US, India Unveil Interim Trade Pact Slashing Tariffs and Expanding Market Access
The United States and India on Saturday announced a framework for an Interim Agreement on reciprocal and mutually beneficial trade, cutting overall US tariffs on Indian goods from 50% to 18% and setting the stage for a comprehensive Bilateral Trade Agreement (BTA). Unveiled in a joint White House statement, the deal follows recent signals of a breakthrough from US President Donald Trump, who described the outcome as “balanced and tough but fair.” India agreed to address long-standing non-tariff barriers affecting sectors such as medical devices, ICT imports, and food and agricultural products, while both sides committed to discussions on standards, conformity assessment, and rules of origin to ensure the benefits flow mainly to domestic firms.
The framework also features India’s intent to purchase about $500 billion worth of US energy products, aircraft, technology goods, precious metals and coking coal over five years, alongside expanded cooperation in digital trade and advanced technologies, including data centre equipment and GPUs. Beyond commerce, the pact underscores deeper strategic alignment, with commitments on supply chain resilience, export controls, and countering non-market policies of third countries. For non-Indian companies, the agreement is relevant because it could reshape global supply chains and standards regimes, potentially lowering compliance costs for firms aligned with US or international benchmarks and creating new opportunities—and competitive pressures—in sectors such as technology, energy, aviation and agribusiness.
Editor’s Note: The US and India have announced an Interim Trade Pact that slashes US tariffs on Indian goods from 50% to 18% and paves the way for a comprehensive Bilateral Trade Agreement. The deal includes India’s plan to purchase $500 billion in US products over five years, while expanding cooperation in technology, energy, aviation, and supply chain resilience.
India Boosts Electronics Manufacturing with ₹40,000-Crore Push, Exports Surge
India’s electronics manufacturing sector is entering a new phase of expansion after the Union Budget 2026–27 raised the outlay for the Electronics Components Manufacturing Scheme (ECMS) to ₹40,000 crore, underlining a stronger policy thrust to deepen domestic production. Over the past decade, electronics output has grown nearly six-fold to ₹11.3 lakh crore in 2024–25, while exports have jumped eight-fold to ₹3.27 lakh crore, making electronics the country’s third-largest and fastest-growing export category. Mobile phones have driven much of this growth, with production rising 28 times since 2014–15 and exports reaching ₹2 lakh crore in 2024–25, positioning India as the world’s second-largest mobile phone manufacturer with more than 300 production units.
Notified in April 2025, ECMS aims to build a self-sustaining ecosystem for components, sub-assemblies and raw materials, complementing the India Semiconductor Mission and integrating Indian firms more closely into global value chains. As of December 2025, investment commitments under the scheme are projected at over ₹1.15 lakh crore, with expected production of more than ₹10.3 lakh crore over six years and over 1.4 lakh direct jobs. Forty-six applications have already been approved across 11 states, covering products such as PCBs, camera modules, connectors and optical components. For non-Indian companies, the scheme is significant because it creates a larger, policy-backed manufacturing base with improving standards and scale, opening opportunities for global suppliers, technology partners and investors to plug into India-based production networks while also intensifying competition in export markets such as electronics, smartphones and IT hardware.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2222519®=3&lang=1
Editor’s Note: India has expanded its Electronics Components Manufacturing Scheme (ECMS) to ₹40,000 crore, driving domestic production and positioning electronics as the country’s third-largest export category, led by mobile phones. With over ₹1.15 lakh crore in investment commitments and 46 approved projects across 11 states, the scheme aims to build a self-sustaining ecosystem, integrate into global value chains, and create 1.4 lakh direct jobs.
India Rolls Out ₹7,280-Crore Rare Earth Magnet Plan, Sets Up Dedicated Corridors
India is moving to build a domestic ecosystem for Rare Earth Permanent Magnets (REPMs) with the approval of a ₹7,280 crore manufacturing scheme and the announcement of Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu in the Union Budget 2026–27. The scheme, cleared in November 2025, aims to create 6,000 tonnes per annum of integrated capacity covering the full value chain from rare-earth oxides to finished magnets, supported by sales-linked incentives and capital subsidies. These measures are aligned with national goals of Atmanirbhar Bharat, Net Zero 2070 and Viksit Bharat @2047, and seek to reduce heavy import dependence, as most of India’s permanent magnet demand has so far been met by overseas suppliers, mainly China.
The corridors will focus on mining, processing, research and manufacturing, leveraging India’s substantial reserves of rare-earth minerals, including monazite deposits across coastal and inland regions, and existing facilities operated by IREL (India) Limited in Odisha and Kerala. With demand for rare earth magnets expected to double by 2030 due to growth in electric vehicles, renewable energy, electronics and defence, the government aims to integrate India more deeply into global advanced-materials value chains while strengthening supply security for strategic sectors. For non-Indian companies, the initiative is significant because it could reshape sourcing patterns and standards in critical materials, creating opportunities for technology partnerships, equipment suppliers and investors to participate in India-based production networks, while also introducing a new competitive manufacturing hub in the global rare earth and magnet supply chain.
https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=157165&ModuleId=3®=3&lang=1
Editor’s Note: India has approved a ₹7,280 crore scheme to build a domestic ecosystem for Rare Earth Permanent Magnets, targeting 6,000 tonnes of annual capacity and reducing reliance on imports. Dedicated corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu will support mining, processing and manufacturing, positioning India as a competitive hub in global advanced-materials supply chains.
Nasscom Report: 60% of Indian Firms Confident in Scaling AI Responsibly, Gaps Persist
Indian businesses are accelerating their adoption of responsible artificial intelligence, with nearly 60% of companies now confident in scaling AI responsibly and having mature frameworks in place, according to Nasscom’s State of Responsible AI in India 2025 report released on Wednesday. Based on a survey of 574 senior executives, the study shows sharp progress since 2023, with 30% of organisations establishing mature responsible AI practices and 45% actively implementing formal frameworks. Large enterprises lead with 46% maturity, compared with 20% among SMEs and 16% among startups. Financial services emerged as the most advanced sector at 35% maturity, followed by technology, media and telecom at 31%, and healthcare at 18%, highlighting a close link between overall AI capability and the strength of responsible AI governance.
Despite the gains, companies continue to face operational and ethical risks, with hallucinations cited by 56% of respondents as the most common problem, followed by privacy violations (36%), lack of explainability (35%) and unintended bias (29%). Barriers to implementation include shortages of high-quality data, regulatory uncertainty and limited skilled talent. Nearly 90% of firms are investing in workforce training, while accountability for responsible AI is increasingly being placed at senior leadership levels. For non-Indian companies, the findings matter because India is emerging as a large test bed for enterprise AI deployment and governance, meaning that evolving Indian practices and standards could influence global compliance expectations, cross-border technology partnerships and the design of AI systems used in finance, healthcare and digital services worldwide.
Editor’s Note: Nasscom’s State of Responsible AI in India 2025 report shows that nearly 60% of Indian firms are confident in scaling AI responsibly, with large enterprises and financial services leading maturity levels. However, challenges such as hallucinations, privacy risks, lack of explainability, and talent shortages persist, even as companies invest heavily in training and leadership accountability.
India’s 2026–27 Budget Bets on Infrastructure and Manufacturing Amid Global Trade Uncertainty
India’s government has unveiled its 2026–27 Union Budget, projecting steady growth despite global turbulence caused by tariff wars and slowing trade. Finance Minister Nirmala Sitharaman set total expenditure at about $583 billion, with a strong focus on infrastructure and domestic manufacturing, as the economy faces the impact of steep US tariffs linked to India’s imports of Russian oil. The Economic Survey pegs GDP growth at 6.8–7.2 percent for the coming fiscal year starting April 1, slightly below the current year’s 7.4 percent but still among the fastest globally. Infrastructure spending will rise to ₹12.2 trillion ($133 billion), while the government plans to boost manufacturing in seven strategic sectors, including pharmaceuticals, semiconductors, rare-earth magnets, chemicals, capital goods, textiles and sports goods, alongside investments in emerging areas such as artificial intelligence.
At the same time, New Delhi aims to maintain fiscal discipline, targeting a reduction in the fiscal deficit to 4.3 percent of GDP and a marginal decline in the debt-to-GDP ratio, while avoiding major populist measures. Prime Minister Narendra Modi said the focus was on long-term solutions to strengthen India’s role in global supply chains, even as the rupee has weakened sharply amid heavy foreign portfolio outflows. Analysts described the budget as cautious rather than expansionary, prioritising resilience over stimulus. For non-Indian companies, the budget is relevant because it signals continued policy support for infrastructure, manufacturing and advanced technologies, creating potential opportunities for foreign suppliers, investors and partners in sectors such as semiconductors, chemicals and AI, while also shaping how India positions itself within shifting global trade and supply chain networks.
Editor’s Note: India’s 2026–27 Union Budget sets expenditure at $583 billion, prioritising infrastructure spending of ₹12.2 trillion and boosting manufacturing in sectors like semiconductors, pharmaceuticals, and rare-earth magnets, while projecting GDP growth of 6.8–7.2%. The government also aims to cut the fiscal deficit to 4.3% of GDP and strengthen supply chain resilience, signaling opportunities for global investors in advanced technologies and manufacturing.
India Budget Clears Tax Hurdle for Apple, Eases Machinery Supply to Local Electronics Manufacturers
India’s Union Budget 2026–27 has delivered a key policy boost to global electronics firms such as Apple by allowing foreign companies to supply manufacturing machinery to their Indian contract manufacturers for up to five years without triggering tax exposure. Finance Minister Nirmala Sitharaman clarified that mere ownership of capital goods, equipment or tooling by a foreign entity will not, by itself, create a taxable “business connection” in India. The move addresses long-standing concerns raised by Apple, which had warned that income-tax rules could undermine its expansion plans by treating ownership of high-end equipment as a taxable presence. Under the new provision, income arising from providing machinery to Indian contract manufacturers will be exempt from tax until 2030–31, provided the units operate in customs-bonded zones.
The exemption is aimed at boosting toll manufacturing and electronics exports, though goods sold into the domestic market from bonded zones will still attract import duties. Industry groups said the measure would reduce compliance friction, ease capital constraints and improve India’s competitiveness against established manufacturing hubs such as China. Analysts noted that the policy could accelerate Apple’s efforts to deepen its India supply chain and raise local value addition in iPhone production, as well as support the growth of domestic capital equipment suppliers. For non-Indian companies, the change is significant because it lowers tax risk for overseas firms investing in India-based manufacturing ecosystems, potentially making the country a more attractive base for export-oriented electronics production while reshaping global supply chain strategies away from overdependence on China.
Editor’s Note: India’s 2026–27 Union Budget exempts foreign firms like Apple from tax exposure when supplying manufacturing machinery to Indian contract manufacturers for up to five years, provided operations are in bonded zones. The move reduces compliance friction, boosts electronics exports, and strengthens India’s competitiveness against hubs like China, while encouraging deeper supply chain integration.