Category: Beyond

The Asian Development Bank (ADB) has revised down India’s economic growth forecast for the fiscal year 2025-26, citing rising tariffs and a more uncertain global trade environment as major headwinds.

In its September 2025 Asian Development Outlook (ADO) report, the Manila-based lender projected India’s GDP growth at 6.5 percent for FY26, lower than the 6.7 percent it had forecast in April.

The bank also trimmed its outlook for FY27 to 6.5 percent from 6.8 percent, noting that tariffs and tighter global conditions are likely to weigh more heavily in the medium term.

The downgrade comes despite a strong start to the fiscal year, with India recording a 7.8 percent GDP growth in Q1FY26, the fastest pace in five quarters.

ADB pointed out that domestic consumption and recent rationalisation of the goods and services tax (GST) are likely to support growth in the near term. However, it warned that additional U.S. tariffs on Indian exports could dampen growth, particularly in the second half of FY26 and in FY27.

“India faces the steepest tariff hikes among developing Asian economies, prompting a downgrade in its growth outlook. For FY2025, growth is now projected at 6.5 percent, down from 6.7 percent in April,” the ADB report stated.

The report highlighted that these tariff measures, implemented by the U.S. starting in August, are expected to reduce export growth, impacting industries heavily reliant on overseas demand.

While growth prospects have been tempered, the report contained positive news on inflation. ADB revised its FY26 forecast for consumer price inflation to 3.1 percent, sharply lower than the 4.2 percent projected earlier, largely reflecting lower food prices. For FY27, the bank raised the inflation estimate to 4.2 percent, anticipating normalisation of food costs.

Consumption is expected to remain a key driver of India’s economy, supported by robust rural demand and higher household spending following GST cuts.

However, the ADB cautioned that investment activity is likely to remain muted due to fiscal constraints and policy uncertainties. Tax revenue growth may be lower than initially projected because the GST reductions were not incorporated in the original budget, while public spending is assumed to continue at current levels, which could push up the fiscal deficit.

Nonetheless, the deficit is still expected to remain below the 4.7 percent of GDP recorded in FY25.

The report stressed that while domestic demand is providing near-term support, the combination of external shocks, higher tariffs, and global uncertainty could weigh on India’s medium-term growth trajectory. The bank highlighted that India’s economic resilience will depend on continued macroeconomic prudence, effective fiscal management, and policies that support investment and competitiveness.

On a regional level, the ADB also revised down its growth forecasts for developing Asia, including Southeast Asia and the Pacific. Developing Asia is now expected to grow by 4.5 percent in 2026, down from the 4.7 percent projected in April, with the subregion of Southeast Asia facing the steepest downgrades due to weaker external demand and elevated trade uncertainty. Growth in the subregion is projected at 4.3 percent for 2025 and 2026, down 0.4 percentage points from April forecasts.

China’s growth forecasts remained largely unchanged, with the People’s Republic of China expected to expand by 4.7 percent this year and 4.3 percent next year. The report noted that policy support is expected to cushion the impact of higher tariffs and the continued weakness in the property market. I

n contrast, growth forecasts for the Caucasus and Central Asia were slightly upgraded to 5.5 percent this year but trimmed for next year to 4.9 percent, reflecting lower oil and gas production in some countries. Economies in the Pacific are projected to grow 4.1 percent this year amid stronger mining output, but the outlook for next year was lowered to 3.4 percent due to weaker resource output and reduced commodity exports.

The ADB report also highlighted the main risks to the region’s growth, including ongoing uncertainty over U.S. trade policies, potential sectoral tariffs on semiconductors and pharmaceuticals, unresolved U.S.-China trade negotiations, geopolitical tensions, a possible further slowdown in China’s property sector, and potential financial market volatility.

ADB Chief Economist Albert Park noted that while developing Asia has remained resilient due to strong exports and robust domestic demand, the worsening external environment is affecting growth prospects. “US tariffs have settled at historically high rates, and global trade uncertainty remains at elevated levels,” Park said. “Amid the new global trade environment, it is crucial for governments to continue promoting sound macroeconomic management, openness, and further regional integration.”

The Asian Development Bank, established in 1966 and owned by 69 members, including 50 from the region, supports inclusive, resilient, and sustainable growth across Asia and the Pacific.

Working with its members and partners, ADB uses innovative financial tools and strategic partnerships to address complex challenges, build infrastructure, and promote sustainable development across the region.

In conclusion, while India’s domestic demand remains strong, the ADB report underscores that elevated global tariffs, particularly from the U.S., and broader international uncertainties are weighing on the country’s growth outlook.

Policy measures to sustain investment, maintain fiscal prudence, and mitigate external risks will be key to ensuring stable economic expansion in the medium term.

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The rupee traded in a tight band and slipped 7 paise to close at a record low of 88.79 (provisional) against the U.S. dollar on Monday, weighed down by foreign capital outflows and risk-off sentiment.

Traders said the local currency remains under pressure amid concerns over global trade, the U.S. visa fee hike impacting Indian IT exports, and rising crude prices. The RBI’s upcoming policy decision on October 1 is also seen as a key driver for both rupee and bond markets.

At the interbank forex market, the rupee opened at 88.69 and finally settled at 88.79, its lowest-ever close. On Friday, it had ended 4 paise higher at 88.72 after rebounding from a record low of 88.76 hit last Thursday.

“We expect the rupee to stay weak amid sluggish domestic markets and importer dollar demand. However, softness in the U.S. dollar and possible RBI intervention may cushion losses,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan. He added that investors will track U.S. home sales data, Donald Trump’s speech, and the RBI’s MPC outcome this week.

The six-member MPC, led by RBI Governor Sanjay Malhotra, began its three-day meet Monday. While most expect rates to remain unchanged, some analysts anticipate a 25 bps cut. The policy review comes amid global trade frictions, with the U.S. recently imposing 50% tariffs on Indian exports.

Meanwhile, the dollar index eased 0.19% to 97.96, and Brent crude futures dropped 1.37% to $69.17 per barrel. On equities, the Sensex slipped 61.52 points to 80,364.94, while Nifty shed 19.80 points to 24,634.90.

Foreign investors sold ₹5,687.58 crore worth of equities on Friday, exchange data showed. Separately, India’s forex reserves declined $396 million to $702.57 billion in the week ended September 19.

Adding to concerns, the U.S. announced a 100% tariff on branded and patented drugs from October 1, with exemptions only for firms building plants on American soil.

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In a significant consumer-centric reform, the Petroleum and Natural Gas Regulatory Board (PNGRB) has unveiled a proposal for an LPG Interoperability Framework, enabling households to switch between cooking gas suppliers—such as Indane, Bharat Gas, and HP Gas—without changing their existing connections.

This move mirrors the mobile number portability system in the telecom sector, aiming to enhance consumer choice and service reliability.

India has achieved near-universal LPG coverage, with over 32 crore active connections as of FY25. However, persistent consumer grievances—exceeding 17 lakh annually—highlight issues like delayed deliveries and supply disruptions.

These challenges are particularly acute in areas where local distributors face operational constraints, leaving consumers with limited alternatives.

PNGRB emphasizes that consumers should have the freedom to choose their LPG supplier, especially when cylinder prices are standardized across companies.

Historically, a pilot LPG portability scheme was introduced in 2013, allowing consumers to switch dealers within the same oil marketing company. This system was expanded nationwide in 2014.

However, it did not permit inter-company portability, meaning a consumer could not switch from Indane to Bharat Gas or HP Gas. The proposed framework seeks to eliminate this restriction, enabling consumers to receive refills from the nearest available distributor, irrespective of the company, particularly during service disruptions or peak demand periods.

PNGRB has invited public comments on the proposed framework, with a rollout expected after finalizing the rules. The initiative aims to address service failures and ensure uninterrupted access to LPG, thereby safeguarding consumer trust.

This development marks a significant step toward enhancing consumer autonomy and service quality in India’s LPG sector.

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Indian equity benchmarks continued to face selling pressure for a sixth consecutive session on Friday, with heavy losses in IT, pharma, and PSU bank stocks weighing on sentiment.

By early afternoon, the Sensex was trading 310 points, or 0.38 percent lower, at 80,849, while the Nifty slipped 120 points, or 0.48 percent, to 24,771. Market breadth was negative, with 2,695 stocks declining compared with 918 advancing and 122 remaining unchanged.

Among the laggards, Sun Pharmaceutical Industries, Mahindra & Mahindra, and IndusInd Bank fell as much as 3 percent, while Larsen & Toubro and Tata Motors bucked the trend, gaining up to 4 percent. Over the past six sessions, the Sensex has dropped 2.73 percent and the Nifty 2.52 percent, positioning the indices for their steepest weekly fall since early April.

Sectorally, pharma, IT, metal, and PSU bank indices were the worst performers. Major IT stocks declined following a cautious outlook from Accenture, which analysts said dampened sentiment across the sector. Additional concerns about rising costs also impacted the industry, as the U.S. introduced a new fee of approximately ₹88 lakh on certain H-1B visas.

Pharmaceutical shares were particularly hard hit after U.S. President Donald Trump announced plans to impose a 100 percent tariff on branded and patented drug imports starting October 1, unless firms establish local manufacturing facilities.

Trump posted on Truth Social: “Starting October 1, 2025, we will be imposing a 100 percent tariff on any branded or patented pharmaceutical product, unless a company is building their pharmaceutical manufacturing plant in America.” He added that companies already under construction would be exempt.

Foreign Institutional Investors (FIIs) also continued their selling streak, offloading equities worth ₹4,995 crore on Thursday. The sustained FII selling may keep the market under pressure,” said V K Vijayakumar, experts believe. 

In the broader market, the Nifty Smallcap100 and Midcap100 indices extended their declines for the fifth consecutive session. The midcap index lost 3.2 percent over this period, while the smallcap gauge declined around 4 percent.

Pharma stocks led losses in the smallcap space, with Neuland Laboratories and Natco Pharma falling up to 4 percent. Only 13 of the 100 constituents in the Nifty Smallcap index managed gains. Among midcaps, Waaree Energies dropped as much as 6 percent after U.S. customs authorities announced an investigation into possible tariff evasion.

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India claimed the spot as the world’s third-highest funded market for technology startups in 2025, despite a marked downturn in investment volumes compared with the prior year. 

According to data compiled by market intelligence firm Tracxn, Indian tech startups raised $4.8 billion in the first half of 2025, down 25 percent from $6.4 billion raised in the same period in 2024. 

This figure also fell short of $5.9 billion recorded in the second half of 2024. India leapfrogged nations such as Germany and Israel to climb from the fourth to the third position globally.

The Tracxn report notes that the dip in funding was broad-based across stages. Seed funding plunged 44 percent to $452 million, early-stage rounds declined by 16 percent to $1.6 billion, and late-stage investments contracted by 27 percent to $2.7 billion. 

Despite the slowdown, five startups secured funding rounds exceeding $100 million, led by electric mobility firm Erisha E Mobility’s $1 billion raise, followed by GreenLine’s $275 million and Infra.Market’s $222 million. 

Other recipients included Spinny and Darwinbox.

Sectoral trends reveal that some domains bucked the overall decline. Transportation and logistics technology stood out, with investment rising by 104 percent from the previous half to nearly $1.6 billion, making it one of the fastest growing areas of investor interest. Meanwhile, the retail tech segment drew $1.2 billion even as its year-on-year performance weakened, and enterprise applications secured $1.1 billion.

The funding climate also reflected greater exit activity. The first half of 2025 saw 73 acquisitions, compared with 54 in the same period in 2024. Among the most significant deals were the $516 million acquisition of Magma General Insurance by the DS Group and Patanjali, and Hindustan Unilever’s purchase of skincare brand Minimalist for $350 million. These exit moves are being viewed as evidence of maturation in India’s startup ecosystem.

Geographically, Bengaluru led the funding tally, accounting for 26 percent of total capital, followed closely by Delhi at 25 percent. In terms of investor participation, Accel, AngelList, and SoftBank Vision Fund emerged as among the most active across funding stages. At the seed level, Venture Catalysts, 100X.VC, and Antler were prominent, while early-stage rounds were led by Peak XV Partners, Accel, and Lightspeed. Late-stage investment saw strong participation from Sofina and Premji Invest.

Some observers see the drop in funding levels as a signal of tighter investor sentiment globally, but note that India’s ascension in rankings underscores resilience in the domestic tech ecosystem. Tracxn cofounder Neha Singh commented that while volumes have declined, meaningful exits and growing unicorn creation reflect greater stability and growth potential.

Beyond the numbers, the rise to third place is notable for its symbolic value. India’s tech founders, venture capital networks, and government policies supporting startups have been working to build a more mature, investable ecosystem. The classification brings heightened global attention, even as challenges such as capital access, profitability pressures, and infrastructure constraints remain.

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United States President Donald Trump announced on Thursday that beginning October 1, the United States will levy a 100 % tariff on imports of branded or patented pharmaceutical products, unless the manufacturer is actively building a U.S.-based production facility. 

He also unveiled fresh tariffs of 50 % on kitchen cabinets and bathroom vanities, 25 % on heavy-duty trucks, and 30 % on upholstered furniture as part of a broader push to shield domestic industries from foreign competition.

In social media posts on Truth Social, Trump defined the exemption for drugmakers as applying to those that have “broken ground” or already are “under construction” in the United States. He framed the moves as efforts to support U.S. manufacturing and cited national security, though he did not provide detailed legal or economic justification in his announcements.

The decision marks a dramatic escalation in Trump’s tariff strategy, which has already included sweeping duties on steel, aluminum, autos, copper, and other goods during his second presidency. Observers note that the pharmaceutical tariffs could disrupt global supply chains, raise the cost of medicines in the U.S., and provoke retaliation from trading partners.

In response to the announcement, Indian pharmaceutical stocks tumbled. The U.S. is a major market for Indian drug exports, although much of India’s trade is in generics rather than branded pharmaceuticals — which the tariff targets do not explicitly address. Several Indian companies, including Sun Pharma, saw share price declines of over 3 %.

Trump’s truck and cabinetry tariffs also went beyond pharmaceuticals. The 25 % tariff on imported heavy trucks is intended to protect U.S. manufacturers such as Peterbilt, Kenworth, Freightliner, and Mack from “outside competition,” Trump said. The 50 % tariff on kitchen cabinets and bathroom vanities and 30 % on upholstered furniture reflect his administration’s claims that foreign imports are “flooding” the U.S. market.

Trump’s announcement comes amid ongoing national security investigations under Section 232 of the Trade Expansion Act. Earlier in 2025, the Commerce Department launched probes into trucks, pharmaceuticals, and other imports to assess whether they threaten U.S. security. Some analysts suggest the tariff declarations may be a signal that these investigations are nearing completion.

Markets reacted swiftly. Pharmaceutical and furniture stocks in Asia declined, while U.S. sectors sensitive to construction and automotive supply chains also showed volatility. Critics warn that imposing such steep levies could exacerbate inflation, strain federal healthcare programs like Medicare and Medicaid, and destabilize bilateral trade relations. Proponents, however, argue the tariffs will incentivize reshoring of production and reduce reliance on foreign supply.

Trump’s sweeping tariff announcement is likely to dominate trade discourse in the coming weeks. The administration faces imminent pressure to define enforcement rules, determine which countries or products may receive exemptions, and respond to legal challenges as trading partners evaluate retaliation or concession strategies.

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Reliance Consumer Products Limited (RCPL), the fast-moving consumer goods (FMCG) arm of Reliance Retail, has announced a significant investment of ₹1,156 crore to establish an integrated manufacturing facility in Tamil Nadu. The facility will be located at the State Industries Promotion Corporation of Tamil Nadu (SIPCOT) Allikulam Industrial Park in Thoothukudi district. Spanning 60 acres, the plant is set to produce a diverse range of products, including regional snacks, biscuits, spices, wheat flour, and edible oils. This strategic move underscores RCPL’s commitment to expanding its footprint in the southern market and catering to the growing demand for FMCG products in the region.

The project is expected to generate approximately 2,000 local jobs over the next five years, contributing to the state’s employment landscape. State Industries Minister TRB Rajaa highlighted that this development positions Tamil Nadu as a preferred destination for national FMCG players, attributing the state’s industrial growth to the “Dravidian Model” of governance championed by Chief Minister M.K. Stalin. He emphasized that the state continues to attract marquee national FMCG players, leaving no major sector untapped.

RCPL’s decision to set up its first manufacturing unit in Tamil Nadu aligns with the state’s ongoing efforts to bolster its industrial infrastructure and attract significant investments. The establishment of this facility is anticipated to enhance the state’s position in the FMCG sector, fostering economic growth and development in the region.

This investment marks a significant milestone for RCPL as it expands its manufacturing capabilities and strengthens its presence in the competitive FMCG market. The company’s strategic focus on diversifying its product offerings and enhancing production capacity is expected to yield positive outcomes, both in terms of market share and consumer reach.

In summary, RCPL’s ₹1,156 crore investment in Tamil Nadu signifies a pivotal step in the company’s growth trajectory, contributing to regional economic development and reinforcing its position in the FMCG industry.

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