Daily News - Tuesday, 24 June 2025
Asean delaying review of trade pact with India: Source (Financial Express)
Despite nine rounds of talks, ASEAN is dragging its feet on reviewing the ASEAN-India Trade in Goods Agreement (AITIGA), with just six months left before the 2025-end deadline and little progress made since negotiations began. India, which cut tariffs on 71% of traded goods under the pact, faces a widening trade deficit with ASEAN, from $4.98 billion in 2010-11 to $44.2 billion in 2024-25, as its exports fell 5.77% to $38.96 billion while imports rose to $84.16 billion. Frustrated by non-reciprocal concessions, trade barriers, and alleged misuse of Rules of Origin, often enabling Chinese goods to enter via ASEAN, India is pushing for stricter enforcement and a fairer deal.
Strait of Hormuz closure: Two-fifths of India’s crude imports at risk (Financial Express)
India faces a major energy security risk as tensions in the Gulf escalate, with nearly 40% of its crude oil supply vulnerable to disruptions through the Strait of Hormuz—through which over 13 million barrels per day of oil and petroleum products flow globally. While India has diversified its crude sources to Russia, the US, and West Africa, any closure or disruption (even short-term) could push freight costs up by $1.5–$3/bbl, trigger supply chain volatility, and potentially drive crude prices above $100/barrel, threatening to inflate India’s oil import bill (India imports 88% of its crude), widen the trade deficit, and spur inflation. Despite holding 9–15 days of import coverage in strategic and commercial reserves, experts urge continued scenario planning, flexible sourcing, and energy diplomacy, especially as petroleum exports—up 31% in May to 1.34 million bpd—could also be indirectly impacted via disruptions at key redistribution hubs like the UAE and Singapore.
Fiscal and inflationary worries may re-emerge (Financial Express)
The escalating Iran-Israel conflict, intensified by US strikes on Iranian nuclear sites, poses a new external shock to India’s economy, with potential implications for inflation, trade, capital flows, and fiscal stability amid an already slowing growth phase. A disruption of oil flows through the Strait of Hormuz, key for 40% of India’s crude imports, could spike Brent to $110/bbl, lifting retail inflation by up to 42 basis points and pushing fertilizer and oil subsidies beyond their current FY26 projections (₹1.67 lakh crore for fertilizers), while adding $13–14 billion to the oil import bill and widening the current account deficit by 0.3% of GDP. Although India’s diversified crude sourcing, strategic reserves, and stable fuel prices may buffer some shocks, prolonged tensions could pressure downstream companies, currency stability, and delay private investments, reinforcing the need for deft fiscal management and diplomatic agility.
Israel-Iran conflict threatens India’s agri exports (mint)
The Israel-Iran conflict is threatening India’s agricultural exports, with about ₹1,500 crore in exporter dues stuck and nearly 100,000 tonnes of basmati shipments to Iran delayed, as payment bottlenecks and security risks grow around the strategic Bandar Abbas port. Iran, which annually imports around 1 million tonnes of basmati rice from India, accounts for 20% of India’s total basmati exports—highlighting the scale of exposure. With rising insurance premiums, perishable goods at risk, and a $40–50 spike in edible oil prices due to supply chain stress, experts stress the urgent need to scale up the Chabahar port as a reliable, long-term alternative trade route to Afghanistan and Central Asia.
Fertilizer subsidy bill faces West Asia shock (mint)
India has allocated ₹1.68 trillion for fertilizer subsidies in FY26, but the bill may rise if tensions in West Asia push up natural gas prices and shipping costs (key inputs in fertilizer production) especially as fertilizer demand is set to grow by 5.5% during the kharif season to 36.26 million tonnes. In FY25, the country imported 4.97 mt of DAP and 3.83 mt of MOP, with 60% of DAP and 15% of urea needs met through imports, largely from Gulf countries, exposing supply chains to geopolitical risks like the possible closure of the Strait of Hormuz. While the government has a history of scaling subsidies during global price shocks, experts warn that China’s export cuts and volatile gas prices may demand higher fiscal outlays despite possible alternate sourcing routes.
