Daily News - Tuesday, 4 February 2025

⁠FTA talks with UK in month-end (Financial Express)

⁠India and the UK will resume their 15th round of Free Trade Agreement (FTA) negotiations on February 24 after a year-long pause, driven by shifting global trade dynamics, including the US-EU tariff war and India’s reduction of peak import duties from 150% to 70%. Key unresolved issues include the UK’s demands for greater market access in automobiles, whiskey, and services, while India seeks a more liberal UK visa regime for its professionals, with the recent 100% FDI allowance in insurance potentially aiding discussions. Bilateral trade between India and the UK stood at $15.0 billion in April-November 2024, with India enjoying a trade surplus ($9.6 billion in exports vs. $5.4 billion in imports), and services exports ($17.7 billion in 2023) surpassing goods trade, while total UK FDI in India stands at $35.2 billion compared to India’s $12.9 billion investment in the UK.

CEA: Geo-economic uncertainties behind Budget measures (Financial Express)

India’s Budget announcements are shaped by global geopolitical and economic uncertainties, with key measures like raising the income tax exemption threshold from ₹7 lakh to ₹12 lakh aimed at boosting consumption and private sector investment. Chief Economic Adviser V. Anantha Nageswaran emphasized that tax relief will not only increase disposable income but also encourage savings, potentially driving economic growth. Amid concerns over weak private sector investment due to post-COVID uncertainty, European conflicts, and rising interest rates, the government hopes these fiscal measures will stimulate demand and long-term economic stability. 

Not worried about rupee’s fall, says finance secretary (Financial Express)

Finance Secretary Tuhin Kanta Pandey downplayed concerns over the rupee’s depreciation to a record low of 87.29 per dollar, attributing it to foreign fund outflows and the broader strengthening of the dollar amid geopolitical tensions and US trade policies, with the rupee weakening by 2.9% in FY25 (up to January 6). While depreciation may make imports costlier and fuel inflation, it also enhances export competitiveness, and the RBI continues to manage volatility in India’s free-floating exchange rate system. Meanwhile, the GST Council is considering rationalizing tax rates across 148 items, including apparel, leather goods, and luxury products, with a Group of Ministers (GoM) set to finalize recommendations for deliberation in the next meeting.

Start-ups raise $1.76 bn in Jan. via 128 deals (Financial Chronicle)

India’s startup ecosystem saw a strong start to 2025, attracting $1.76 billion across 128 deals in January—the highest in six months and more than doubling the $719.42 million raised in January 2024, with health-tech surpassing fintech and SaaS as the top-funded sector. AI-driven Impetus Technologies led with $350 million, followed by health-tech firm Innovaccer at $275 million, while overall funding rose 33% from December 2024’s $1.32 billion, marking a recovery after fluctuations in 2024. Additionally, layoffs significantly declined, with only three startups cutting just over 200 jobs, signalling a positive shift in the job market. 

⁠Flag tax devolution with finance commission: FM (Financial Chronicle)

Finance Minister Nirmala Sitharaman has urged southern states to engage with the 16th Finance Commission regarding concerns over tax devolution, as their collective share fell from 18.62% in 2014-15 to 15.8% in 2021-25, partly due to the shift from the 1971 to the 2011 census for population weightage. The 16th Finance Commission, led by Arvind Panagariya, will finalize its recommendations by October 31, 2025, determining the tax-sharing formula for the next five years, while the central government follows the commission’s core suggestions. Meanwhile, Chief Economic Adviser V. Anantha Nageswaran downplayed India’s growth slowdown as temporary, stating that the $12 billion in tax cuts from the Budget will boost middle-class consumption and domestic demand, potentially driving future growth beyond the projected 6.5%.