Union Budget 2026-27: Key Developments
India-European Union Trade Deal
- The trade agreement aims to enhance market access for goods and services between India and the EU.
- Main features include tariff reductions and easier mobility for service providers.
- The final text of the agreement is pending and will require approval from EU member countries, a process that may take about a year.
- The agreement signals India and the EU’s intent to improve market access, benefiting sectors like textiles, chemicals, leather, and jewellery.
- Trade agreements are seen as enablers; competitiveness is crucial for realizing export growth.
Economic Survey Insights
The Economic Survey emphasizes the need for India to focus on export competitiveness to thrive in the global market.
- It advocates for reducing manufacturing costs by correcting inverted duties and enhancing logistics infrastructure.
- Frequent policy changes can hinder export supply chains and market stability.
- India should leverage opportunities to increase export earnings to support its import demands.
- High protection in upstream sectors can increase costs for export-driven industries.
- The Survey identifies micro-level regulatory friction as a growth constraint rather than macroeconomic instability.
Recommendations
For better export growth, the survey recommends:
- Reviewing tariff and non-tariff barriers to reduce input costs.
- Focusing on reforms that enhance the competitiveness of Indian producers instead of protective measures or subsidies.
- Developing targeted industrial policies and technological improvements.
