Indian government mulls impact of US ‘reciprocal tariffs’

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India’s government has said that it is examining the implications of the ‘reciprocal tariffs’ announced by the United States, which has imposed a baseline duty of 10%, effective from 5 April 2025. A remaining country-specific ad valorem duty of 27% became effective on 9 April 2025.

The Ministry of Commerce and Industry said it is engaging with all stakeholders, including Indian industry and exporters, collecting feedback on their assessment of the tariffs and assessing the situation.

“The Department is also studying the opportunities that may arise due to this new development in the US trade policy,” it said in a press statement.

Referring to Prime Minister Narendra Modi and US president Donald Trump’s February announcement on ‘Mission 500’ – aiming to more than double the bilateral trade to $500 billion by 2030 – the commerce ministry said discussions are ongoing between Indian and US trade teams for the conclusion of a mutually beneficial, multi-sectoral Bilateral Trade Agreement.

“These cover a wide range of issues of mutual interest including deepening supply chain integration. The ongoing talks are focused on enabling both nations to grow trade, investments and technology transfers. We remain in touch with the Trump Administration on these issues and expect to take them forward in the coming days,” it said.

The ministry statement added that “India values its Comprehensive Global Strategic Partnership with the United States”, and is committed to implement the India-US ‘Catalysing Opportunities for Military Partnership, Accelerated Commerce & Technology’ (COMPACT) agreement, to ensure that trade ties remain a pillar of mutual prosperity and drive change for the benefit of the people of India and the US.

 

New Income Tax Bill gets approval

India’s Union Cabinet has approved the New Income Tax Bill, which is set to replace the six-decade-old Income Tax Act, news agency PTI has reported.

The new legislation aims to make direct tax laws simpler and easier to understand, while ensuring that no additional tax burden is imposed on taxpayers. According to sources, the bill seeks to eliminate complex provisos, explanations and lengthy sentences, making the tax structure more transparent and accessible. The proposal was approved during a Cabinet meeting chaired by Prime Minister Narendra Modi, the news agency reported.

The New Income Tax Bill is expected to be introduced in the Parliament later this month and would be sent to Parliament’s Standing Committee on Finance.

Finance Minister Nirmala Sitharaman had announced in Budget 2025-26 that the new tax bill will be introduced in the ongoing session of Parliament. Sitharaman had first announced a comprehensive review of the Income-tax Act, 1961 in July 2024 Budget.

India’s Central Board of Direct Taxes (CBDT) had set up an internal committee to oversee the review and make the Act concise, clear, and easy to understand, which will reduce disputes, litigations, and provide greater tax certainty to taxpayers.

Also, 22 specialised sub-committees have been established to review the various aspects of the Income Tax Act. Public inputs and suggestions were invited in four categories – simplification of language, litigation reduction, compliance reduction, and redundant/obsolete provisions. The income tax department has received 6,500 suggestions from stakeholders on the review of the Income Tax Act.

PTI reported that the new law is expected to be leaner and more reader-friendly. It said the intention of the government is to halve the volume and make the language simpler, so that taxpayers can know their exact tax liability. It said it “would also help in reducing litigation and thereby cut down on disputed tax demands. Income tax law was enacted about 60 years ago in 1961 and since then a lot of changes have taken place in the society, in the way people earn money and companies do business.”

China acts to encourage foreign private enterprises

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China is considering raising the foreign debt ceiling for high-tech firms as part of its efforts to enhance financial support for private enterprises, the State Administration of Foreign Exchange (SAFE) has said.
Executives and industry experts said the moves will support private, tech-oriented enterprises to obtain more overseas financing and help private sector exporters save on costs and enhance efficiency, thus sharpening their international competitiveness.
“We will increase the quota for eligible high and new-tech firms, ‘Little Giants’ and tech-oriented small and medium-sized enterprises to autonomously borrow external debt at an appropriate time,” a SAFE official said in an interview with the China Daily website.
High and new-tech enterprises are government-recognized companies that engage in innovation and research and development. ‘Little Giant’ companies refers to specialised and sophisticated SMEs that produce novel and unique goods and services.
SAFE said the moves would be part of the country’s efforts to deepen the reform of foreign exchange management to extend support for the private sector, including efforts related to cross-border investment and financing, foreign exchange rate risk management and foreign exchange policies to facilitate international trade.
“We will optimize and expand facilitation policies, tilting toward private entities with genuine need and good compliance, to better support the stability of foreign trade,” the administration said.
Noting that private sector enterprises are playing an increasingly important role in foreign trade – not only in the growth of trade but also in terms of economic restructuring and innovative development – the administration said it is committed to providing strong financial support for the healthy development of the private economy and “helping private enterprises grow stronger and better”.
SAFE said: “A series of measures will be gradually introduced, including optimizing and upgrading the cross-border cash pool policy for multinationals, simplifying the foreign exchange management of direct investment, expanding the facilitation quota for cross-border financing of innovative and tech enterprises, and optimizing the policy of facilitating foreign exchange receipts and payments under the capital account.”

China’s domestic consumption will offset tariff risks
Despite the ‘reciprocal tariff’ policy announced by the United States, senior economists say that China’s strong domestic consumption potential and its people-centric investment strategies means it is well placed to offset the risks posed by tariff hikes.
“While the Chinese economy faces challenges, the sky is not falling,” said Chen Wenling, former chief economist at the China Center for International Economic Exchanges. “China’s economy is still robust and capable of weathering storms.
“China’s economy has maintained a steady growth trajectory over the past decades, with its massive economic scale serving as a powerful buffer against external pressures.”
Chen said China is doubling down on boosting domestic demand – both consumer spending and effective investment – to prop up its growth, with policymakers setting the country’s deficit-to-GDP ratio at the highest level on record.
By placing domestic demand at the forefront, China can create a more stable and self-sustaining economic growth model that is less vulnerable to the volatility of global trade flows, he added.
China’s annual economic growth rate in 2025 will “be faster than that of last year”, said Li Daokui, director of Tsinghua University’s Academic Center for Chinese Economic Practice and Thinking. “Policymakers still have a diverse range of policy tools at their disposal.”
China has the “sufficient patience and determination” to confront the shocks of the Trump administration, as US polices are hastily implemented, often without a well-thought-out strategy or a clear understanding of their broader implications, Li said.
And Jeffrey Sachs, director of the Centre for Sustainable Development at Columbia University, said: “The US should recognize that China’s rise is not only good for China, but also good for the US and the world as a whole.”
The United States “should not aspire to a world in which it alone is prosperous, while everyone else remains poor. Instead, it should strive for a world in which prosperity is widely shared, and all nations can reap the benefits of peace and openness,” Sachs added.

 

Adoption of crypto in UAE continues to quicken

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Speed and transactional efficiency are driving the fast adoption of cryptocurrencies in the UAE and wider Middle East region, according to new research.

And many people in the Middle East are opting for digital currencies because of the privacy it affords while making transactions, reflecting the region’s preference for financial security and discretion, according to a global study by Bitget Wallet, an arm of leading crypto exchange Bitget.

A sizeable number of cryptocurrency users in the region, however, are concerned about security risks amidst the surge in phishing scams, exchange breaches and Ponzi schemes, making security a top priority

“Whether for personal savings, business dealings or investment purposes, [Middle Eastern users] are increasingly preferring crypto as it offers a way to transact without excessive scrutiny or third-party oversight,” the study said.

“This also aligns with the growing demand for decentralized financial solutions in the region that put users in control of their wealth,” it said.

Bitget Wallet, however, said while crypto presents exciting financial opportunities, strengthening security education and implementing more user-friendly protections will be key to boosting confidence in crypto payments. Many new users remain vulnerable to cyber threats, it said.

High transaction fees are another barrier for wide-spread use of crypto transactions in the Middle East, as unpredictable costs reduce its appeal for users relying on crypto for remittances, business transactions, or daily payments, the study said.

“Many individuals and businesses face barriers in transferring funds across borders due to banking regulations or limited access to international financial networks.

“Crypto eliminates these restrictions, allowing users to send and receive money effortlessly, regardless of location. This has made digital assets particularly attractive for expanding business opportunities and enabling financial inclusion,” Bitget Wallet said.

It, however, pointed out that clearer regulations and enhanced legal protections will be essential for building trust, ensuring that crypto can evolve into a more secure and widely accepted financial tool in the region.

The global study of crypto users across regions also revealed that privacy concerns drive adoption in the Middle East (38%) and Western Europe (35%).

The study, however, said across regions, limited merchant acceptance – estimated at 31% – continues to be a major barrier, preventing crypto from being a widely used everyday payment method.

Lack of legal protection is another major obstacle for wider crypto adoption, with as much as 30% of Middle Eastern users highlighting it as a key concern.

“Unlike traditional finance, crypto transactions often lack consumer safeguards, leaving users exposed to fraud, disputes or lost funds with no recourse,” Bitget Wallet said.

The study also revealed that some regions see crypto as an alternative financial system rather than just a payment method.

Generational differences in crypto usage revealed that Gen X (49%) prioritises speed, while Millennials (42%) and Gen Z (39%) favour borderless transactions.

The study also showed that security concerns are highest among Gen X (42%), while Gen Z (36%) is more sensitive to transaction fees.

While younger users are more willing to integrate crypto into their daily financial activities, usability challenges and a lack of financial infrastructure remain key hurdles for broader adoption, Bitget Wallet said. “Across generations, the top reasons for using crypto payments remain consistent, but key differences emerge in priorities,” it said.

The study said privacy and cost savings resonate across all age groups, with 37-40% citing privacy as a major factor and 37% appreciating lower transaction fees.

While all generations recognize the convenience of spending crypto without converting to fiat, Gen X and Millennials (39%) lead in this preference.

“These insights suggest that while Gen Z is more experimental, Millennials and Gen X see crypto as both a practical tool and a financial alternative, with speed, accessibility, and privacy driving adoption,” Bitget Wallet said.

Gen Z is also slightly more inclined toward crypto’s ability to bypass traditional financial systems, it said.

The study is expected to enable industry stakeholders to anticipate trends, refine user experiences, and develop solutions that enhance trust, usability, and global acceptance of crypto as a viable payment method.

Global firms seeking fresh opportunities in China

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China’s commitment to opening up its economy will encourage new industrialisation, green growth and digital transformation, according to executives of leading multinational corporations.

Speaking at the China Development Forum 2025, held recently in Beijing, company bosses said that as China shifts toward innovation-driven and green growth, foreign companies are committed to working with local partners, investing in high-end manufacturing, artificial intelligence and the service industries.

At the forum, Li Yongjie, deputy international trade representative of the Ministry of Commerce, said China will further advance comprehensive pilot programmes to open up its services sector, promote the opening of industries such as the internet and culture, and expand access to key areas including telecommunications, healthcare and education.

Christophe Weber, President and CEO of Takeda Pharmaceuticals, said his company will make targeted investments in data and digital solutions in China to unleash the power of new technology for the future of healthcare.

In January, the Japanese company announced the signing of an investment co-operation agreement to establish its China innovation centre in Chengdu, Sichuan province. The facility will focus on digital healthcare innovation and will develop solutions using big data and artificial intelligence.

Danish technology and engineering conglomerate Danfoss Group has also seen strong momentum in sectors aligned with China’s development priorities, with 70% year-on-year growth in its data centre business and 29% in its marine business in China in 2024.

Kim Fausing, President and CEO of Danfoss, said the group will further scale up its presence in China in 2025 and beyond. The company will start mass production later this year at its campus in Nanjing, Jiangsu province, producing electric and hybrid power train systems. This follows the launch in January of its newly upgraded application development centre in Suzhou, Jiangsu.

Acknowledging the shift in foreign investment patterns in China, John Quelch, executive vice-chancellor and American president of Duke Kunshan University in Jiangsu, described China’s renewed commitment to opening up to foreign investment — backed by consistent government support and a more level playing field — as “highly encouraging”.

He said: “With the country’s growing innovation capabilities, foreign investment is increasingly focused on collaborative research and development activities, rather than being limited to manufacturing alone.”

A total of 7,574 foreign-invested enterprises were newly established in China in the first two months of this year, representing year-on-year growth of 5.8%, statistics from the Ministry of Commerce showed.

Meanwhile, foreign-invested businesses in China saw their export value grow 6.9% year-on-year to 1.08 trillion yuan ($148.9 billion), according to the General Administration of Customs.

Expressing concern over rising global protectionism, Oliver Zipse, board chairman of Germany’s BMW AG, said that economic growth thrives through opening, not closing.

Zipse warned that such measures will diminish prosperity for all, emphasising that the best response to decoupling or de-risking is more co-operation, not less.

Small firms benefiting from better access to credit

Official data showed that China saw strong growth in amount of loans to small and micro companies by the end of 2024 amid government efforts to encourage inclusive financing.

By the end of the fourth quarter (Q4) of last year, the balance of loans issued by banking financial institutions to small and micro firms totalled 81.4 trillion yuan (£8.8 trillion), according to the National Financial Regulatory Administration.

The outstanding loan to small and micro companies with a credit limit of 10 million yuan or less reached 33.3 trillion yuan, surging 14.7% year-on-year, data from the administration showed.

China has been stepping up financial support for the country’s small businesses, with reserve requirement ratio cuts and policy interest rate reductions to lower borrowing costs and boost the vitality of the small market players.

In 2024, the number of registered enterprises in China reached 61.226 million, most of which were middle, small and micro-sized businesses.

India’s GDP growth forecast to 6.5% as world economy stutters

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A leading ratings agency has cut India’s GDP growth projections to 6.5% for the next financial year, predicting that economies in Asia will feel the strain of rising US tariffs and pushback on globalisation.

In its Economic Outlook for Asia-Pacific (APAC), S&P Global Ratings said that despite these external strains, it expects domestic demand to remain solid in most emerging-market economies.

“India’s GDP will grow 6.5% in the fiscal year ending March 31, 2026, we expect. Our forecast is the same as the outcome for the previous fiscal year, but less than our earlier forecast of 6.7%,” S&P said.

Slowing food inflation, tax benefits announced in the country’s budget for the fiscal year ending March 2026, and lower borrowing costs will support discretionary consumption in India, S&P said.

The global credit rating agency expects central banks in the Asia-Pacific region to continue cutting benchmark interest rates through this year.

The S&P Economic Outlook said Asia-Pacific economies will feel the strain of rising US tariffs specifically and a pushback on globalisation more generally.

It said: “However, we see domestic demand momentum broadly holding up, especially in the region’s emerging-market economies.

“Given the volume of policy measures and external pressures hitting Asia-Pacific, the robustness of our forecasts underscores the resilience of the regional economies.’

Domestically, immigration reduction, deregulation and cuts to taxes and government spending are in focus.

Externally, US import tariffs are rising across the board. So far the new US government has imposed an additional 20% tariff on imports from China; 25% levies on some imports from Canada and Mexico, with levies on other products postponed for a month; and a global 25% tariff on steel and aluminium.

“The heightened uncertainty about US economic policy and its impact, notably around tariffs, is weighing on investment in the US and elsewhere,” S&P said.

India expected to remove 6% ‘Google tax’ from 1 April

India is set to remove the 6% Equalisation Levy, known as the ‘Google tax’, on online advertising services provided by foreign tech companies including Google and Meta. The tax will be scrapped from 1 April 2025, as part of amendments to the Finance Bill, news agency Reuters has reported.

This move comes amid efforts to improve trade relations with the US, which had previously criticised the levy and threatened retaliatory tariffs. The removal of the tax is expected to benefit tech companies, advertisers and India’s digital economy.

The Equalisation Levy was introduced in 2016 to tax payments made by Indian businesses to foreign companies for digital advertising services. It was aimed at ensuring that global tech firms, which earn significant revenue from Indian users but do not have a physical presence in the country, contribute to India’s tax system.

Initially set at 6% for online advertising services, the levy was later expanded in 2020 to include a 2% tax on all e-commerce companies with annual business exceeding Rs 2 crore (about £180,000) in India.

The 2% levy was withdrawn last year following an agreement between India and the US. Now the government plans to remove the original 6% tax as well, Reuters said.

The decision to remove the tax is part of India’s negotiations with the US to avoid trade conflicts. In the past, the US had threatened to impose tariffs of up to 25% on Indian some products in response to the Equalisation Levy.

Some experts believe the tax removal will help improve India-US relations and prevent any future trade disputes. Some countries, including the UK, are also considering withdrawing similar digital taxes to avoid tensions with the US.

“Removal of the equalisation levy is a smart move by the government, as collections weren’t very high, and it was a concern for the US administration,” Sudhir Kapadia, senior advisor at EY told Reuters.

The removal of the Google tax is expected to provide multiple advantages to global tech firms operating in India. With the 6% tax gone, advertising on platforms like Google and Meta will become cheaper for Indian businesses, encouraging more digital ad spending.

And lower costs could attract more advertisers, boosting revenues for digital platforms.

Malaysian survey highlights differing staff/employer expectations

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While many Malaysian workers are looking for pay rises, the organisations they work for are focusing on compensation planning to retain talent in a competitive job market – that is, aligning employee incentives with their business objectives.

That might mean creating incentives for employees to work longer hours, achieve aspirational goals or simply keep working for the organization in the face of alternative employment options.

That was one of the conclusions of a salary survey by leading jobs platform foundit, which also found that more than half of the surveyed employees recognise the need for salary adjustments to align with industry standards. However, nearly half of respondents anticipate just single-digit salary growth in their upcoming pay reviews.

The survey found that more than half (52%) of employees believe they are underpaid compared with industry peers; 38% feel their salary is above average, while 10% do not know how their pay compares to market rates.

Executive-level professionals (those with more than 15 years of experience) have the highest salary awareness, with only 4.48% unaware of market benchmarks, compared with mid-career professionals who display greater uncertainty.

V Suresh, CEO of foundit, commented: “This research offers fascinating insights into Malaysia’s compensation landscape, revealing both challenges and opportunities. The perception gap we’ve identified – where many employees believe their pay falls below industry standards – represents a critical area for employers to address.

“Malaysian businesses have a compelling opportunity to strengthen their position in the talent market through enhanced salary transparency and more effective communication about compensation. By helping professionals understand how their pay compares to true market rates and developing transparent frameworks for advancement, organisations can better align expectations with reality.”

Suresh added: “This strategic approach benefits not just individual employees but strengthens organisational resilience and competitiveness. For Malaysia to continue its trajectory as a business hub in Southeast Asia, addressing these compensation perception gaps will be instrumental in attracting and retaining the best talent.”

 

Small pay rises expected

When it comes to pay rise expectations, the foundit survey discovered that 45% of professionals expect only a 0-10% salary hike in their next review. Some 28.7% anticipate a 6%-10% increment, while 16.7% expect a rise of just 0%-5%.

It also found that professionals with four to six years’ experience are the most optimistic, with nearly 39% expecting a 6%-10% rise, while senior executives anticipate more conservative increases (0%-5%).

Over the past three years, 36% of professionals saw no salary growth, indicating wage stagnation. Some 30% experienced salary reductions (19% minor, 11% significant), while 34% received salary hikes (18% modest, 16% substantial), highlighting industry-specific trends.

The survey also found that the key drivers of salary levels are:

  • Skills in demand: 31.2% of professionals believe in-demand skills significantly impact salaries.
  • Economic trends: 30.5% see macroeconomic factors shaping pay scales.
  • Sector-specific challenges: 18% cite industry constraints as key influencers.
  • Technological advancements: 12% recognise tech-driven disruptions affecting wages.

The foundit report said: “For organisations navigating the complexities of talent acquisition and retention in today’s competitive landscape, this research provides a valuable measuring stick for assessing current approaches and identifying areas for strategic improvement. By leveraging these insights to enhance both compensation structures and communication around pay, companies can create more appealing work environments that attract and retain top talent.”

 

EPF contributions ‘will boost economy in the long-term’

Foreign workers’ mandatory Employees Provident Fund (EPF) contributions will benefit Malaysia’s economy over the long term as employers will favour hiring more local talent as costs increase, Malaysia Employers Federation (MEF) President Syed Hussain Syed Husman has said.

While operational costs would be higher, the advantage is that it would foster sustainable business practices among local industries, said Husman. He added that industries such as manufacturing, construction and plantations, which are largely dependent on foreign workers, may explore alternatives like automation and a greater focus on local talent.

“The additional cost will affect competitiveness… some businesses will pass the cost on to consumers. Otherwise, they will face tighter profit margins on already thin margins,” he said.

This being the case, he reiterated that the government’s imposition of the EPF contribution presents an opportunity for employers to hire more local talent, as the cost of employing foreign workers rises.

The private sector has lauded the 2% EPF contribution by employers and foreign workers as of March this year as it will, among other things, improve worker retention and build loyalty.

The Employees’ Provident Fund is a federal statutory body under the purview of the Ministry of Finance. It manages the compulsory savings plan and retirement planning for private sector workers in Malaysia.

China expected to achieve its annual growth target of around 5%

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China is expected to achieve its annual growth target of around 5% this year, offering more business opportunities for both domestic and foreign companies through its intensified efforts to spur innovation and further boost consumption and investment.

That was the collective view of economists and business leaders at the recent ‘CEO: Grow with China’ roundtable event, hosted by China Daily.

“China’s economy is right on track to meet its pre-set annual growth target of around 5% for 2025, supported by its ultra-large domestic market, strong innovation capability, as well as a string of supportive policies aimed at boosting consumption and emerging industry investment,” said Lin Shen, a researcher at the Chinese Academy of Social Sciences’ Institute of World Economics and Politics.

“Government policies aimed at fostering innovation and developing emerging industries have been steadily implemented. Fiscal policies and other innovation-friendly measures will play a crucial role in sustaining economic growth throughout the year,” Lin said.

Lin said that the impact of new growth drivers, including artificial intelligence-powered manufacturing, have already started to benefit the economy. He said: “Our new quality productive forces, coupled with AI empowerment, have integrated well with manufacturing and the real economy. There will be significant progress in application scenarios.”

Ole Gerdau, chief operating officer at Deutsche Bank China, told the forum: “Even though there are certain geopolitical headwinds, we are still very optimistic about China’s economic prospects this year as the country’s fiscal and monetary policies go hand in hand.”

He added that consumption will be the key driver of the economy, contributing around two-thirds of China’s growth this year.

Gerdau said the emergence of Chinese AI start-up DeepSeek is changing people’s perception about China’s innovation strength and technological advancements. “This creates a wake-up moment for the world that now might be the time to invest in China. We expect this year to be the turning point where international investors are going to shift their focuses and have a higher allocation into the Chinese market,” he said.

China is prioritizing new quality productive forces and enhancing financial services to enterprises in its economic agenda for the year, as policymakers recently announced the rollout of a raft of supportive measures aimed at creating new growth drivers for the world’s second-largest economy.

The People’s Bank of China, the country’s central bank, said recently that it will reduce the reserve requirement ratio and interest rates as appropriate, based on the domestic and international economic and financial situation, as well as the performance of financial markets.

And the National Development and Reform Commission announced that it would establish a national venture capital guidance fund, with the goal of enhancing, strengthening and expanding innovative enterprises. The fund is expected to attract nearly 1 trillion yuan ($138 billion) in capital from local governments and the private sector.

The participants at the roundtable emphasized that emerging sectors such as AI have great potential in China, presenting new opportunities for enterprises.

China’s AI-led innovation is also offering opportunities for businesses like Rolls-Royce, said Troy Wang, executive vice-president of Rolls-Royce Greater China. “China’s focus on innovation-driven growth is making it continue to be an important country for Rolls-Royce, and it’s so much more than just a market for us,” Wang said.

“Rolls-Royce just achieved a record year in 2024 in terms of business performance and we’re confident about 2025,” he said, adding that the company is building Beijing Aero Engine Services Co Ltd, a joint venture in the capital, into a world-leading digitally enabled aeronautical engine repair and overhaul shop.

Rani Jarkas, chairman of Cedrus Group, said that the development of AI requires a large amount of electricity, chips and applications, and China has it all. “Technology speaks for itself,” he said. “I think the innovation will continue and the opportunities will grow for Chinese companies going abroad and for foreign companies to come to explore the market and set up local units here.”

Huang Yanxiang, co-founder and CEO of Shanghai CarbonNewture and an environmental, social and governance expert, said the current wave of AI-led innovation in China is transforming industries by integrating AI with manufacturing, boosting efficiency and giving rise to new business models. For CarbonNewture, this means deeply integrating AI into its carbon accounting platforms, improving data analysis and reporting capabilities to deliver more precise and actionable insights.

India ‘must accelerate reforms to speed up growth’

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India would need to grow its economy by 7.8% on average over the next 22 years to achieve the country’s aspirations of reaching high-income status by 2047, according to a recent report from the World Bank.

The report – entitled ‘India-Country Economic Memorandum: Becoming a High-Income Economy in a Generation’ – said that while achieving this target was possible, getting there would require reforms and their implementation to be as ambitious as the target itself.

Recognising India’s fast pace of growth averaging 6.3% between 2000 and 2024, the report observed that India’s past achievements provide the foundation for its future ambitions.

“Lessons from countries like Chile, Korea and Poland show how they have successfully made the transition from middle- to high-income countries by deepening their integration into the global economy,” said Auguste Tano Kouame, World Bank Country Director. He added: “India can chart its own path by stepping up the pace of reforms and building on its past achievements.”

The report evaluates multiple scenarios for India’s growth trajectory over the next 22 years. It said that vital to India reaching its targets are:

  • achieving faster and inclusive growth across states;
  • increasing total investment from current 33.5% of GDP to 40% (both in real terms) by 2035;
  • increasing overall labour force participation from 56.4% to above 65%; and
  • accelerating overall productivity growth.

Emilia Skrok and Rangeet Ghosh, co-authors of the report, said: “India can take advantage of its demographic dividend by investing in human capital, creating enabling conditions for more and better jobs and raising female labour force participation rates from 35.6% to 50% by 2047.”

In the past three fiscal years, India has accelerated its average growth rate to 7.2%. In order to maintain this acceleration and attain an average growth rate of 7.8% (in real terms) over the next two decades, the Country Economic Memorandum recommends four critical areas for policy action:

  • Increasing investment (the rate of private and public investment should increase from around 33.5% of GDP to 40 % by 2035).
  • Fostering an environment to create more and better jobs. Overall, labour force participation rates have remained low in India at 56.4% compared with countries like Vietnam (73%) and Philippines (60%). The report recommends incentivising the private sector to invest in big employment sectors like agro-processing manufacturing, hospitality, transportation and care.
  • Promoting structural transformation, trade participation and technology adoption.
  • Enabling states to grow faster and together. The report argues for a differentiated policy approach whereby less developed states could focus on strengthening the fundamentals of growth (health, education, infrastructure, etc.), while more developed states could prioritise the next generation of reforms.

 

MSMEs key to achieving growth

India’s micro, small and medium-sized businesses (MSMEs) need to be integrated into larger supply chains to drive real competitiveness and achieve 7%-8% growth, said Suman Bery, Chairman of the Economic Advisory Council to the Prime Minister Government of India.

“Growth happens through innovation and gains from trade, but sustaining momentum is harder when you’re doing well,” said Bery. “The challenge is to keep pushing forward… India’s corporate sector must step up, and MSMEs need to be integrated into larger supply chains to drive real competitiveness and achieve 7-8% growth.”

Bery added: “India has staged a remarkable economic recovery post-Covid, emerging as the fastest-growing large economy in the world, as acknowledged by the IMF. With moderate inflation and declining poverty levels, the country is on a strong growth trajectory. The challenge now is to sustain and accelerate this momentum.”

Highlighting the importance of sustainability, Bery said: “As the world moves towards greener supply chains, Indian enterprises – both large and small – must adapt. Sustainability is no longer just about compliance; it is becoming a core factor in global competitiveness. MSMEs must be supported in this transition, ensuring they are part of a greener, more resilient industrial ecosystem.”

Dubai ranked world’s top destination for foreign direct investment

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Dubai has been ranked the world’s top destination for greenfield Foreign Direct Investment (FDI) projects for the fourth successive year, according to the Financial Times ‘fDi Markets’ data.

Greenfield FDI is a form of FDI where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

In 2024, Dubai attracted AED52.3bn ($14.24bn) in estimated FDI capital, a 33.2% increase from AED39.26bn ($10.69bn) in 2023, marking the highest FDI value recorded to date in a single year for the emirate since 2020.

Dubai attracted a record-breaking 1,117 greenfield FDI projects in 2024, the highest number in its history.

A total 58,680 estimated jobs were generated through FDI in 2024, a 31% increase, from 44,745 jobs in 2023.

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, said: “Dubai’s ability to steadily consolidate its status as a leading global destination for foreign direct investment reflects its commitment to delivering exceptional value to investors worldwide.

“The city’s ranking as the world’s number-one destination for attracting greenfield FDI for the fourth consecutive year is a testament to its ability not only to set new global benchmarks for sustained, rapid growth but also to continuously evolve its investment proposition in response to changes sweeping the international market.

“This success is the result of a strategic vision that keeps pace with economic and technological transformations, aligned with the ambitious objectives of the Dubai Economic Agenda D33 to double the size of the emirate’s economy by 2033 and establish it as one of the world’s top three urban economies.”

Sheikh Hamdan added: “We remain committed to fostering a culture of innovation, enhancing economic competitiveness, and building an exceptional ecosystem that empowers businesses and investors to achieve growth and prosperity.”

Dubai’s forward-looking strategies have transformed the emirate into a global hub for FDI, with the city’s attractive business environment, favourable regulations, infrastructure, and strategic location making it a preferred destination for investors.

In 2024, the city was ranked fourth globally for attracting greenfield FDI capital, up from fifth position in 2023, while also claiming the top spot in the Middle East and Africa (MEA) region, according to the Financial Times data.

The city also advanced from fourth to third globally in terms of jobs created through inward FDI in 2024, securing the top position in MEA.

The data also showed that Dubai experienced a surge in talent attraction across key sectors, including business services, software IT services, real estate, logistics, financial services and consumer products.

For the third consecutive year, Dubai was also ranked first globally in the attraction of Headquarter (HQ) FDI projects, with 50 projects in 2024.

Helal Saeed Almarri, Director General of the Dubai Department of Economy and Tourism (DET), said: “The influx of new capital also underscores the confidence that investors, multinational corporations, and global talent place in our resilient ecosystem, bolstered by the collaborative spirit of public-private partnerships and the transformative goals of the Dubai Economic Agenda, D33.

“Looking ahead, Dubai remains committed to setting new benchmarks in global competitiveness through forward-thinking regulations, cost-effective energy solutions, and strategic global partnerships, as we continue building an ecosystem that empowers businesses to thrive.”

He added: “Our focus on innovation, start-up incubation and digital-first infrastructure ensures that Dubai will continue to be the destination of choice for those seeking growth, opportunity, and success in the global economy.”

The Financial Times data also showed that venture capital-backed FDI increased by 39%, reinforcing Dubai’s position as a thriving hub for start-ups and high growth ventures. And mergers and acquisitions (M&As) rose by 8%, demonstrating strong corporate interest in strategic partnerships and market consolidation.

Dubai FDI Monitor, published by DET, revealed that the top five source countries for FDI capital accounted for 63% of the total estimated flows into the Emirate in 2024.

India was the top source country with the highest total estimated FDI capital into Dubai, accounting for 21.5%, followed by the United States (13.7%), France (11%), the United Kingdom (10%) and Switzerland (6.9%).

Based on FDI capital, the leading sectors were hotels and tourism (14%); real estate (14%); software and IT services (9.2%); building materials (9%); and financial services (6.8%).

Finance minister: Indian banks must continue to boost efficiency

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Indian banks must continue to enhance operational efficiency to enhance customer services in a highly-competitive business environment, Union finance minister Nirmala Sitharaman has said.

Sitharaman was speaking at the launch of the Platinum Jubilee Celebrations for the Foundation Day of the State Bank of India (SBI) in Mumbai.

“With a surge in tech-savvy customers, there is an increasing demand for innovative, personalised and on-the-go banking experiences. Furthermore, strict regulatory compliance and the entry of new banks and non-bank entities have presented both challenges and opportunities to established players,” she added.

The finance minister virtually inaugurated 70 branches across India, 501 women customer service points, coinciding with the International Women’s Day and also launched 17 SBI corporate social responsibility (CSR) initiatives.

“As we celebrate this Platinum Jubilee, let us also look to the future. The world is changing rapidly, and the banking sector must continue to innovate and also to lead,” she said, adding that the number of banking service providers are on the rise. The customer base is expanding, with India’s favourable demographics (at median age 28) and growing aspirations, she observed.

Sitharaman also said that SBI has continuously evolved to meet the changing landscape. Despite recent disruptions and regulatory tightening, the bank has retained its position as a market leader, earning the trust of millions in a lower to middle-income economy.

The country’s largest lender is reinventing its personal distribution channels to align with evolving customer expectations. As the largest commercial bank in the world’s most populous nation, SBI is catering to about 5.6% of the global population, the finance minister said.

Unlike many organisations that resist change, SBI has embraced it. It has bolstered its infrastructure, established a robust monitoring and control framework, and built a talent pool of committed professionals, Sitharaman said. Additionally, the bank has re-engineered its internal processes to improve risk management and accelerate growth velocity.

India’s tracking taxpayers who have not filed their ITR

India’s Income Tax Department has warned taxpayers that it is using risk management strategy (RMS) software to track high-risk non-filers. It said the system analyses high-value transactions (such as property purchases and large bank deposits), plus income from salary, rent, mutual funds and shares.

The tax department said that taxpayers who have not filed their Income Tax Return (ITR) in the past few years despite having taxable income will also be tracked by the software. It said that it has identified individuals who have undisclosed income liable for income tax, and based on these findings, Income Tax Assessing Officers (AO) will take action, including sending tax notices under Section 148A, among other measures.

According to sources, the income tax department has also gathered data from multiple sources, like annual information statement (AIS), TDS/TCS records, statement of financial transactions (SFT) as well as import and export data.

Using this information, the department has identified people who had taxable income but did not file ITR.

The tax authority said the action specifically covers the financial years 2018-19, 2019-20, and 2020-21 (assessment years 2019-20, 2020-21 and 2021-22).

It added that if an individual’s income or spending exceeded the tax-filing threshold but he/she didn’t file a return, then that individual is likely on their list.

Since the deadline to file an updated return (ITR-U) for AY 2021-22 was March 31, 2024, taxpayers who have not filed their ITR have limited options, the department warned. It said: “You could apply for condonation of delay, wherein the tax department allows you to file your return late. However, in this case, approval isn’t guaranteed and may take time.

“Also, an individual, upon getting a tax notice for not filing their ITR, can stop further interest accumulation and appeal for penalty relief since they are proactively addressing the issue.”