Islamic State (IS) and its affiliates, along with Jamaat Nusrat Al-Islam Muslimeen (JNIM), a franchise of Al-Qaeda, were the most active terrorist organizations in this region.

The Vision of Humanity identified IS and its affiliates as the deadliest, responsible for 1,805 deaths across 22 countries. Other major groups include Pakistan’s Tehrik-e-Taliban and Al-Shabaab. Although the number of terrorist incidents, last year, decreased by 22 percent, the average number of people killed per attack increased by 56 percent, making them more lethal. The ‘Lone Wolf’ attacks in the western world, driven by individuals radicalized online, increased significantly, with a rise in terrorist incidents and arrests, particularly in Europe.

Last year, Europe faced several major Islamist terror attacks, including the deadly Moscow Crocus City Hall attack killing 145 people and injuring many more. Other than this specific incident, terrorist attacks in the West, particularly in Europe, doubled to 68, indicating a significant increase in Jehadist violence on the continent. Lone Wolf attacks have become increasingly prominent in the West, accounting for a significant portion of fatal attacks in recent years.

Islamist terror groups like ISKP (Islamic State – Khorasan Province), a regional branch of the IS Salafi jihadist known to be highly active in Central and South Asia, have threatened to target major sporting events, including the Paris Olympics. In West Asia, Al Qaeda and the Islamic State remain committed to conducting attacks against the US homeland as well as US interests. Israel has degraded Hezbollah’s and Hamas’s capabilities, while the Houthis have become a more active regional threat. Africa remains the most active centre for Salafi-jihadist organizations.

It should be noted that Hindu-majority secular India features prominently in the global Islamist terror targets. And, Pakistan and Bangladesh form the two major export centres of Jihadists into India. While Islamist terror attacks from Bangladesh are suspected mostly by Lone Wolf groups having little link with the state administration and army, the ones originating from Pakistan seem to have strong connections with Pakistan’s Inter-Services Intelligence (ISI). Pakistani Jihadists are believed to be mostly ISI recruited and trained.

Incidentally, India’s own intelligence agency, Research and Analytical Wing (RAW), may have substantial information on India-specific Jihadi training establishments in Pakistan. A coordinated effort among India’s central and state intelligence agencies, particularly those in border states such as J&K, Rajasthan, Gujarat, Maharashtra, West Bengal, Assam and Tripura, should help locate Islamist Jehadi export networks and, in the process, help the army, police and other security forces smash the Jehadi design in advance before it targets the country’s civilians and their dwellings. (IPA Service)

The article Growing Islamic Terrorism Is A Global Phenomenon appeared first on Arabian Post.

By Nantoo Banerjee

It may be good that the latest armed conflict between India and Pakistan ended quickly before it could blow up into a full-scale war leading to massive destruction of life and property and economic disaster in both the countries – maybe more so in Pakistan than in India. However, the abrupt end of the conflict, which seriously damaged Pakistan’s military infrastructure, seemingly due to Pakistan’s possible nuclear threat is a matter of major concern. Of all the nine nuclear armed states, Pakistan is probably the world’s biggest terrorist state that had secretly sheltered the world’s most notorious, violent and wanted terrorist Osama bin Laden in an army cantonment area.

Pakistan’s ways are equally unpredictable. Formerly a close ally of the United States, Pakistan is now heavily dependent on China, militarily and economically. Reports suggest that a bewildered Pakistan, cornered by a barrage of Indian missile attacks on its military assets, was considering a nuclear response to teach India a lesson. Pakistan is the world’s seventh largest nuclear-armed power with some 170 nuclear warheads — all targeted at its single major enemy, India. Nuclear arms are Pakistan’s key weapon of mass destruction. Thankfully, Pakistan is yet to develop substantially other three weapons for the purpose – biological, chemical and radiological.

Unlike India, Pakistan pays little attention to the so-called nuclear doctrine. In the case of war with India, Pakistan will not even blink before using its nuclear warheads with the ‘first strike’ option if it finds an Indian military aggression deeply penetrating through its defences causing a major setback that can’t be reversed by conventional means. The ‘first nuclear strike’ option could be lethal as it can defeat the other belligerent nuclear power by destroying its arsenal to the point where the attacking country can survive the weakened retaliation while the opposing side is left unable to continue war. The Pakistan armed forces and government were clearly bamboozled by the extremely swift moves by the Indian defence forces that nearly rattled its war machinery.

In the early hours of May 10, Indian missiles hit Pakistan’s Nur Khan air base in Rawalpindi, where the headquarters of the nuclear-armed country’s military is located. A thoroughly confused Pakistan probably considered the nuclear option. It is possible that the US had a tip-off about Pakistan’s intention. India may deny but the White House had promptly responded by asking the two belligerent nations to go for immediate ceasefire. And, both sides agreed and the fight stopped abruptly. In fact, US President Donald Trump upstaged both New Delhi and Islamabad to announce a “full and immediate” India-Pakistan ceasefire hours before the Indian government and Pakistan Prime Minister Shehbaz Sharif confirmed the development.

Within days after the ceasefire, Prime Minister Narendra Modi served a strong message amid tensions with Pakistan, declaring that “India will not tolerate any nuclear blackmail.” In his first address to the nation after ‘Operation Sindoor’, Prime Minister Modi said, “No nuclear blackmail will be tolerated anymore. Terrorist attacks on India will have to face a befitting reply, and the response will be on our terms.” He said India will not be intimidated by nuclear threats. “Any terrorist safe haven operating under this pretext will face precise and decisive strikes,” the prime minister added. However, it may be difficult to entirely ignore the Pakistani ‘nuclear blackmail’ factor until the country is able to neutralise Pakistan’s nuclear war capability which is singularly directed towards India. Tiny Pakistan, only 25 percent of India’s geographical size, has as many as 170 nuclear warheads – 10 less than India’s, according to the think-tank Stockholm International Peace Research Institute (SIPRI). As of January 2024, SIPRI estimated there were 12,121 nuclear warheads worldwide. Of these, about 9,585 were held in military stockpiles, with 3,904 actively deployed – 60 more than the previous year. The US and Russia together account for more than 8,000 nuclear weapons.

Pakistan’s nuclear warheads can be delivered from the land and air. Pakistan is yet to have the sea delivery capability for its nuclear arsenal. Today, a single nuclear warhead can kill hundreds of thousands of people, with lasting and devastating humanitarian and environmental consequences. Jihadist Pakistan’s ‘nuclear blackmail’ can’t be taken lightly as the country had spent billions of dollars to build the nuclear arsenal and deployment system marking India as its sole target. It has developed long-range ballistic missiles which can deliver nuclear warheads even beyond 3,500 kilometres.

Pakistan’s longest-range missile system is the Shaheen-III, which was first tested in 2015 and had an estimated range of 2,750 kilometres. Pakistan is even ahead of Israel and North Korea in nuclear warhead stocks. Pakistan is reportedly one of the four countries yet to deploy nuclear warheads. The other three are: India, Israel and North Korea. However, deployment of nuclear warheads is not a big deal. They can be done within hours depending on the delivery system and the specific requirement. Intercontinental ballistic missiles (ICBMs) launched from land can be deployed within minutes. The same is the case of submarine-launched ballistic missiles (SLBMs).

Despite the massive production of nuclear weapons by the ‘Enabled Nine’ year after year, none of them has shown the courage to use them against their adversaries in a war since the first and the last nuclear strikes were made by the US, dropping atomic bombs on Hiroshima and Nagasaki towards the end of the 2nd World War in August, 1945. The US was the first country to produce atomic bombs during World War II as part of the Manhattan Project, testing the first nuclear weapon on July 16, 1945. Today, the nuclear weapons produced by China, France, India, Israel, North Korea, Pakistan, Russia, the United Kingdom and the US are several times more powerful than the nuclear weapons dropped on Hiroshima and Nagasaki. They are capable of decimating the entire world.

In this context, the two pertinent questions are: Will Jihadist Pakistan ever stop its frequent state-sponsored dangerous terrorist attacks on innocent Indians on Indian soil and ‘nuclear blackmail’? Probably not. A Jihadist nation, which can secretly shelter Osama bin Laden, the world’s most dreaded terrorist and mass murderer, and kidnap and butcher a young ‘The Wall Street Journal’ scribe, Daniel Pearl, near Karachi just because he was a Jew, can hardly be trusted. Pakistan’s nuclear threat against India may be real. (IPA Service)

The article Pakistan’s Nuclear Threat To India Is Real appeared first on Arabian Post.

By Nantoo Banerjee

Amazing are the ways of the Indian government and the country’s political satraps to deal with frequent Islamist terror attacks on India’s innocent citizens. In the last one month or so, the organized Islamist terror in West Bengal’s Muslim-majority Murshidabad district had led to massive destruction and displacement of over 150 Hindu families. Within weeks of the incident came the attack on scores of innocent tourists at picturesque Pahalgam in the Muslim-dominated state of Kashmir (J&K) in another far corner of the country. The trousers of around 20 victims of the dastardly Pahalgam attack – all males – were reportedly found unzipped or pulled down by the team of officials that carried out the first examination of the 26 lifeless, bullet-riddled bodies, in what is being seen as a confirmation that Islamist terrorists had established the faith of the tourists before killing them. These terrorists are not political militants. They are jihadists, or killers of Kafirs. No words are strong enough to condemn the abominable religion-centric cruelty.

Surprisingly, the Indian government is yet to act rigorously. The perpetrators of such horrific crimes are yet to be traced and brought to justice. The J&K chief minister had at least accepted his government’s failure to protect the innocent tourists and told the state assembly that “I did not know how to apologise to the families of the deceased. Being the host, it was my duty to send the tourists back safely. I couldn’t do it. I do not have the words to seek an apology,” he added. However, the Indian government, which maintains around 500,000 military and paramilitary personnel in J&K, is yet to take responsibility for the Islamist massacre of Pahalgam tourists. In West Bengal, neither the state nor the central government took responsibility for the gruesome religious violence on innocent Hindu residents at Murshidabad hamlets.

Instead of acting fast to teach its belligerent neighbour Pakistan, known to be a perpetual source of Islamist terror attacks on India, an exemplary lesson, the Indian government has so far been mostly into chest-thumping. India’s home minister, who visited Srinagar, the J&K state capital, after the incident and convened a meeting with top security officials, wrote on social media: “We will come down heavily on the perpetrators with the harshest consequences.” With India clamouring that terrorists involved in the Pahalgam massacre were from its arch-enemy Pakistan, the Indian prime minister has vowed to pursue the assailants to the “ends of the earth.” Unfortunately, there is little action still to be seen on ground.

So far, they all appeared to be empty threats. Such threats have been helping Pakistan to internationalise the issue and gather support from friends like China. India’s threat to suspend the Indus Water Treaty, which governs the water flow in the Indus basin between India and Pakistan, is yet to be executed. Such an action could probably wreak havoc on Pakistan’s agriculture and economy. Although several days have passed after the Pahalgam killings, there is practically no clear sign of any punitive Indian action against Pakistan except for some battle-like military drills by the Indian Navy and Air Force within the country’s western and northern fronts. The military exercise has given Pakistan a handle to tell the world that it expects India to launch a military incursion soon on the country. As a result, India is now under external pressure to bite the dust.

Paradoxically, almost in a similar situation on October 7, 2023, when Palestinian Hamas militants hurled missiles to kill hundreds of Jewish revellers, including women and children, celebrating their religious holiday, Simchat Torah, with song and music at an open setting in Southern Israel, bordering Gaza strip, the Israeli government did not waste much time to militarily attack Hamas terrorists with full force. The Israeli attack on the militants is still on, killing over 62,000 Palestinians in Gaza, West Bank and southern Lebanon, so far. None of the adjoining 22 Arab countries, all members of the Arab League, came in support of Gaza militants to force Israel stop killing innocent Gazans. The Arab League members include Egypt, Bahrain, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, the UAE, and Yemen. Only Yemeni Houthis have partly supported Gaza militants.

If India reacted instantly to launch military attacks on Pakistan soon after the Pahalgam massacre, Pakistan would have probably come to terms with India making promises to help trace those terrorists. India’s seeming indecision on attacking Pakistan is making the matter complicated. A war-like tension between the two countries may lead to more jihadist subversions in India. Less than a year ago, in June 2024, Pakistan-linked jihadists killed nine people and injured three dozen others after they opened fire on a bus carrying Hindu pilgrims. The government did little to bring the terrorists to justice.

Even this time, India’s response has remained limited to detentions of people suspected of supporting secessionist groups; and raids and demolitions of the homes of rebels, in Kashmir, banning all imports from Pakistan, suspending all postal services from the country and barring its ships from entering Indian ports. India has temporarily shut down tourism in parts of the Kashmir valley. It is also expelling Pakistani citizens living in India, including the families of former Kashmiri rebels who were invited as a part of a rehabilitation programme.

The naked demonstration of religious killings at Pahalgam was almost instantly condemned by the United Nations and a number of countries. UN Secretary-General Antonio Guterres strongly condemned the attack and stressed that “attacks against civilians are unacceptable under any circumstances.” US Vice President JD Vance, who was visiting India with his family during the Pahalgam massacre, called it a “devastating terrorist attack.” He added on social media: “Over the past few days, we have been overcome with the beauty of this country and its people. Our thoughts and prayers are with them as they mourn this horrific attack.” US President Donald Trump noted on social media the “deeply disturbing news out of Kashmir. The United States stands strong with India against terrorism.” Other global leaders, including Russian President Vladimir Putin and Italian Prime Minister GiorgiaMeloni, condemned the attack. “The United States stands with India,” U.S. Secretary of State Marco Rubio said on X.

If the primary function of a state is to protect the life, liberty and property of its citizens, the growing attacks on Hindus in recent months, may suggest India has practically failed in this regard. Pressure is growing on the country’s prime minister and his so-called Hindu nationalist government to mount a military response to the Pakistan-backed Jihadi attack on innocent tourists at Pahalgam. The government can’t escape its responsibility by merely giving “free hand” to armed forces to respond to the Pahalgam Jihadist attack.

The attack was not on the armed forces as it happened on February 14, 2019, after a suicide car bombing killed 40 paramilitary troops in Pulwama in Kashmir. The attack was claimed by Pakistan-based Islamist group Jaish-e-Mohammad. The Indian armed forces retaliated soon after with its air force heavily bombing down Jaish-e-Mohammad camps near the Pakistani town of Balakot reportedly killing “a very large number of JeM terrorists, trainers, senior commanders and groups of jihadis” in the region. It is time that India acts quickly and decisively against all forms of religious terrorism to protect its citizens. (IPA Service)

The article To Strike Or Not To Strike Pakistan Is The Big Question Before India appeared first on Arabian Post.

By Nantoo Banerjee

Hit by the massive US import tariff, export-led China seems to have gone crazy as its No.1 export destination, the United States of America, has suddenly gone out of reach after US President Donald Trump’s prohibitive import tariff on China. Shockingly, China has issued a warning against countries seeking to strike a broader economic deal with the United States at its expense, ratcheting up its rhetoric in a spiralling trade war between the world’s two largest economies.

Notably, India, the second largest trade surplus destination of China after the US, is currently negotiating with the US for a new trade deal. With India’s exports to the US and imports from China reaching an all-time high in 2024-25, China is clearly worried about India’s possible import trade shift from China to the US. With the US, India had a merchandise trade surplus of $41.18 billion during the last financial year while its trade deficit with China reached a record level of over $99 billion. The US accounted for nearly 19.78 percent of India’s total exports and 6.29 percent of the total imports.

China proved to be India’s biggest avenue of foreign exchange drain as the country’s trade deficit with China reached an all-time high at $99.2 billion in 2024-25. China’s massive merchandise export push towards India witnessed a 17 percent export growth for China over the previous year while the country further stifled its imports from India. During the last fiscal, India’s exports to China decreased by 14.5 percent, reaching only $14.25 billion, a drop from $16.66 billion in the previous year.

With India now negotiating with the US for a fresh trade deal between the two countries, China is visibly upset. China has accused Washington of abusing its import tariff mechanism to corner the world’s largest exporter. Beijing will firmly oppose any party striking a deal at China’s expense and “will take countermeasures in a resolute and reciprocal manner,” its Commerce Ministry said in a statement. Ironically, the threat – if China is serious about its implementation – is expected to vastly benefit India. In fact, India should raise a massive import trade barrier against China to protect its industry and local employment until China allows substantial import of goods from India on a reciprocal basis to bridge the large trade gap.

The Trump administration is believed to be pressuring nations seeking tariff reductions or exemptions from the US to curb trade with China, including imposing monetary sanctions. President Trump has paused the sweeping tariffs on dozens of countries on April 2 except those on China, singling out the world’s second largest economy for the biggest merchandise import levies. Over the years, increasing imports from China have seriously impacted the growth of the domestic industry and employment in the US. Now, the US seems to be determined to arrest the trend. This explains President Trump’s move to raise tariffs on Chinese imports to 145 percent, prompting Beijing to slap retaliatory duties of 125 percent on US goods, effectively erecting trade walls against each other. “The United States has abused tariffs on all trading partners under the banner of so-called ‘equivalence’, while also forcing all parties to start so-called ‘reciprocal tariffs’ negotiations with them,” a Chinese Commerce ministry spokesperson said.

Chinese President Xi Jinping started hopping around the leading ASEAN countries with the intention of partly covering China’s export loss to the US. Not many ASEAN nations are, however, seemed to be convinced as they are also suffering from increasing trade deficits with China. President Xi Jinping visited some of the Southeast Asian countries in a move to bolster regional ties, calling on its ASEAN trade partners to oppose unilateral bullying by the US. ASEAN has 10 member countries including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. Interestingly, economic ministers from Thailand and Indonesia were recently in the US, with Malaysia set to join later last week, all seeking trade negotiations with the US administration. The trade between ASEAN and the US totalled around $476.8 billion in 2024, according to the US estimates, making Washington the regional bloc’s fourth-largest trading partner.

In fact, ASEAN accounts for China’s largest export destination. Last year, China’s exports to ASEAN reached US$586.52 billion, a 12 percent increase compared to the previous year. This growth has led to higher trade deficits for some ASEAN countries and has put pressure on local industries and employment due to the influx of Chinese goods. Increasing trade deficits with China have been haunting major ASEAN countries as in the case of India. Last year, Chinese exports to ASEAN grossed $586.52 billion (up 12 percent) while Chinese imports from ASEAN stood at only $395.81 billion. ASEAN’s exports to China saw a barely two percent growth.

China’s export growth to ASEAN countries has led to increasing trade deficits for some of the member nations and has put pressure on local industries due to the large influx of Chinese goods. Not many ASEAN countries trust China when it comes to trade. They find the US a much reliable trading partner. Last year, total merchandise trade between the US and ASEAN countries amounted to $476.8 billion. The US imports from ASEAN were $352.3 billion, a 13.3 percent increase from the previous year, leading to a US trade deficit with ASEAN at $227.7 billion, a 11.6 percent rise from 2023.

Under such circumstances, few countries are ready to take seriously China’s threat to retaliate against those trying to negotiate bilateral trade and economic deals with the US. Most of the countries, including India, find the US a more reliable trading partner than China. As for India, the country’s trade deficit with China has surged, reaching a record level, with imports from China far outpacing exports. China has been consistently blocking imports from India. It has also been using Nepal to push all kinds of Chinese goods into India. China has become India’s top import source in various industrial product categories. With the US-China trade relation having reached its nadir, there are strong concerns about Chinese exporters diverting production to India due to US tariffs and further resorting to dumping practices.

Fortunately, India and the US have already finalised the terms of the ongoing Bilateral Trade Agreement negotiations, aiming for balance and reciprocity in trade relations. According to US Treasury Secretary Scott Bessent, India may be the first country to sign a trade deal with the Trump administration. The trade pact is expected to boost market access, reduce tariffs, and bridge trade deficits for mutual benefits. (IPA Service)

The article China’s Warning Against Nations Striking Trade Deals With The US Is Absurd appeared first on Arabian Post.

By Nantoo Banerjee

It is good to know that the government is already cautious about the possible increase in Chinese export trade and investment to India to exploit both the local market as well as to push exports to the USA taking advantage of the massive US import tariff difference between India and China. India needs to be cautious about China’s likely general merchandise export push, including automobiles, to the country to partly offset its anticipated export loss to the United States. The total US import tariff on goods from China now stands at 145 percent. President Trump had made a general announcement of 10 percent import tariff for all countries, and even higher tariffs for 60 trading partners having high trade imbalance with the US.

However, facing a global market meltdown, the US president backed down on his import tariffs on most countries for 90 days as some of these nations, including India, are engaged in bilateral trade negotiations with America. On the contrary, China challenged the US by imposing additional tariffs on goods imported from the US to 125 percent. Obviously, the two sides are not interested in doing trade with each other under the present environment. The US imported $438.9 billion in goods from China last year, according to the Office of the US Trade Representative, and exported only $143.5 billion in goods, leading to a massive trade gap or deficit. India’s annual merchandise import is worth well over half a trillion dollars.

India has also been hit hard by aggressive Chinese exports to the country while China has nearly blocked imports from India. In the period from April to February of 2024-25, India’s exports to China decreased by 15.7 percent to only $12.7 billion, while imports from China rose sharply by 10.4 percent to $103.7 billion. China has already emerged as the largest exporter to India, overthrowing the US, India’s long standing foreign trade partner and provider of its largest trade surplus from any country.

Now, the chances are China will further push its exports to India and also try to invest in manufacturing in India to serve the markets of both India and also probably the US. China has manufacturing facilities in a number of countries to push its exports to the US. They include Mexico, Cambodia, Vietnam and Thailand. The US, which accounts for India’s largest trade surplus from any country, is believed to be highly unhappy about India’s growing imports from China.

Notably, China’s industrial investment in Mexico has heavily surged, particularly in recent years, with a focus on manufacturing, especially automotive and electric vehicles, driven by factors like nearshoring and USMCA (United States-Mexico-Canada Agreement) trade benefits, though official figures may understate the true scale of engagement. Chinese foreign direct investment (FDI) in Mexico has seen significant growth, suggesting a rise from $38 million in 2011 to $386 million in 2021. Chinese investment is reportedly concentrated in the manufacturing sector, including auto parts, electronics, home appliances, and electric vehicles. Chinese EV manufacturers are using Mexico as a base to supply the US market, potentially evading tariffs on EVs coming from China. The latter’s growing presence in Mexico is a potential challenge to US economic and national security interests, particularly in strategic sectors like electric vehicles and infrastructure. Chinese direct investment could be over six times higher than reported by Mexican and Chinese authorities. Chinese companies are increasingly investing in industrial parks in Mexico, particularly in northern regions like Nuevo Leon, Coahuila, and Baja California.

For instance, BYD, a major Chinese electric vehicle manufacturer, is investing in Mexico, aiming to build a car factory and potentially dominate the EV market. Located north of Monterey in Mexico, Hofusan Industrial Park is home to manufacturing plants for ten Chinese companies, with investments aggregating $1 billion over the past three years. Other Chinese companies investing in Mexico include Ning B shung group, Tball Group, High Sense Bethel Automotive, and Kuka. China’s primary export destinations, including those that facilitate its exports to the USA, are known as Hong Kong, Vietnam, South Korea, and Japan. Canada, the UK and Germany are also China’s major trading partners for the US market. In 2022, the top five exporters of goods to the US market were China, Mexico, Canada, Japan, and Germany.

In India, BYD had proposed a $1 billion joint venture with Megha Engineering and Infrastructures (MEIL) to build electric cars and batteries, but the plan faced the India government scrutiny and was reportedly shelved due to security concerns. However, the Telangana government had identified a 200-acre site for BYD’s potential plant, near Olectra’s electric bus plant. Olectra Greentech, India’s largest electric bus manufacturer, is setting up a new greenfield factory in Seetharampur, near Hyderabad, Telangana, with an estimated investment of Rs.700 crore, aiming for an initial capacity of 5,000 buses and ramping up to 10,000 units. Olectra Greentech is believed to have a significant partnership with BYD for the manufacturing and maintenance of electric buses, with an extended agreement until 2030. Ironically, Megha Engineering was in the news as one of the top donors to political parties via electoral bonds, donating around 60 percent of the total Rs 966 crore to Bharatiya Janata Party (BJP), according to the data from India’s Election Commission.

Another Chinese automotive giant, SAIC Motor, the country’s largest vehicle manufacturer by sales volume and a Fortune 500 company, is already present in India, producing MG-branded vehicles, including electric vehicles in collaboration with the JSW group, at Halol in Prime Minister Narendra Modi’s home state of Gujarat. JSW Group holds a 35 percent stake in the joint venture named JSW MG Motor India. SAIC Motor holds a 49 percent stake in MG Motor India. Other stakeholders include Indian financial institutions (8 percent), MG India employees (5 percent), and MG India dealers (3 percent.) The company’s plea for ‘production linked incentive’ (PLI) has been under government scrutiny due to MG Motor’s strong China connection, requiring official approval for FDI from countries sharing land borders with India.

It is to be seen how the Indian government effectively tackles the aggressive Chinese pressure to review its foreign direct investment (FDI) norms. It is in the country’s strategic and geo-political interest that the government must block majority Chinese control, directly or indirectly, in industrial investments in India. To check the massive annual trade deficits with China, India should urgently hold bilateral trade talks with China to clearly link its imports with exports. Until then, the country could impose Trump-style heavy import tariffs on Chinese products and create strong non-tariff barriers to check imports from China. The latest US trade and tariff actions have exposed India’s commercial vulnerability. At a stake are the country’s economy, employment generation and the future exchange value of Indian Rupee. (IPA Service)

The article US Import Tariffs On China Raise India’s Trade Vulnerability appeared first on Arabian Post.

By Nantoo Banerjee

If in the United States, the world’s second largest federal democracy, the number of seats in the House of Representatives could remain capped at 435 since 1913, there is no reason to justify the latest delimitation exercise to freshly fix the number of seats and boundaries of territorial constituencies in each state of India for the Lok Sabha and state legislative assemblies in keeping with the population growth. The country is now going through a census exercise after a gap of several years. In fact, India should be more concerned about how to contain its population growth and make its legislatures truly contributive to the electorate. Two years ago, India surpassed China as the world’s most populated country. This is despite the fact that China is nearly three times larger than India in terms of land mass. Ideally, India should focus on how to control the population size to benefit the public from the country’s real time economic growth after the current census exercise. The delimitation exercise should take a back seat.

The country’s Lok Sabha would perform well without an additional number of backbenchers, who contribute little to Parliament proceedings by raising public issues and participating in debates. The number of seats and boundaries of territorial constituencies in each State for the Lok Sabha and Legislative assemblies also represents the seats reserved for Scheduled Castes (SC) and Scheduled Tribes (ST) in these houses. Although the Articles 82 and 170 of the Constitution provide that the number of seats in the Lok Sabha and State Legislative assemblies as well as its division into territorial constituencies shall be readjusted after each Census, they need to be amended to freeze the number of seats in state assemblies and Parliament. The ‘delimitation process’ is performed by the ‘Delimitation Commission’ which is set up under an act of Parliament. In the past, such an exercise was carried out after the 1951, 1961 and 1971 Census.

In the US, the number of seats in the lower house has remained frozen since 1913 although the country’s population has increased almost four times from 94 million to around 340 million, last year. The US Congress had capped the number of House Representatives at 435 since the Apportionment Act of 1911 except for a temporary increase to 437 during the admission of Hawaii and Alaska as states in 1959. Over the last century, US Congressional Districts have more than tripled the size since the 1910 census, listing roughly 212,000 inhabitants per district. While the number of House Members for each state is determined according to a statistical formula in federal law, each state is responsible for designing the shape of its districts so long as it accords with various provisions of the Voting Rights Act of 1965, which seeks to protect racial minorities’ voting and representation rights.

What India badly needs to do is to improve the quality of its Parliament and state legislature members. Political parties seem to be more interested in grabbing seats in the legislature than effectively using the lawmaking forum to address the needs of the day. They should discuss and debate on the efficacy of the existing laws, amend them if necessary, and introduce new ones to tackle new issues. To grab seats in the legislature, these political parties would go to any extent to recruit even some seemingly politically dumb popular film stars and entertainment world personalities to win elections.

Such representatives are often seen occupying seats in Parliament without making any contribution to the proceedings during their entire tenure. Not even 30 percent of Lok Sabha members show the desire for active participation. Occasionally, some are even seen to doze off to sleep undisturbed by heated debates in the legislature. What matters to a political party is sheerly the number it has in Parliament and probably nothing else. The delimitation exercise to raise the seats in the legislature may unfortunately focus only on the numbers. This needs to be stopped. Moreover, the exercise may punish states having lower or even negative population growth and reward those contributing to the country’s population explosion. This is hardly acceptable.

The country’s members of legislatures, including those of Lok Sabha, are costing the nation dearly with little improvement of their functions. For instance, the cost to the exchequer of a MP could be well over Rs. 60 million per annum, including salaries, perks and other expenses, and MPLADs (Members of Parliament Local Area Development Scheme). Only last week, the national government approved a 24 percent pay hike for MPs, effective from April 2023. In effect, the main job of a Member of Parliament is to legislate on the ‘Union List’ matters or modify them through amendments and hold the Union Government accountable.

For the last five decades, Indian Parliament has functioned with 543 Lok Sabha MPs while the country’s population increased from 550 million to 1.45 billion. India’s population is projected to peak around 1.65-1.70 billion in the next three decades whereas the United Nations has projected China’s population at around 1.21 billion by 2060. China’s One-Child Policy, implemented from 1979 to 2015, helped curb the country’s population growth by restricting most families to one child. The India government may think on such lines or follow a system that rewards small families and penalises those producing more children ignoring their social and financial constraints.

Under the circumstances, expansion of the legislature in keeping with the size of population would be a wrong step forward. It will put the states, having a good population management record, in an awkward situation vis a vis others showing uncontrolled population growth. In recent years, some of India’s highly populous states such as Uttar Pradesh, Bihar, West Bengal, Maharashtra, Rajasthan, Jharkhand, Orissa, Chhattisgarh, Madhya Pradesh, Andhra Pradesh, Kerala, Tamil Nadu, Punjab and all the states located in the North-East region witnessed perceptible increases in population. It will be good for both the centre and states to cap the size of the legislature irrespective of the population expansion to ensure the proper functioning of the legislatures. The delimitation exercise may wait for now. (IPA Service)

The article It’s Time To Cap The Number Of Seats In Lok Sabha appeared first on Arabian Post.

By Nantoo Banerjee

Returning empty-handed and crestfallen from his meeting with United States President Donald Trump, popular satirical comedian turned Ukraine President Volodymyr Zelensky looks more like a totally confused person now. He doesn’t know whom to trust — highly peeved US President Donald Trump or the leaders of the EU-UK combine, the backstage instigators who constantly propped him up to fight a losing battle with mighty nuclear armed Russia. Even after the globally-televised snubs he received from Trump and his Vice President James David Vance at a White House press conference after a tense Oval Office meeting, he had the cheek to confer with those European leaders, playing the fiddlers on the roof, on his return about the future of his country’s three-year old war with mighty Russia, especially after the massive death and devastation on its eastern front. Joker Zelensky is clearly at his wit’s end.

To save what is left of the beautiful land of Ukraine and its people, Zelensky must resign soon and let his country pick up a level-thinking leader to settle for a peace with Russia to rebuild the country, one of Europe’s most technologically advanced nations. All that Ukraine needs to do is to assure Moscow that it will not entertain NATO on Russia’s back. It will remain a politically neutral nation, acting as a buffer state between Russia and NATO. Energy rich Russia, a military superpower, has rarely flexed its muscles to impress or frighten people in the region. It is true that Ukraine was forced to cede majority Russian speaking Crimea in 2014, following a pro-Russian uprising. And, ever since Crimea has been part of the Russian Federation. This was clearly unacceptable to Ukraine, leading to continuous conflict between Ukraine and Russia. To Russia’s discomfort, Ukraine was constantly bending towards its NATO neighbours and aspired to become a NATO member for a joint offensive against Russia.

Incidentally, Russia has always looked for good economic and political cooperation between the EU and itself to grow and work towards a strategic partnership. The EU is by far the largest export market for Russia, while Russia is the EU’s third biggest trade partner, with Russian supplies of oil and gas making up a large percentage of Russia’s exports to Europe. In fact, President Trump’s intervention to end the Russia-Ukraine war should be welcome by all concerned. And, Zelensky needs to be dumped for the political safety and economic prosperity of the entire region. India has been genuinely concerned as the country is a friend of both Russia and Ukraine.

The war between Ukraine and Russia has benefitted none except probably China, ostensibly a friend of Russia. Paradoxically, China had even indirectly supported Democrat Kamala Harris against seemingly pro-Russian Republican Donald Trump in the last US presidential election to ensure that the war continues to boost its lucrative trade with both the US and Russia. This was barely months after Chinese President Xi Jinping pledged a new era of partnership between China and Russia during President Putin’s Beijing tour in mid-May, last year. Xi greeted Putin on a red carpet outside the Great Hall of the People in Beijing, where they were greeted by marching People’s Liberation Army soldiers, a 21-gun salute on Tiananmen Square and children waving the flags of China and Russia.

Putin could never believe that China would like a Democrat victory in the US presidential election just to ensure its unhindered export trade with the US, even if that means a further continuation of the Russia-Ukraine war. Now, a Trump-Putin alliance resulting in a possible end of the three-year old war and the US announcement of additional 10 percent tariffs on Chinese goods have angered China so much that China officially reacted by issuing a threat that it is ready to fight for any ‘type of war’ with the US.

Donald Trump’s return to power with a windfall victory in the last presidential election has severely upset the political calculations of Ukraine’s Zelensky, China’s Xi and heads of NATO member-states in Europe. Now, the 47-year-old Ukrainian president, Zelensky appears to be the most worried about his own future at this moment. Maybe, he is looking back to those happier days when he played the popular Jewish classic ‘Hava Naglia’ on a piano with penis for a living.

Jewish-born Zelensky grew up in Kryvyi Rih, a major city of Dnipropetrovsk Oblast in central Ukraine. “I’d give anything to beat those ivory keys with my manhood right now instead of leaving the fate of our nation to foreign superpowers hellbent on making lucrative deals for themselves with Ukrainian territory,” politically humiliated Zelensky was quoted as saying before media persons as he was bombarded with questions relating to news of ‘peace talks’ between Russia and the US. “Maybe if I did the piano act again today as president wearing this stupid khaki T-shirt they make me wear, then everyone might actually listen to me?” he had pondered.

However, there is no sign of Zelensky resigning anytime soon unless he is thrown out of power for a more fruitful peace negotiation between Russia and Ukraine. The US wants him to leave. But, Zelensky seems to be struggling hard to remain in power with the support of NATO’s European members for a possible face-to-face with Putin for a peace agreement. Zelensky knows he can’t be removed immediately. He will try to hang on till peace talks are formally concluded between the two countries.

Any change of president in Ukraine would spark at least six months of political limbo, and that would require an enduring ceasefire in the war before elections could be held in conformity to international standards. A professional showman, Volodymyr Oleksandrovych Zelensky would like to hang on to the political stage till a peace agreement brings the curtain down on the war. Ironically, a major hurdle in peace talks between Russia and Ukraine is a 2022 decree signed by Zelensky himself that bans him from negotiating with Putin. Despite Zelensky’s willingness to talk, the law prevents him from entering talks with the Russian president. (IPA Service)

The article Joker Zelensky Should Return To His Old Job, Playing Piano With Penis appeared first on Arabian Post.

By Nantoo Banerjee

If the United States of America is the provider of the largest trade surplus to India year after year, there is no reason for India to impose unreasonable tariffs on merchandise imported from its best trading partner. In fact, the import tariff should not be allowed to be a bone of contention between the two countries. On the contrary, India needs to severely downsize imports from China, which provides little access to Indian goods and investment to that country.

Available reports suggest that during the first half of the last year, the US gave India the largest trade surplus of $21 billion, followed by the Netherlands ($11.6 billion). In contrast, India’s trade deficit with China in the first 10 months of the current fiscal soared to $87.47 billion. Further, in April-October, last year, India’s exports to China dipped by 9.37 percent to barely $8 billion, according to the commerce ministry data. The question is: why must India import from China which is extremely reluctant to buy anything from India?

There is nothing that India imports from China which cannot be manufactured in India or procured from elsewhere in the world. The key objective behind China’s massive export orientation is to keep its labour employed. The export price is believed to be often manipulated to take on its competitors. Heavily import dependent India should take a cue from US President Donald Trump to strongly use the tariff mechanism to restrict imports from China and try to establish a trade balance between the two countries.

The massive trade imbalance with China, its main strategic adversary, is a cause of concern as it affects the country’s economic and national security. India’s import dependence on China has substantially damaged its resolve to make the country an industrial powerhouse. India primarily imports cell phones, heavy machinery, telecom equipment, toys, pharmaceutical ingredients, furniture, textiles, plastics, optical and medical apparatus, iron and steel, fertilizers, and vehicles from China. They all can be manufactured in India or imported from other countries, including the US.

India’s top 10 trading partners in the last financial year were China, the US, Russia, the United Arab Emirates, Saudi Arabia, Iraq, Indonesia, Switzerland, Singapore, and South Korea. Of them, only the US provided the trade surplus for India. A sudden and substantial import reduction from China may lead to temporary disruption of the Indian economy while the country opts for other import sources. This could lead to potential shortages in some sectors such as active pharmaceutical ingredients (API).

However, it is bound to incentivize domestic production despite a transition period of challenges. For instance, India’s API or basic drugs production has lately picked up. This is especially so since 2021 when the output was estimated at around $19.9 billion accounting for 25 percent of India’s requirement. The key players included AurobindoPharma, Lupin, Sun Pharma, and Cipla, which manufacture a wide range of APIs across different therapeutic areas. A complete import ban would push Indian companies to invest more in domestic production, aiming to replace Chinese imports with locally made goods.

As mentioned earlier, India had a trade deficit with nine out of its top 10 trading partners in the last financial year. The country’s total merchandise trade deficit was as large as $240.17 billion. The trade deficit with China increased by $85 billion compared to those in 2022-23. With Russia, it increased by $57.2 billion, with South Korea by $14.71 billion and Hong Kong by $12.2 billion compared to 2022-23 figures, respectively. Hong Kong is part of China and, together, they accounted for an increase in the trade deficit by $97.2 billion.

Effectively, such large trade deficits lead to balance of payments problems, more foreign exchange borrowing and fall of the exchange value of the domestic currency vis-à-vis US$. India’s total imports in 2024 were estimated to be US$682.15 billion, which represented a 6.91 percent increase over the previous year. This included both merchandise and services. Notably, India’s exports to the US have diversified over the years, while exports to China have stagnated mainly due the latter’s anti-import policy especially with regards to goods from India.

The US being India’s most favourable international trading partner, the country should seriously explore expanding its import basket from the US and lower its import tariffs on US goods. In 2023, India dropped retaliatory tariffs on a number of US products such as almonds, apples, chickpeas, lentils and walnuts. Yet, it is difficult to justify the 40 percent import levy on Harley-Davidson motorcycles from the US. High priced, up-end Harley-Davidson brand pose little threat to popular India-made national and international brands.

India itself is one of the world’s top motorcycle manufacturers and exporters. In volume terms, Hero MotoCorp is the world’s largest manufacturer of two-wheelers. Some popular motorcycle brands in India come from Hero MotoCorp, Bajaj Auto, Royal Enfield, TVS Motor, Yamaha Motors, Suzuki Motor, Honda Motor, and Mahindra Two Wheelers. It is ridiculous to penalise Harley-Davidson with such a high import tariff ostensibly to ‘protect’ India’s motorbike makers. The US currently has a trade-weighted average import tariff rate of two percent on industrial goods. One-half of all industrial goods imports enter the United States duty free. Customs duty rates in the US can range from zero percent to 37.5 percent, depending on the type of goods and the country of origin. The average duty rate is around 5.63 percent.

Now, all eyes are on the possible outcome of the proposed Indo-US trade and commerce negotiation in the coming autumn season – ranging from September 22 to December 21 – this year to give a shape to the resolution between the two countries to take the two-way commerce to $500 billion by 2030. The two sides are expected to negotiate the first tranche of a mutually beneficial, multi-sector bilateral trade agreement by fall of 2025.

Both the countries are enthusiastic about the upcoming negotiations to strike a lasting deal on trade and investment. Typically, trade agreements focus on reduction or elimination of customs duties on goods, simplifying regulations to facilitate services trade, and boosting investment flows. This move is expected to create new opportunities for industries in both countries while ensuring a smoother exchange of goods and services. During the first term of Donald Trump’s administration, India and the US had explored a mini-trade deal. However, the Biden administration opted against such agreements, prioritising broader trade policies. (IPA Service)

The article Indo-US Commerce Deal May Help India Escape From Chinese Trade Trap appeared first on Arabian Post.

By Nantoo Banerjee

India, the world’s second most preferred destination of illegal migrants, has a lot to learn from the United States about how the latter has been handling the situation in recent years. Although US President Donald Trump is lately hogging the limelight for forcing illegal immigrants out of the country, such deportations are not unique to the Trump administration. His predecessor, Joe Biden, carried out 1.5 million deportations – almost the same number as carried out under Trump’s first term – without much publicity. Former US president Barack Obama also followed the practice. The US has been the most preferred destination for unlawful migrants for years. It is believed to have the world’s largest illegal immigrant population, numbering around 11.4 million. The majority of illegal migrants to the US come from neighbouring Mexico, followed by El Salvador and Guatemala.

The International Organisation for Migration and other global agencies conservatively put the number of undocumented migrants in India at around 10 million. India’s weak deportation policy has encouraged over the years large illegal migration into the country from its neighbouring countries such as Bangladesh, Myanmar, Nepal, Pakistan and Afghanistan. Few will disagree that the world’s most populous country needs a strong policy to deal with illegal immigrants for the safety and security of its own nationals. Economically, India is much weaker than neighbouring China, Saudi Arabia and the UAE which are known to follow a strong immigration policy. However, India’s soft democratic system and easy judicial interventions often make forceful deportation of illegal immigrants difficult. The US, itself a country of immigrants, has shown the world its ruthless resolve to deal with illegal immigrants.

Contrary to the poor economic status of those migrating illegally into India, Indian unlawful migrants to the US and Canada are reasonably well-off. Most of them take the help of private agents to enter their chosen overseas destinations at a huge cost. A good number of illegal immigration seekers are from Gujarat, Punjab, and Haryana. Fees paid to agents for facilitation of illegal migration to the US could be as much as Rs. 40-60 lakhs for an individual and Rs.1-1.5 crore for a family unit. India’s External Affairs Minister S Jaishankar made a statement in Parliament that the focus should be on a “strong crackdown on the illegal migration industry”, following which central probe agencies and state police forces announced a slew of measures that they plan to take against such mischievous travel agents. According to the data provided by the government in Parliament last year, the Centre and states had notified 3,094 “illegal agents” on the eMigrate Portal until October 2024. The minister said that on the “basis of information provided by returning deportees about the agents and others involved, law enforcement agencies will take necessary preventive and exemplary actions”.

Interestingly, there is no authentic data on Indian migrants living illegally in the US. The number varies from 18,000 to 220,000 as reported by the US Department of Homeland Security as “unauthorised Indians” in 2022. The vast differences in estimates highlight the uncertainty surrounding the true size of the undocumented Indian population, according to the study. It is generally believed that Indian migrants make up only a small share of the overall unauthorised migrant population in the US. However, few are willing to buy Prime Minister Modi’s views on the subject during his recent visit to Washington DC that “these are children of very ordinary families, and they are lured by big dreams and promises.” India’s illegal migrants are known to pay large fees to local agents to enter the USA. The prime minister said India would take back its nationals who were in the US illegally, and also crack down on the “human trafficking ecosystem”.

In fact, as many as 15,756 illegal Indian immigrants had been deported by the US since 2009. Thus, the Trump administration’s action is nothing new. According to the official data, the highest number of deportations occurred in 2019 (2,042), followed by 1,889 in 2020. The numbers declined to 805 in 2021 and slightly rose to 862 in 2022. In 2023, the figure dropped to 617, while 1,368 deportations were recorded in 2024. As of February 5, 2025, a total of 104 illegal Indian immigrants have been deported. President Trump announced a flurry of immigration-related executive orders, paving way for a widespread effort to crack down on undocumented migrants in the US. In more than 21 actions, Trump has moved to overhaul parts of the US immigration system, including how migrants are processed and deported from the US.

India is as much at fault as the US with regard to the exit of illegal migrants and their entry to the US. Improperly documented migration to any country is a crime. The immigration and custom authorities are fully responsible for the exit and entry of these illegal migrants. These illegal immigrants are law offenders. They need to be treated and punished under the law of the land. There is nothing called innocent criminals. If the deportees are handcuffed before pushing them inside military aircraft, it could be for the safety of the pilot and crew members on board. There is no guarantee that the deportees on board will not attack the pilot or try to hijack the aircraft to a different destination.

There is much to learn from the process of the ongoing deportation of illegal immigrants from the USA for India, which has been suffering from the non-stop illegal immigration through its long sparsely guarded land, sea and river borders along Pakistan, Bangladesh, Nepal and Myanmar, even 77 years after the country’s independence. According to the Ministry of Home Affairs, India has a total land border length of approximately 15,106.7 kilometres, including those with countries such as Pakistan, China, Nepal, Bhutan, Myanmar, Bangladesh, and Afghanistan. India is still negotiating with Bangladesh to erect fencing along some portions of its borders. India has the longest international land border with Bangladesh covering 4,096.7 km. Jobless illegal immigrants are often easy prey for terrorists, drug peddlers, pimps, swindlers and other criminals. While the country must try to prevent the entry of illegal immigrants, the process of deportation should be carried out earnestly with wide international publicity. (IPA Service)

The article It Is Time To Be Tough To Deal With Illegal Immigrants And Their Agents appeared first on Arabian Post.

By Nantoo Banerjee

The government disinvestment in India’s state-controlled enterprises is always welcome if it is aimed to make them professionally managed entities for faster growth. Unfortunately, the haphazard disinvestments in public sector enterprises (PSE) by the government seem to have only a single purpose — financing part of the annual union budget deficit. The practice has been going on for the last several years. New shareholders are mostly other state-controlled entities. They rarely take any active interest in the management of those PSEs. The government continues to control those PSEs. The directors and chief executives of those PSEs are usually there merely to complete their terms to retire at 60. A PSE chief executive is allowed to serve till 62 under exceptional circumstances. The government’s stake dilution in small parts does not bring any change to the PSE management style, including the continuity of top performing executives and CEOs.

During the current financial year, the government is expected to meet only 66 percent of its disinvestment target in PSEs. The disinvestment target for 2025-26 is Rs 47,000 crore, lower than the 2024-25 target of Rs 50,000 crore. The government continues its strategy of not having a separate disinvestment target, instead including it under ‘miscellaneous capital receipts’. The general public is not particularly keen on buying PSE stocks due their low appreciation rate. PSE disinvestment schemes rarely excite the market. There is little change in the operational styles of those PSEs after partial stock disinvestment by the government. In fact, such disinvestments are harming the operation of those PSEs, which were originally set up to strengthen India’s basic industrial environment and help rejuvenate the country’s industrial activities in the private sector.

Ideally, the government stock disinvestments in large PSEs should result in installing professional management to freely run those enterprises, exploiting opportunities for growth and expansion, making their products and services internationally competitive, and improving market share. Most of these PSEs were set up at a time when private entrepreneurs had little surplus funds to launch long-term diversification programmes, especially in basic industries. In the 1960s and 1970s, only a few private enterprises had surplus funds to expand up to a point. Those business houses included the Tatas, the GD Birla group, the Mafatlal Group, Dalmia-Jain Group, Shriram Group, Sarabhai Group, Walchand Group, Scindia Group and MA Chidambaram group. The Dhirubhai Ambani-led Reliance group was the only major new entrant during this period. The Tata Group, Birla Group, and Mahindra Group were considered the most prominent business houses, with diverse interests across industries. However, the real industrial growth push came from giant greenfield PSEs. The latter helped create a new generation of private sector entrepreneurs.

Ironically, agriculture-dependent China in the 1950s and 60s took the cue from India’s pseudo-socialist government’s industrial policy to set up large state-owned enterprises (SOEs) to rapidly boost its economy. Year after year, the government in China invested large amounts of money to build giant SOEs which today perform as the backbone of the world’s second largest economy apart from making it the world’s biggest exporter. As many as 133 Chinese companies, mostly SOEs, were on the 2024 Fortune Global 500 list, which ranks the world’s largest corporations by revenue. In contrast, only nine Indian companies featured in the Fortune Global 500 list, of which five were PSEs. The Indian government’s industrial policy throttled the growth of both the PSEs and private enterprises. Today, China has some 391,000 SOEs. A new analysis of state ownership among all 40 million registered firms in China shows that 363,000 firms are 100 percent state-owned, 629,000 companies are 30 percent state-owned, and nearly 867,000 firms have smaller state stakes. All Chinese SOEs are run professionally with focus on international competitiveness.

The Chinese SOEs play a crucial role in driving China’s industrial growth, infrastructure development, and overall economic stability by controlling key sectors like energy, telecommunications, and finance, even though there are ongoing efforts to increase private sector participation. The SOEs account for a substantial portion of China’s GDP. Several of them rank as some of the world’s biggest corporations by revenue. The SOEs are used to prioritize development in key sectors deemed vital to the national economy, such as high-tech industries, aerospace, and renewable energy. The SOEs are often seen as China’s economic stabilizing force, providing consistent investment even during economic downturns. China’s state-owned enterprises are significant employers, providing jobs for a large portion of the Chinese workforce.

On the contrary, the India government shows little exuberance about the performance of its PSEs and the role they play in the national economy. It does not seem to be concerned about their underperformance. For instance, the government-controlled Coal India (CIL), accounting for about 90 percent of the country’s coal production, has remained an underperformer for years like several other major PSEs. India, boasting the world’s fifth largest coal reserves, continues to be a major coal importer, mostly by private parties. One such Indian private enterprise even operates coal mines in Australia and exports coal to India. This is despite the fact that India accounts for 9.5 percent of the world’s proven coal reserves. The government holds around 66.13 percent in CIL. However, that has not changed the company’s management style. The country’s state-controlled coal mining behemoth since 1975 operates through 10 subsidiaries in 84 mining areas across India’s eight states. It had some 229,000 employees as of last July, after getting rid of nearly 12,000 workers in the two previous years. India’s coal production continues to be below one billion tonnes as against China’s output of 4.8 billion tonnes in 2024.

India has 389 Central Public Sector Enterprises (CPSEs) and their subsidiaries. They include Indian Oil Corporation, Bharat Petroleum, Hindustan Petroleum, NTPC Limited, National Hydroelectric Power Corporation, and Rural Electrification Corporation. Its wholly-owned defence undertakings include Munitions India Limited, Armoured Vehicles Nigam, and Advanced Weapons and Equipment India Limited. It is for the government to decide its holding pattern in PSEs. Ideally, it should hold a simple majority stake of 51 percent in non-defence or non-strategic PSEs. The board of directors of such PSEs must have all professional members, including government representatives who are not serving bureaucrats. One of the key objectives should be to make such PSEs world class enterprises with focus on exports. If necessary, they may be offered protection against import dumping under specific circumstances. In due course, such PSEs together can help boost the country’s GDP growth beyond eight percent per year. (IPA Service)

The article Government Stake Dilution In PSE Should Aim At Their Faster Growth appeared first on Arabian Post.

By Nantoo Banerjee

With Indian Rupee (INR) dwindling almost daily against US Dollar (USD), it is good the Union Budget for 2025-26 has stopped repeating on making the Indian economy a $5-trillion GDP to become the world’s third largest by the end of this year or anytime too soon. The budget also provides no indication of how and when INR will stabilize vis-à-vis USD. INR is pegged with USD. There is no way it can come out of the arrangement with US President Donald Trump blowing hot and cold against ideas of undermining the role of USD in the international market threatening to impose massive import tariffs on countries harbouring such an idea.

The minimum expected GDP growth rate in FY26, as per the economic survey tabled in Parliament by the union finance minister, is only 6.3 percent. Minus the inflation rate, the real GDP growth could be as low as 5.7 percent. INR has depreciated about three percent in 2024. A strong dollar affects the value of imports, especially crude oil which accounts for nearly 25 percent of our gross import bill carrying a chain effect on user industries. The budget makes little effort to control the rising non-oil imports. Therefore, it makes little sense to brag about future GDP targets in dollar terms. The government has clearly failed to control the decline of INR against USD. This appears to be the biggest challenge before the economy and government.

Interestingly, the GDP of China, having a similar population size as India’s, in 2024 is expected to be worth US$18.28 trillion in nominal terms, recording a five percent increase from the 2023 level. China’s GDP growth rate is estimated to be 4.5 percent in 2025. A strong dollar has little impact on the actual economic activity within China, the world’s largest producer and exporter of goods. The domestic production is not directly impacted by the dollar’s valuation. The primary driver of China’s GDP is its own internal production and not the exchange rate against the dollar. On the contrary, India’s import dependent economy is substantially impacted by the Rupee-Dollar exchange rate.

On October 11, 2018, the union commerce and industry ministry issued a press release on the vision of a US$5-trillion Indian economy. It said: The Working Group tasked to develop a roadmap towards achieving a 5-trillion-dollar economy by 2025 has prepared its report and it is being circulated to the stakeholders for further suggestions. The group held extensive and broad-based consultations with stakeholders to better understand the aspirations and the potential. The sectoral sub-groups were also formed to take the task forward.

The group was happy to note that India is one of the fastest growing major economies and is currently ranked as the world’s sixth largest. Projections of growth, over the medium term, remain encouraging and optimistic for India. The underlying strengths are indicative of the potential of India to achieve a USD 5-trillion economy by 2025. The current structure of the economy and the emerging dynamics provide the nation grounds to target achieving one trillion dollars from agriculture and allied activities, one trillion from manufacturing and three trillion from services.

The government has several ongoing initiatives across sectors focused on growth. In agriculture, the government is aiming to reorient policy focus from being production-centric to becoming income-centric. The emphasis on incomes provides a broader scope towards achieving the needed expansion of the sector. The proposed Industrial Policy 2018 provides an overarching, sector-agnostic agenda for the enterprises of the future and envisions creating a globally competitive Indian industry that is modern, sustainable and inclusive. The Champion Services sector initiative is also under way to accelerate the expansion of select service sectors. The working group has accounted for these initiatives and encourages a fresh impetus to achieve the target of a five-trillion-dollar economy.

As early as on August 15, 2019, Prime Minister Narendra Modi, addressing the nation on the country’s 73rd Independence Day from the Red Fort, shared his vision of India becoming a $5-trillion economy in five years or by 2024. The prime minister said India had reached a $2-trillion economy after 70 years of independence, but within five years from 2014 to 2019, it reached a $3-trillion economy, adding $1 trillion in just five years. “If we succeeded in taking such a big jump in just 5 years, then we can become a $5-trillion economy in the next five years.” Last year, Finance minister Sitharaman said India would touch its goal of achieving a $5-trillion GDP in 2027-28, making a substantial departure from Prime Minister Modi’s earlier target of hitting the mark by 2024-25.

India’s Chief Economic Advisor V. Anantha Nageswaran was equally hyper on India’s potential to become a $5-trillion economy by FY 26, ignoring the practical roadblocks such as inadequate infrastructure, growing import dependence, falling Rupee, high unemployment, poor energy security and a large informal sector. In January 2023, Nageswaran said India has the potential to grow at 6.5-7 percent and will become a $5 trillion economy by 2025-26 and $7 trillion by 2030 depending on exchange rate fluctuation. He went further to say that “in case the Indian rupee actually appreciates against the US dollar in the next few years as it is quite possible,” then India will be in a position to achieve that GDP in dollar terms even higher than nine percent. “And some of our goals may be reachable within a shorter timeframe than we imagined right now. So, I think achieving a $7 trillion GDP by 2030 is quite feasible,” he said.

Unfortunately, the union budget seems to miss the moot point that is to push a massive all-round domestic production to restrict imports. It is difficult to understand why gold occupies the most important item of import after petroleum in generally impoverished India which has been struggling to pay for large trade deficits year after. Last year, India’s gold imports reached a record level of 802.8 tonnes. In November, gold imports hit a record high of $14.8 billion, more than doubled from $7.13 billion in October. The budget clearly lacks direction to substantially increase domestic production, invest large on physical infrastructure, create millions of sustainable jobs, use high tariff and non-tariff barriers to drastically cut imports and trade deficits and, finally, stabilise Rupee.

Given its vast population and poor per capita income, a $5-trillion economy would appear to be quite small. The Indian economy needs to grow at a much faster rate. The Trading Economics has predicted India’s GDP to be only around $3.781 trillion in 2025 while the earlier IMF prediction was $4.340 trillion this year. The country’s dream to grow its economy to $5 trillion and beyond depends on how it manages the exchange rate of its currency against the US dollar in the near future while retaining the current GDP growth agenda. (IPA Service)

The article India’s $5-Trillion-Economy Dream By 2025 Has Gone Awry appeared first on Arabian Post.

By Nantoo Banerjee

It would be wrong to underplay the impact of rising foreign disinvestments from the country’s secondary market on the economy and the very stability of Indian Rupee (INR). Both the domestic economy and INR have been constantly under pressure from large deficit trade balances year after year, external borrowings, loan servicing, very low levels of fresh foreign direct investment (FDI) and high real-time inflation rate. Some foreign portfolio investors (FPIs) seem to find the country’s secondary market no longer attractive. According to the Reserve Bank of India (RBI), it sold $50 billion from the central bank’s foreign exchange reserves during this fiscal as FPIs sold large rupee stocks to pull back investment. The sum is quite big by any standard. Never before had FPIs exited from the Indian market in such a fashion just before the country’s annual budget presentation. It would have been nice if the RBI clearly mentioned the periods involved in such transactions and the net currency outflow from its forex reserves on account of FPI investments and disinvestments.

In contrast, the central bank is seemingly taking credit for deploying or injecting the collection in tranches of Rs.1.5 lakh crore from FPI sale proceeds into the money markets. It is also somewhat mischievous to suggest that the action may lead to a possible repo rate cut by the central bank in February. The repo rate is the rate at which a country’s central bank lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation. India’s inflation rate continues to be high. As of last December, India’s inflation rate was 5.22 percent year-on-year, based on the Consumer Price Index (CPI) data released by the Ministry of Statistics and Programme Implementation. The rural inflation rate was higher at 5.76 percent. The food inflation rate was in excess of eight percent. The inflation rate may go up further during the coming economic slack season, beginning April. Normally, the release of such large funds into the market would call for fixation of higher interest rates to control inflation.

Interestingly, one of the three measures of the RBI’s liquidity infusion plan is to conduct a government bond buyback worth Rs.60,000 crore in three tranches till February 20. This will certainly help the government to cover part of the budget deficit for the current fiscal. Currently, there seems to be no liquidity shortfall in the market as it is indicated by the call money rate. As of last month, India’s call money rates have remained constant, with the current rate being around 6.5 percent as the RBI repo rate remained unchanged at 6.5 percent for the seventh consecutive time. This means the call money rate is largely stable at this level. A high call money rate is directly connected with a liquidity shortfall. When there is a scarcity of available funds, the rate at which banks lend to each other (call money rate) tends to rise; conversely, a low call money rate indicates surplus liquidity.

Therefore, the RBI’s liquidity injection into the money market has little link with liquidity shortfall. Flush with rupee funds, the country’s rich and the upper middle class are spending big on gold purchase and foreign travel like never before. Forex is under constant demand. Its supply being limited, INR’s exchange value on a daily basis is almost constantly dwindling. Large withdrawals by FPIs from the secondary market may further complicate the situation. In the first 11 months of last year, India’s gold import created an all-time record of $47 billion although the November import number was revised downward due to a “reporting error,” apparently for “double counting” of gold shipments. On the other hand, Indians spent a record $17 billion on international travel in the last fiscal showing a 25 percent increase over the previous year. Considering such lavish spending by Indians on gold and foreign travel, few will buy the argument that the RBI is injecting Rs. 1.5 lakh crore in the market to ease the liquidity crunch. Also, there is no guarantee that a total Rs.100,000 crore income tax concession to the middle-income group in the 2025-26 budget will generally boost domestic consumption.

Large hot money exchange in the weak Indian market should be a matter of serious concern. It has made investment in high-rise stocks by ordinary mid-term investors very volatile. Few can trust investments in mutual funds, which traditionally come out with NFOs in skyrocketing market situations, for good gains in the short or medium term. It may take years for those initial investors in such funds to realise their basic investment amounts before they start growing. During last month alone, FPIs withdrew nearly Rs.70,000 crore in Indian equities in an unabated exodus amid Rupee depreciation, rise in United States bond yields and expectations of an overall tepid earnings season. In October, last, FPIs withdrew Rs.94,000 crore from the Indian equity market reportedly on attractive Chinese valuations.

As long as the US dollar index remains at the current level and the 10-year US bond yield stays above 4.5 percent, the FPI selling operation in India may continue to gain ground. The continuous depreciation in the value of INR seems to exert significant pressure on FPIs leading them to pull the investment out of the Indian equity and debt markets. With US bond yields becoming attractive, FPIs have turned sellers in the Indian debt market too. They withdrew Rs. 4,399 crore from debt general limit and Rs.5,124 crore debt voluntary retention route.

The recent FPI withdrawals, forcing the RBI to swallow large chunks of INR stocks in exchange of US$, is expected to bring the value of INR further down in due course. It would not be right to interpret the situation to the advantage of India or the RBI, which does not regulate the market sentiments of FPIs. This is delivering a wrong message, instead. The government should seriously pay attention to revisit the country’s import policy to reduce the trade gap, raise the interest rate to control inflation, help stabilise INR and take strong measures to make foreign investors both in the primary and secondary markets truly attracted to the country. The stability of INR is the most important aspect of the management of the economy. Unfortunately, the budget seems to have missed the point. (IPA Service)

The article Disenchanted Foreign Investors Make A Record Pre-Budget Stock Sale appeared first on Arabian Post.