New Delhi, March 18 Global trade and tariff uncertainties could become a catalyst for reforms in India over the medium term and for growth results, the reforms must run deep, an HSBC Research report said on Tuesday.
Potential US tariffs may have already become a catalyst for reforms like lowering import tariffs, opening up to regional FDI, fast-tracking trade deals, and making the Indian rupee more flexible.
"And India does not have to look too far for models to emulate. Its success in services exports has demonstrated the power of moving up the value chain, from basic (call centre services) to high-tech (professional services)," said the report.
India's goods trade deficit narrowed sharply in February to $14.1 billion, from $23 billion in January.
“The trade deficit tends to narrow in February but this time, it narrowed rather sharply to the lowest in more than three years,” the report mentioned.
India's goods trade deficit narrowed to $14 billion and the services trade surplus rose to $18.5 billion, putting the overall trade balance in a rare surplus zone in February.
A normalisation in imports across the board - oil, gold, and core - led to the narrowing of the goods trade deficit, the report mentioned.
Global trade and tariff uncertainty is likely to lower India's GDP growth in the short term, but could become a catalyst for reforms over the medium term; for growth results, however, reforms must run deep.
Within exports, core goods were softer, led more by weaker investment goods exports than consumer goods exports.
"This is in line with our expectation that globally, FDI and investment may be challenged in 2025, due to global uncertainty," the HSBC report noted.
Within imports, all key categories softened - oil, gold and core. Falling global oil prices lowered the oil import bill by $1.5 billion, while gold imports remained modest after a steep rise in Q4 2024.
The services trade surplus remained robust at $18.5 billion. On seasonally adjusted sequential terms, services exports have been rising by an average 3 per cent for three months.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor