India’s AI market set to triple within two years, says report

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The Indian AI market could triple in size to over $17 billion by 2027, driven by increased investments in technology, a burgeoning digital ecosystem and a strong pool of skilled professionals, according to a new study.

India has 16% of the world’s AI talent, placing it behind only the US, reflecting both its demographic advantage and strong STEM education system, according to Boston Consulting Group (BCG) research.

The report, titled ‘India’s AI Leap: BCG Perspective on Emerging Challengers’, said India has a thriving AI ecosystem with over 600,000 AI professionals, 700 million internet users, and a surge of AI start-ups, with over 2,000 launched in the past three years.

“India’s domestic AI market is projected to more than triple to $17 billion by 2027, making it one of the fastest-growing AI economies globally. This momentum is fuelled by rising enterprise tech investments, a thriving digital ecosystem and a robust talent base,” the report said.

It added that India’s public digital infrastructure provides a robust and scalable base for AI integration across various industries. It also said that with a large base of internet users and extensive smartphone adoption, India generates massive volumes of data, which is the used for training AI models.

India is set to create 45 new data centres in 2025, adding to its existing network of 152 centres, as set out in the government’s IndiaAI initiative.

“AI is no longer an option but a business necessity. Indian companies are using it to leapfrog traditional growth curves and compete confidently on the global stage,” said Mandeep Kohli, Managing Director and Partner, BCG India.

“While the hurdle rate for successful deployment is high, the rewards are even higher, and the results speak for themselves. What separates the leaders is not just the tech, but how they manage change, build talent and embed AI into the fabric of their organisation.”

 

Government set to help Indian MSMEs improve export sales

The Indian government is considering formulating a scheme to fund the country’s exporters in registering new products in new markets, Commerce and Industry Minister Piyush Goyal has said.

He added that the entire cost of such registration – especially designed for India’s micro, small and medium-sized enterprises (MSMEs) will be funded by the government.

“I am thinking of coming out with a scheme that any MSME that needs to spend any amount of money to register their products anywhere in the world, particularly for new products, new markets, new exporters, the government will fund the whole cost,” Goyal said while addressing business delegation on an official visit to Switzerland. During the trips the minister held meetings with Swiss leaders and companies to boost trade and investments between the two countries.

This scheme is expected to be part of the Export Promotion Mission (EPM), which was announced in the Budget. It could include include easy credit schemes for MSMEs, e-commerce exporters, facilitation of overseas warehousing and global branding initiatives, to tap emerging export opportunities and strengthen trade tools for small businesses.

The country’s total exports of goods and services have increased to $825bn in 2024-25, up from $778bn in the 2023-2024 fiscal year. MSMEs account for more than 40% of the country’s exports.

Goyal also urged the Indian industry to focus on exporting value-added goods and run campaigns for brand building and marketing. “I would urge you to come with an idea for the government to support (exporters) in brand building, in getting registrations around the world,” he said.

The minister added that a number of Free Trade Agreements (FTAs) have been signed and implemented by India with countries, including the UAE and Australia, to provide greater market access to Indian exporters.

And active negotiations for FTAs are ongoing with countries including Oman and New Zealand, as well as the European Union (EU).

China sees rapid growth in exports in 2025

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Chinese exporters’ shift towards higher-value manufacturing and their sustained focus on innovation will continue to anchor China’s foreign trade growth this year, government officials, manufacturers and experts have said.

As China works to consolidate its position in global industrial chains amid rising geopolitical tensions, Chinese companies’ large-scale production capabilities, innovation strength, industrial upgrades and market diversification moves will keep driving export growth in the second half of the year, they said.

Liang Ming, director of the Institute of International Trade at the Chinese Academy of International Trade and Economic Cooperation, said that the country’s robust industrial ecosystem provides enormous stability for the nation’s foreign trade supply networks.

Data from the General Administration of Customs (GAC) shows that China’s foreign trade grew 2.5% year-on-year to reach 17.94 trillion yuan ($2.5 trillion) in the first five months of 2025.

Lyu Daliang, director of the administration’s department of statistics and analysis, said the Chinese economy “has continued to recover steadily since the beginning of the year, with the trade in goods demonstrating strong resilience despite external pressures”.

China’s imports and exports maintained a steady growth momentum in May 2025, with trade accelerated following high-level economic and trade talks between China and the United States in Switzerland in mid-May, Lyu said.

According to the GAC, China’s total value of goods trade reached 3.81 trillion yuan last month, up 2.7% year-on-year.

Xiao Lu, deputy director of the department of foreign trade at the Ministry of Commerce, said that amid global supply chain restructuring and de-risking trends, Chinese manufacturers have ramped up high-tech innovation, fostering innovation chains alongside industrial clusters.

Wang Qian, a researcher specializing in international trade at Shanghai University of International Business and Economics, said that China’s export growth has been primarily driven by mechanical and electrical product exports in recent years.

“A growing range of products is fuelling export growth through increasingly innovative activities and integrated supply chain collaboration,” Wang said.

Latest data from the GAC shows that China’s mechanical and electrical product exports increased 9.3% year-on-year to 6.4 trillion yuan between January and May, accounting for 60% of the country’s total exports.

 

Tax changes boost tourist spending across China

China has experienced a surge in inbound consumption following the introduction of an updated tax-refund-upon-departure policy, with increases in both the number of tax refund stores and the total amount refunded.

Between April 27 and May 26, the number of departure tax refund transactions processed by the country’s tax authorities jumped 116% year-on-year, and sales at tax refund stores climbed 56%, according to the State Taxation Administration.

The country has expanded its refund-upon-purchase service model nationwide, with the number of related transactions increasing 32-fold and sales surging 50-fold year-on-year, according to data released by the administration.

Driven by the new policy measures, 1,303 new departure tax refund stores were established across the country during the period, raising the total to 5,196, which was a 40% increase from the end of 2024, the data shows.

This rise in inbound consumption is a result of China’s latest efforts to encourage foreign tourist spending. On April 27, the country introduced a package of measures to optimize its departure tax refund policy, including measures lowering the minimum purchase threshold for refunds, raising the cash refund ceiling, expanding the network of participating stores, and broadening the range of products covered.

China is also promoting a refund-upon-purchase service model, allowing eligible tourists to receive tax refunds instantly at retail outlets rather than waiting until they leave the country.

International tourists in China can now claim a tax refund if they spend at least 200 yuan (about $28) at a single store in a single day and meet other relevant requirements, with refunds payable in multiple forms, including mobile, bank and cash payments. The upper limit for cash refunds has been raised to 20,000 yuan.

China acts to tackle scourge of late payments of SMEs

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The Chinese government has introduced revised regulations to tackle the scourge of late payments, guaranteeing payments owed to small and medium-sized enterprises (SMEs).

The revised regulation, which took immediate effect and is now in force, will help strengthen the legal protection for private enterprises, mostly SMEs, further optimize the business environment and enhance fair participation in market competition, said market experts and leading company executives.

According to the new regulation, large enterprises are required to pay SMEs within 60 days of delivery of goods or services. Other revisions require detailing work responsibilities, improving supervision and enhancing punishments for illegal activities.

Nie Xianzhu, vice-president of the China Association of Small and Medium Enterprises, said the revised regulation has further raised awareness of the “crippling issues” faced by SMEs. He said: “The problem-oriented and targeted approach will help relieve the capital pressure on SMEs and stimulate their endogenous driving force and vitality.”

Collecting long-overdue payments is a major difficulty hindering the development of SMEs, Nie said, adding that the problem stems from the declining payment capability of enterprises amid a sluggish global economy, lacklustre demand and fiscal pressures at various government levels.

Meanwhile, large enterprises often place payments owed to SMEs low on their funds priority list, Nie added. He said: “In the broader context of pursuing progress while maintaining stability, helping SMEs resolve difficulties is an effective way to stabilize overall growth.”

According to data from the National Bureau of Statistics (NBS), the accounts receivable of major industrial enterprises hit 25.86 trillion yuan ($3.6 trillion) at the end of April, up 9.7% year-on-year, while the average collection period for accounts receivable was 70.3 days, a year-on-year increase of four days.

Li Hongjuan, deputy director of the Private Economy Research Office at the Economic System and Management Institute, which is part of the National Development and Reform Commission, said the revised regulation reflects the government’s strong attention to the issues of arrears owed to SMEs.

“It clarifies the responsibilities of the government and relevant departments, strengthening accountability and coordination,” she said. “Also, it shortens the payment period and standardizes payment practices, addressing the root causes of arrears. It precisely regulates pain points such as hidden contract terms.”

Li said SMEs were an important part of the national economy and social development, serving as a key pillar for stabilizing employment, improving people’s livelihoods and reviving economic growth.

Private companies, mostly SMEs, contribute over 60% of China’s GDP, 70% of technological innovation and 80% of urban employment, NBS data shows.

The government is also taking steps to promote sustainable development in the private sector.

China’s first all-encompassing law focusing on promoting the private economy took effect on May 2025, when the government issued a guideline for stepping up financing support for micro and small enterprises.

Business leaders welcomed Beijing’s intensified efforts to support the development of the private sector, expecting to see more detailed supporting measures to ensure effective implementation.

“The regulation plays a significant role in boosting the confidence of businesses,” said Cheng Shuqing, Party secretary of Beijing-based Pan-China Group.

Ye Lin, a professor at Renmin University of China Law School, called for more efforts to improve the long-term mechanism for resolving SME payment arrears. “More efforts are needed to ensure that the asserting rights of SMEs are not affected during their future business operations,” he said.

 

China to be responsible for 25% of global growth in 2025

China is expected to contribute around a quarter of global growth this year,” according to Marshall Mills, senior resident representative of the International Monetary Fund in China.

In an interview at the 2025 Tsinghua PBCSF Global Finance Forum, Mills said there might be an upward revision of the fund’s 2025 economic growth forecast for China if recent tariff rollbacks and strong first-quarter growth momentum are maintained.

“With these positive developments, there is a potential upside. We’ll have to look at all the factors together and provide an updated forecast in due course,” Mills said, adding that the first-quarter results of China’s economic growth were “a welcome, positive surprise”.

India extends deadline for filing of Income Tax Returns

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India’s Central Board of Direct Taxes (CBDT) has extended the deadline for filing Income Tax Returns (ITRs) to 15 September from 31 July 2025, due to structural changes and system updates.

The CBDT said it has revised the Income Tax Return (ITR) Forms 1 to 7 for the tax year 2024-25 in order to simplify compliance and enhance transparency.

Key changes include allowing salaried individuals and small business owners with long-term capital gains up to INR 1,25,000 (around £1,000) to use simpler Form ITR-1 or ITR-4. It has also revised the capital gains schedule by changing tax rates effective from 23 July 2024; and it will treat gains from unlisted bonds and debentures as short-term capital gains (STCGs), effective from 23 July 2024.

The CBDT statement, released at the end of May 2025, said the moves were due to substantial structural and content revision in the notified ITR forms, requiring additional time for system development, integration and testing of filing utilities.

The statement said: “With an aim to facilitate a smooth and accurate filing, as well as to address stakeholder concerns and ensure compliance without undue pressure on taxpayers, the CBDT has now extended the due date for filing ITRs for tax year 2024-25 from 31 July 2025 to 15 September 2025.” It said the extension was relevant for individuals, HUF and partnership firms not covered by tax audit requirements.

Commenting on the delays, EY India said: “This is a welcome move, allowing the taxpayers sufficient time to meet enhanced reporting requirements amid recent tax law amendments.

“Unlike in the recent past, when the said forms were typically released well in advance, typically in February or March prior to the end of the tax year, this year, the ITR forms were released belatedly. This had led to the expectation from taxpayers that the department may need to extend the deadline for filing income tax returns.

“On other hand, even for the tax department, the extension is viewed as a necessity for allowing the requisite time to update the utilities, given the changed taxation rules and tax rates.”

And Sandeep Sehgal, partner-tax at AKM Global, a tax and consulting firm, commented: “Given the complexity and increased reporting requirements in the revised ITR forms, including more granular disclosures of capital gains, foreign income, and asset ownership, the extension offers much-needed relief to taxpayers.”

The additional time, Sehgal added, is intended to facilitate a smoother transition to the new compliance regime, allowing taxpayers to correctly interpret the updated requirements, and ensure accurate and complete return filings.

India’s finance ministry said its programme of tax policy reforms “are geared to widen the tax base, detect undeclared income through data matching and promote digital compliance”.

 

Services sector grows in May on the back of strong exports

India’s services sector maintained its growth trajectory in May, helped by strong export demand and record hiring, according to a newly published survey.

The HSBC India services purchasing managers’ index (PMI), compiled by S&P Global, stood at 58.8 in May, marginally up from 58.7 in April. The index has been above the neutral 50 mark, which separates contraction from expansion, for 46 consecutive months.

“A key area of strength was exports, with survey participants reporting one of the strongest improvements in international demand in 19-and-a-half years of data collection,” said the survey.

Growth was helped by buoyant demand, new client wins and greater staffing capacity. New orders rose at a sharp pace, largely aligning with those registered from February to April, the survey said.

“Advertising, demand strength and repeat orders from existing clients were some of the reasons panellists gave for the upturn in sales,” it added.

Malaysia set to lead ASEAN’s drive towards sustainable development

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Malaysia is set to become the driving force in shaping a more sustainable and inclusive future for the region, delegates at the recent 46th ASEAN Summit were told.

According to International Islamic University Malaysia lecturer Prof Dr Zainal Abidin Sanusi, Malaysia’s consistent commitment to green policies and renewable energy initiatives sets it apart as a natural leader for ASEAN’s next phase of development.

“As Chair this year, Malaysia can act as a catalyst for a sustainable development model that is not dependent on the unsustainable frameworks of developed nations,” Zainal Abidin said. “The climate crisis is already here which means ASEAN must act boldly and collectively.”

He also emphasised that ASEAN must move away from fossil fuel-based strategies and toward models that prioritise climate resilience, responsible resource management and social justice.

Under the theme ‘Inclusivity and Sustainability’, the ASEAN 2025 agenda called for long-term, people-centred development, but Zainal Abidin warned that this vision must be translated into tangible policies and actions.

“Without inclusivity, inequality will continue to widen. Without sustainability, progress will be short-lived. Malaysia’s leadership as ASEAN Chair in 2025 is critical to ensuring that today’s growth doesn’t become tomorrow’s burden,” he said.

He added that Malaysia’s domestic policies already reflect this forward-thinking approach. “Initiatives like the National Environmental Policy, Green Economy Framework, New Industrial Master Plan and a strong push for renewable energy underscore its commitment to climate action and environmental governance,” he said.

“With a moderate and balanced foreign policy, Malaysia is seen as a credible bridge between ASEAN and external partners such as the Gulf Cooperation Council (GCC) and China,” he said.

Zainal Abidin further called on Malaysia to champion the environmental, social and governance principles, promote access to education and technology, and elevate the voices of women, youth and local communities in shaping ASEAN policies.

“Malaysia can lead by example in making development and sustainability complementary, not conflicting, strategies,” he said.

Addressing ASEAN 2025, Malaysia’s Prime Minister Anwar Ibrahim Malaysia said the country remained steadfast in facing various global challenges and continues to play a role as the catalyst and leader of regional diplomacy.

He said that although the world is facing various challenges, including geopolitical tensions and trade tariffs, Malaysia remains firmly anchored.

“Malaysia is among the first countries to act in protecting the interests of industry and businesses and the welfare of the people.

“Comprehensive and inclusive strategic measures have been taken, with the involvement of various parties to ensure the country remains economically stable and competitive,” he said.

The Prime Minister also described this year’s ASEAN Summit as the best in the history of the organisation. “The Asean Summit… very much proved that the spirit of teamwork is the key to fulfilling the aspirations and ambitions of the country,” he said.

He also expressed confidence that the Visit Malaysia 2026 initiative will be a new catalyst for economic growth and the proliferation of employment opportunities.

The chair of ASEAN rotates annually based on the alphabetical order of the English names of member states, and in 2025 the role is being held by Malaysia.

 

Accountants ‘play critical role in sustainability’

Accountants are increasingly vital in embedding Environmental, Social, and Governance (ESG) principles into corporate decision-making and reporting, according to Malaysia’s Minister of Finance II, Amir Hamzah Azizan.

He said the accounting profession’s advocacy for sustainability aligns closely with national priorities, such as the National Energy Transition Roadmap (NETR) and the New Industrial Master Plan 2030 (NIMP 2030), which aim to accelerate green growth and industrial transformation.

“In executing these plans, we are counting on accountants to play a critical role in guiding companies to improve their sustainability practices, particularly in governance by ensuring high-quality, reliable disclosures are aligned with international standards. Such reliable and credible reporting is crucial for attracting low-carbon investments and enhancing the international competitiveness and green credentials of Malaysian products.

“Their contributions enhance transparency, support climate action, and help guide Malaysia toward a low-carbon, resilient economy,” he said.

UAE moves to give tax breaks to unincorporated partnerships

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Businesses operating in the UAE as unincorporated partnerships now have the option to be taxed as full legal entities – similar to companies – if they apply and receive approval from the Federal Tax Authority (FTA), the Ministry of Finance has announced.

The change could open up new benefits for certain partnerships, including access to the same corporate tax exemptions and reliefs available to other legal entities under the UAE’s new Corporate Tax Law.

Most unincorporated partnerships in the UAE are treated as ‘transparent’ for tax purposes. This means the partnership itself isn’t taxed – instead, each partner is taxed on their share of the income.

But under this new Cabinet Decision, partnerships that prefer a different approach can now apply to be treated as a single taxable entity.

If approved, the partnership will be considered a ‘legal person’ for tax purposes, much like a company. This would mean it is taxed directly and may be eligible for corporate tax benefits offered to other business structures.

The new decision also outlines how such partnerships should calculate their taxable income, giving more clarity to firms that choose this option.

According to the government, this step supports the UAE’s broader goals of improving tax transparency, enhancing the ease of doing business and maintaining a competitive environment for all types of firms.

While this change doesn’t affect all partnerships automatically, it gives certain businesses more flexibility in how they manage their taxes – particularly those looking to benefit from corporate tax incentives or simplify partner-level tax filings, the finance ministry said.

Businesses must apply and receive approval from the FTA before switching to this tax status.

 

Small firms and freelancers to benefit most from penalty refunds

The UAE’s Federal Tax Authority (FTA) has announced it is not charging businesses administrative fines for delays in registering for corporate tax. And the authorities have also said they are to refund all those businesses that had already been fined for not meeting their registration deadlines. The penalty for late registration is Dh10,000 (about £2,000).

This would be a huge relief for single individual or freelance-run businesses, the FTA said. Such entities had to register for tax before end March.

Girish Chand, Senior Partner at the management consultancy MCA, said: “Based on past experience of such penalty reversals, the penalty already paid could be automatically reversed. This refund could be available for adjustment against the company’s corporate tax liability.”

He said the UAE FTA has “gone out of its way to hand-hold businesses through the process of registering for corporate tax as per deadlines”. Constant reminders have been issued to get businesses to submit all the documentation through the Emaratax portal.

Mushtaq Khatri, CEO of mkACE Management Consultancy, said: “The FTA has confirmed those businesses who paid the Dh10,000 penalty but meet the waiver conditions will be refunded.

“The FTA may need the taxpayer to apply for the refund, and the FTA may review the case before releasing the funds. Clarifications on the procedure to get the refund are awaited.”

The tax authority said that to qualify for the penalty waiver, eligible businesses must file their tax return or annual statements within a period not exceeding seven months from the end of their first tax period.

“This aims to encourage registrants to file tax returns or annual statements before the deadline, bolstering early compliance with legal requirements,” it said in a statement.

  1. E. Khalid Ali Al Bustani, Director-General of the FTA, said that the FTA’s core strategy has been structured around expediting tax procedures for all business sectors and to encourage voluntary compliance with tax laws.

“Widespread compliance is a key and contributing element in promoting economic growth and the FTA remains committed to full transparency in relation to a flexible and constantly updating tax legislative environment,” he said.

India ‘world’s fourth-largest economy,’ says leading think-tank

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India now fourth-largest economy in the world, overtaking Japan, according to the top Indian government public policy think-tank.

BVR Subrahmanyam, chief executive of NITI Aayog, described the overall geopolitical and economic environment as “favourable to India”. He said: “We are the fourth-largest economy as I speak. We are a $4 trillion economy.” Citing IMF data, Subrahmanyam added that India’s economy is now larger than Japan’s.

“It is only the US, China and Germany that are larger than India, and if we stick to what is being planned and what is being thought through, in two-and-a-half to three years we will be the third largest economy,” Subrahmanyam said.

The International Monetary Fund (IMF), in its latest World Economic Outlook (WEO) report said that India is expected to be the fourth largest economy in the world with a GDP of $4.19 trillion in 2025.

India’s nominal GDP for 2025 (FY26) is expected to be $4.187 billion, marginally ahead of the likely GDP of Japan which is estimated at $4.187 billion, the IMF said.

According to IMF data, India’s per capita income has doubled from $1,438 in 2013-14 to $2,880 in 2025.

The organisation also said the Indian economy is projected to grow at 6.2% in 2025-26, slower than earlier estimated rate of 6.5%, due to escalated trade tensions and global economic uncertainty.

“For India, the growth outlook is relatively more stable at 6.2% in 2025, supported by private consumption, particularly in rural areas,” the IMF stated.

According to the report, the global growth is projected at 2.8% in 2025, lower by 0.5 percentage points estimated earlier. In 2026, the global economy is estimated to grow at 3%.

A new NITI Aayog paper, called ‘Viksit Rajya For Viksit Bharat @ 2047’, said from being considered a part of the so-called ‘fragile five’ economies of the world, India rose to become the top five economies of the world in just a decade.

In 2013, Morgan Stanley coined the term ‘fragile five’ in reference to the emerging market economies of Brazil, India, Indonesia, South Africa and Turkey.

The World Bank defines high-income countries as those whose annual per capita income is more than $14,005 (2024–25). India has the potential and aims to be a high-income country by 2047, with an economy worth $30 trillion.

“It will have all the attributes of a developed country with a per capita income that is comparable to the high-income countries of the world today,” the paper said.

It added that in order to achieve the goal of a Viksit Bharat by 2047, an overall framework for strategic interventions and reforms based on six key building blocks have been identified.

These are: Macro-Economic Goals and Strategy; Empowered Citizens; A Thriving and Sustainable Economy; Technology and Innovation Leadership; A Global Leader, Vishwa Bandhu; and Enabling Factors – Governance, Security and Justice delivery.

 

Interim India-US trade deal could be in place by July

A team of US officials are expected to visit India in June for trade talks, with the possibility that the two countries agreeing on an interim trade pact by June 25, trade sources have said.

India’s chief negotiator, Special Secretary in the Department of Commerce Rajesh Agrawal, recently undertook a four-day visit to Washington, holding talks with his US counterpart on the proposed agreement.

Commerce and Industry Minister Piyush Goyal was also in Washington, meeting with United States Commerce Secretary Howard Lutnick twice during his visit.

Both sides are looking at an interim trade deal before the first tranche of the proposed bilateral trade agreement (BTA), with the US’ 26% reciprocal tariff on India suspended until 9 July this year. However, Indian goods still attract the 10% baseline tariff imposed by the US.

Both countries have fixed a deadline to conclude the first phase of the proposed BTA by September-October of this year.

The US was India’s largest trading partner for the fourth consecutive year in 2024-25, with bilateral trade valued at $131.84 billion. The US accounts for about 18% of India’s total goods exports.

‘China must strengthen ties with other major economies’

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China and other leading economies should deepen regional economic co-operation and defend the multilateral trade system, according to a senior trade expert.

Zhao Zhongxiu, president of the University of International Business and Economics in Beijing, told the China Daily website that the United States’ current tariff-based economic policies, represent a unilateral attempt to rewrite global trade rules to its own advantage.

“These developments have made it more urgent for major economies – such as the European Union, the Association of Southeast Asian Nations (ASEAN) and China — to strengthen consensus and deepen cooperation, thereby jointly improving agility and resilience of regional and international supply chains,” he said.

“These so-called reciprocal tariffs, even though temporarily paused, have raised the average US tariff rate to nearly 30%. That marks a historic regression, undermining the WTO framework that took decades to build,” Zhao said.

Citing statistics from international organisations, Zhao showed that global tariff negotiations since 1947 have lowered duties in developed economies to 3% – 5%. If unchecked, the US policy reversal may trigger retaliatory cycles, pushing the world into a ‘jungle economy’, jeopardizing 86% of global trade that relies on free trade rules, he said.

Since the US announced the so-called ‘liberation day’ tariffs package, China’s firm stance and calibrated countermeasures have helped bring the Washington administration back to the negotiation table. On May 12, the two countries announced a series of tariff adjustments aimed at easing trade tensions. Still, effective US tariffs on Chinese products remain around 50%, far higher than pre-2018 levels, according to Zhao.

He said: “Shared pressure from US tariff measures is pushing China and the EU closer. Coordination between the two is no longer optional — it’s imperative.

“This is a critical window of opportunity for the two sides to deepen co-operation and strengthen economic ties,” Zhao said. “By leveraging shared interests, the two sides can push back protectionist disruptions and reinforce the multilateral trade system.”

The UIBE president suggested that China-EU collaboration could start with “small yet practical initiatives’, and gradually elevate strategic dialogue to higher levels to advance broader partnership.

For example, China’s commitment to green development dovetails with the EU’s decarbonization efforts, creating opportunity to jointly transform the EU’s Carbon Border Adjustment Mechanism (CBAM) — currently a unilateral carbon pricing instrument — into a multilateral framework consistent with WTO rules and global climate responses.

As for digital economy, China and the EU share common priorities, including digital trade facilitation, standards development and consumer protections. Deeper collaboration on emerging issues such as aligning standards in 6G networks could position China and the EU as key pillars in the multilateral digital trade system of the future.

Zhao also emphasised that China and ASEAN are strengthening industrial chain integration under the Regional Comprehensive Economic Partnership, particularly by leveraging rules of origin to reshape regional supply chains.

“ASEAN can serve as a ‘stabilizer’ for China’s economic growth amid US tariff pressures,” he said. “By relocating production to ASEAN-based industrial parks, Chinese companies can supply to both local and international markets, with or without access to the US market.

“For ASEAN, investments from Chinese companies support local industrialization, job creation, and tax revenues,” he said. “It’s win-win – as long as China is avoiding domestic industrial hollowing-out.”

Zhao also noted that China’s ability to respond to US unilateralism and hegemony stems from its supply chain resilience, and its capacity to withstand inventory adjustment cycles.

He added: “Despite the current tariff truce, the US could reinstate suspended tariffs or attach new conditions. Ultimately, it is a matter of endurance.

“China has prioritized self-reliance in sci-tech innovation and domestic market expansion, and its new growth drivers have begun to yield results. We are making steady progress despite ongoing challenges.”

Malaysia launches all-encompassing AI infrastructure project

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The Malaysian government has launched the region’s first all-encompassing AI ecosystem which it says will ensure data is processed locally, safeguarding user privacy and data security.

Ministry of Communications Deputy Minister Teo Nie Ching said the new Strategic Artificial Intelligence Infrastructure marks an important step in the country’s AI development.

She said: “The special thing about this project is that the data will be stored in Malaysia, it will be managed by Malaysians, and it will be used by Malaysians as well, so this is how we can actually safeguard our AI sovereignty.

“Now it’s no longer like the cloud or the data centre is overseas, it’s purely in Malaysia – server also in Malaysia, managed by Malaysia, and the AI agents will also be developed by Malaysians. I think this is how we can localise the AI application in Malaysia,” she said.

Teo said the project was the first of its kind outside China, adding: “We are very proud, meaning that in terms of AI adoption and AI application, Malaysia indeed truly will be the leader in Asean, in terms of AI application and adoption.”

The platform is designed to empower the government, businesses and universities to leverage AI in improving services, boosting productivity and driving innovation. It offers 20% higher performance and 30% energy savings compared to industry peers, and hosts the DeepSeek open-source large language model, making it the first national-scale sovereign LLM deployed in Malaysia.

Early adopters include the Prime Minister’s Office, the Ministry of Communications and Universiti Teknologi Malaysia.

Teo also announced the launch of the Malaysia-China Trusted Data Zone, the first bilateral corridor linking Cyberjaya, Malaysia and the China (Shanghai) Pilot Free Trade Zone Lin-gang Special Area. It is designed to enable seamless cross-border AI development through infrastructure, joint innovation platforms and digital capability integration.

Malaysian online sellers reluctant users of AI

The launch comes as a new survey reveals that only 25% of Malaysian online sellers have integrated AI into their business operations.

Research by e-commerce platform Lazada Malaysia found that while 69% of Malaysians show strong familiarity with AI, at least one in two Malaysian sellers remains sceptical about its usefulness.

The platform’s chief operating officer, Ángel Ramiro, said key barriers to entry include cost concerns, time investment and resistance to change, with nearly 67% of employees preferring familiar manual processes.

“We understand this gap and recognise that our sellers need a strong support system beyond offering powerful tools.

“Our seller learning platform, Lazada University, and the Seller Ambassador Programme, which provides peer-to-peer mentorship, are some ways we support AI adoption.

“We have also launched a playbook to help sellers assess their AI readiness and discover how they can use AI on Lazada to drive business success,“ Ramiro said.

He added that the online e-commerce platform has launched the Online Sellers Artificial Intelligence Readiness Playbook – a strategic guide to help sellers understand where they are on their AI journey and map out clear, actionable steps for adoption at their own pace.

The playbook offers sellers insight into their AI-readiness under three archetypes – AI Agnostics, Aspirants and Adepts – while highlighting operational gaps they can bridge with AI. It also outlines key AI solutions they can leverage, with direct access to resources and tutorials for maximising Lazada’s built-in AI-powered tools and features.

“AI is a key priority for us, and we are focused on closing the adoption gap by upskilling the local seller ecosystem and equipping them with powerful yet easy-to-use tools. Our digital AI solutions are designed to be genuinely inclusive for sellers across Malaysia, operating from Kuala Lumpur or a small town in Pahang.

“With only 15% of Malaysian online sellers classified as ‘AI Adepts’, most micro-entrepreneurs and rural businesses can benefit from our infrastructural and educational support,” Ramiro said.

More Indian start-ups benefit from tax exemption scheme

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The Indian government has approved a tranche of 187 start-ups for tax exemption under the revamped Section 80 of the IAC framework.

With the latest approvals by the Department for Promotion of Industry and Internal Trade (DPIIT) more than over 3,700 Indian start-ups have now benefited from the scheme since its launch.

The tax exemption initiative – under the revamped Section 80-IAC of the Income Tax Act – aims to provide fiscal relief for emerging businesses, encouraging innovation and supporting job creation across the country.

In a statement, the DPIIT said latest the approvals came during the 79th and 80th meetings of the Inter-Ministerial Board (IMB), with 75 start-ups cleared in the 79th meeting and 112 in the 80th.

Under the revised framework, eligible start-ups can claim a 100% income tax deduction on profits for any three consecutive years within a 10-year period from their date of incorporation. The Union Budget 2025–26 extended the eligibility window, allowing start-ups incorporated up to 1 April 2030 to claim the benefit.

To qualify, start-ups must be recognized by the DPIIT, operate as a private limited company or limited liability partnership, and have an annual turnover not exceeding Rs 100 crore (£8.76m) in any previous financial year.

The DPIIT has also simplified and sped up the application process, ensuring that complete applications are reviewed within 120 days. Start-ups that were not approved in the latest round are encouraged to review and strengthen their applications, focusing on technological innovation, market potential, scalability, and their contribution to employment and economic growth.

“These steps underline the government’s ongoing commitment to nurturing a vibrant, innovation-led start-up ecosystem in India,” the DPIIT said.

The government has also doubled the guarantee cover under its Credit Guarantee Scheme for Startups (CGSS), raising the limit per borrower from Rs 10 crore to Rs 20 crore, a move aimed at easing credit access for start-ups and driving innovation in priority sectors.

The revised scheme also increases the guarantee cover to 85% for loans up to Rs 10 crore and 75% for loans above that threshold. The government is positioning the expanded coverage as a way for start-ups to secure working capital, term loans and venture debt, key to sustaining R&D and product development.

As of December 2024, the DPIIT had recognized 157,000 entities as start-ups. Since the launch of the Startup India initiative on 16 January 2016, these start-ups have generated over 1.55 million direct jobs, according to government figures.

Industry experts have welcomed the move. “This will give start-ups much-needed breathing room to innovate and scale up without the immediate pressure of tax burdens,” said Vinod Kumar, president, India SME Forum.

“Combined with improved access to credit, these measures create a supportive environment that can help Indian start-ups compete globally.”

India ‘must speed up merger process’

India’s regulatory frameworks must facilitate swift and seamless approvals for mergers (or combinations) that pose no harm to competition, while also maintaining rigorous oversight, Finance Minister Nirmala Sitharaman has said.

Speaking at the recent 16th Annual Day of the Competition Commission of India (CCI), Sitharaman said: “Delays in regulatory clearances can lead to uncertainty, disrupt commercial timelines, and potentially erode the intended value of transactions.”

The CCI allows automated approval for combinations that are deemed to have no appreciable adverse effect on competition in order to reduce transaction costs and timelines for benign mergers and acquisitions under its green channel mechanism.

“Regulators must be guided by the principle of ‘minimum necessary, maximum feasible’ in order to balance regulatory vigilance with a pro-growth mindset,” Sitharaman said.

The Finance Minister said that the ability of the antitrust watchdog to strike a balance between regulatory vigilance and a pro-growth mindset will be integral to building a resilient, equitable and innovation-driven economic framework in India.

“In an export-challenged, environment-challenged, energy-challenged, and emissions-challenged world, the increased reliance on domestic growth levers requires ensuring the right balance of regulation and freedom,” she added.