MSMEs look for finance and compliance relief in Budget 2026

Mumbai: India’s micro, small and medium enterprises (MSMEs) approach the Union Budget 2026 with a clear set of expectations shaped by both longstanding challenges and new opportunities. Deloitte’s pre-budget report emphasises the sector’s central role in the economy – contributing nearly 30 per cent to gross domestic product (GDP), over 35 per cent to manufacturing output and 45 per cent to exports, while employing more than 100 million people. Despite this scale, MSMEs continue to face barriers in finance, compliance and competitiveness, leaving them vulnerable to global volatility and domestic constraints.

The report identifies three priority areas for intervention. The first is strengthening capacity at the last mile. Many enterprises struggle with digital bookkeeping, accounting methods and compliance with domestic quality standards such as those of the Bureau of Indian Standards and the Food Safety and Standards Authority of India. Deloitte recommends structured training in these areas, alongside support for participation in government competitiveness programmes such as Raising and Accelerating MSME Performance, Zero Defect Zero Effect and LEAN. Wider adoption of platforms like the Trade Receivables Discounting System, Government e-Marketplace and the Open Network for Digital Commerce is also seen as critical. The measurable outcome would be faster order-to-cash cycles, improved product quality and greater formalisation across the sector.

The second priority is expanding access to finance. Despite repeated reforms, credit remains constrained by stringent know-your-customer norms and reliance on collateral-based lending. Deloitte proposes a ‘green channel’ for compliant MSMEs, offering faster turnaround times and reduced documentation. It also calls for a dedicated liquidity and growth fund, channelled through non-banking financial companies and fintechs, with district-level monitoring. Cash flow-based lending, using GST and e-invoice data, is another recommendation, aimed at improving working capital velocity and reducing dependence on informal credit. The expected impact would be more first-time formal borrowers, improved profitability and lower financing costs.

The third priority is enabling scale. More than 90 per cent of MSMEs remain microenterprises, limiting productivity and visibility. Deloitte suggests district-level transformation cells to monitor growth from micro to small to medium, supported by mentor–mentee networks linking large public sector undertakings and anchor firms with their suppliers. Incentives for membership in industry associations and preferential scoring in public procurement for certified vendors could accelerate this process. The goal is higher integration into domestic and global value chains, measured by increased business-to-business sales, export participation and repeat orders.

Beyond these immediate asks, Deloitte outlines policy recommendations to operationalise cash flow lending and resolution mechanisms. These include simplified restructuring for viable MSMEs under stress, receivables discounting with legal enforceability and alignment with insolvency thresholds. District-level competitiveness missions, outcome-based grants and public scorecards are proposed to ensure accountability. Preferential procurement incentives for certified vendors and independent evaluations every 12 months would reinforce delivery fidelity. The rationale is straightforward: MSMEs remain central to India’s economic ambitions, but their growth is constrained by structural gaps. Addressing these through targeted training, easier finance and pathways to scale would not only strengthen enterprises but also safeguard jobs, boost rural incomes and support India’s aspiration to become a global manufacturing hub.

The backdrop to these expectations is last year’s budget, which delivered a substantial enhancement of credit support. The credit guarantee cover for micro and small enterprises was doubled from ₹5 crore to ₹10 crore, with the potential to add ₹1.5 trillion in credit over five years. Support for start-ups was also expanded, with maximum loan amounts raised from ₹10 crore to ₹20 crore. A new Fund of Funds worth ₹10,000 crore was announced, alongside a targeted loan programme for 500,000 first-time entrepreneurs from under-represented groups. Export-oriented MSMEs were offered guaranteed term loans up to ₹20 crore, while the Focus Product Scheme for footwear and leather was projected to create 2.2 million jobs. These measures were significant, but the sector continues to face uneven access to capital, complex compliance requirements and difficulties in scaling sustainably.

Global trade volatility adds another layer of uncertainty. With tariffs and supply chain disruptions becoming more frequent, Deloitte proposes a Trade Resilience Fund for MSMEs vulnerable to export shocks. Industries such as readymade garments, gems and jewellery, and leather are particularly exposed. Short-term financial or credit support could help these businesses weather sudden changes in global markets, protecting jobs and sustaining export earnings. The report also notes that MSMEs contribute nearly half of India’s exports, making resilience in this sector critical to the country’s broader trade ambitions.

As the government prepares to present the Union Budget 2026, MSMEs will be watching closely to see whether these recommendations are adopted. For a sector that underpins employment, exports and manufacturing, the stakes are high. Relief in compliance, access to finance and support for scaling could determine whether India’s millions of small businesses remain resilient in the face of global volatility or continue to struggle with familiar constraints.

India’s foreign direct investment (FDI) resilience stands out in global slowdown

Mumbai: India continues to attract foreign direct investment (FDI) despite subdued global flows, according to a new report by CareEdge Ratings. The study highlights that while worldwide FDI has slowed, India has maintained annual gross inflows in the range of $70–85 billion over the past five years, with growth picking up in the current financial year. The report positions India as one of the more resilient destinations for investors, supported by reforms and a strong return profile.

Globally, FDI has been on a downward trajectory. CareEdge notes that the ratio of FDI flows to GDP fell to 1.3 per cent in 2024, down from 2.4 per cent in 2021. This decline reflects a longer trend since the 2008 financial crisis, with Europe’s share shrinking, US outflows stagnating and China’s outward investment rising sharply. Countries benefiting from the China+1 strategy, such as Vietnam and Mexico, have seen notable gains, while resource‑rich nations in Africa have also attracted higher inflows. Against this backdrop, India’s ability to sustain inflows stands out.

The report finds that India’s services sector was the largest recipient of FDI equity in 2025, followed by computer software and hardware, trading and renewable energy. Greenfield projects in manufacturing have also expanded, particularly in semiconductors, electronics, EV components and basic metals. CareEdge points out that this diversification is critical, as it reduces reliance on a single sector and signals broader investor confidence. “India’s manufacturing story is beginning to show results, with global players committing capital to long‑term projects,” the report states.

Outward investment from Indian firms has also risen. Average annual overseas investment has reached $20 billion in the past three years, compared with $8 billion before the pandemic. CareEdge highlights a 20 per cent increase in greenfield project announcements by Indian investors in 2024, placing the country among the world’s top ten investor nations. This outward push reflects the growing ambition of Indian companies to establish a global footprint, even as they continue to draw foreign capital into domestic projects.

The report underscores India’s strong return on inward FDI, averaging 7.3 per cent. On a risk‑adjusted basis, India ranks second only to Indonesia among major economies analysed. This performance, CareEdge argues, is a key factor in sustaining investor interest despite global uncertainty. “Returns remain robust, and when adjusted for risk, India compares favourably with peers,” the report notes, adding that this strengthens the country’s case as a stable destination.

Policy reforms have played a significant role in bolstering investor confidence. CareEdge points to recent labour code simplifications and ongoing efforts to improve infrastructure and reduce logistics costs. These measures, combined with regulatory reforms in financial markets, are expected to enhance India’s ability to attract diversified and stable inflows. The report suggests that continued progress in these areas will be essential to maintain momentum, particularly as global competition for capital intensifies.

At the same time, CareEdge acknowledges challenges. Higher repatriation of profits and increased outward FDI from India have weighed on net inflows, even as gross figures remain strong. The report cautions that balancing inflows with outflows will be important to ensure sustained benefits for the domestic economy. Nevertheless, the overall outlook remains positive, with India positioned as a leading destination for both greenfield and equity investments.

The findings reinforce India’s role in the global investment landscape. While many economies struggle to attract capital, India’s combination of sectoral diversity, policy reforms and strong returns has kept it on investors’ radar. As CareEdge concludes, the country’s ability to adapt and strengthen its frameworks will determine how far it can build on this momentum. For now, India’s resilience offers a rare bright spot in an otherwise subdued global FDI environment.

India’s exports to US slump under steep tariff hikes, $3.3 billion wiped out May–Sept 2025

Mumbai: India’s exports to the United States have experienced a significant downturn, marking one of the sharpest short-term declines in recent years. Between May and September 2025, exports to the US fell by 37.5 per cent, dropping from $8.8 billion to $5.5 billion. This decline comes in the wake of steep tariff hikes imposed by the US government, which began at 10 per cent on April 02, 2025, escalated to 25 per cent on August 07, 2025, and reached a punitive 50 per cent by late August 2025. The Global Trade Research Initiative (GTRI) has analysed the impact of these tariffs, revealing a widespread contraction across various sectors.

Surprisingly, tariff-free products, which account for nearly one-third of India’s total shipments to the US, suffered the most severe contraction. Exports in this category fell by 47 per cent, from $3.4 billion in May to $1.8 billion in September. Among the hardest-hit products were smartphones and pharmaceuticals, both of which are key beneficiaries of India’s Production Linked Incentive (PLI) manufacturing programme. 

Smartphone exports, which had seen a remarkable 197 per cent surge between April and September 2024 compared to the same period in 2025, plummeted by 58 per cent during the review period. Monthly shipments fell consistently, from $2.29 billion in May to $884.6 million in September. The reasons behind this sharp decline remain unclear and warrant further investigation. Pharmaceutical exports also experienced a notable drop, slipping by 15.7 per cent from $745.6 million to $628.3 million, despite being exempt from tariffs.

In contrast, sectors subject to uniform tariffs for all countries, such as industrial metals and auto parts, showed a milder decline. Exports in these categories fell by 16.7 per cent, from $0.6 billion to $0.5 billion. Within this group, aluminium exports dropped by 37 per cent, copper by 25 per cent, auto parts by 12 per cent, and iron and steel by 8 per cent. The relatively smaller contraction in these sectors suggests that the decline may be more closely linked to a slowdown in US industrial activity rather than a loss of competitiveness for Indian exporters.

The most severe impact was felt in labour-intensive sectors, which were subjected to the 50 per cent India-specific tariffs. These sectors, including textiles, gems and jewellery, chemicals, agri-foods, and machinery, collectively account for nearly 60 per cent of India’s exports to the US. Exports in these categories fell by 33 per cent, from $4.8 billion in May to $3.2 billion in September. 

Within this group, gems and jewellery exports were particularly hard-hit, collapsing by 59.5 per cent from $500.2 million to $202.8 million. Gold jewellery exports fell by 58 per cent, diamond-studded pieces by 63 per cent, and lab-grown jewellery by 37 per cent. Exports of cut and polished diamonds dropped by 54 per cent, while lab-grown diamond exports plunged by a staggering 89 per cent. The decline has severely impacted manufacturing hubs in Surat and Mumbai, as competitors from Thailand and Vietnam have captured lost US orders.

Solar panel exports also suffered a sharp decline, falling by 60.8 per cent from $202.6 million to $79.4 million. India’s competitiveness in the renewable energy sector has been eroded, particularly as China and Vietnam face lower tariffs of 30 per cent and 20 per cent, respectively. Textiles and garments, another key labour-intensive sector, saw exports fall by 37 per cent, from $944 million to $597 million. Within this category, garments experienced a 44 per cent decline, home textiles fell by 16 per cent, and yarn and fabrics dropped by 41 per cent. Knitted apparel exports decreased by 39 per cent, woven apparel by 50 per cent, and girls’ suits by 66 per cent.

Chemical exports also faced a significant downturn, shrinking by 35 per cent from $537 million to $350 million. Agrochemicals fell by 37 per cent, while essential oils dropped by 44 per cent. This decline has adversely affected production hubs in Vapi, Dahej, Ankleshwar, and Vizag, which are home to major firms such as UPL and Rallis India, as well as numerous micro, small, and medium enterprises (MSMEs) in Maharashtra and Karnataka.

Marine and seafood exports, another labour-intensive sector, declined by 49 per cent, from $223 million to $113 million. Vannamei shrimp exports fell by 51 per cent, while processed seafood dropped by 22 per cent. Coastal hubs such as Nellore, Bhimavaram, Kakinada, Paradeep, Veraval, and Porbandar have been severely impacted, as buyers have shifted their focus to competitors in Ecuador and Vietnam.

Agricultural and processed food exports also recorded a broad-based slump. Preparations of cereals fell by 27 per cent, processed fruits and vegetables by 44 per cent, roots and tubers by 45 per cent, cocoa products by 99 per cent, oilseeds by 53 per cent, dairy and honey by 59 per cent, processed foods by 35 per cent, coffee and spices by 40 per cent, and resins by 61 per cent. These losses have had a devastating impact on agricultural clusters in regions such as Nashik, Gujarat, Kerala, Karnataka, Jharkhand, and Chhattisgarh, erasing two years of steady growth.

The sharp decline in exports has prompted calls for urgent government intervention. Exporters are urging authorities to implement targeted relief measures to mitigate the impact of the tariffs. Proposed actions include enhanced interest-equalisation support to reduce financing costs, faster duty remission to alleviate liquidity pressures, and emergency credit lines for MSME exporters. Without swift and decisive action, India risks losing its market share to competitors such as Vietnam, Mexico, and China, even in sectors where it has traditionally held a strong position.

The data presented in the GTRI report underscores the significant impact of the US tariffs on India’s export performance. The tariffs have not only squeezed trade margins but have also exposed structural vulnerabilities across key industries. As the situation continues to unfold, it remains imperative for policymakers to address these challenges and support exporters in navigating the difficult terrain ahead.

New Labour Codes advance women’s workplace rights and equality

Mumbai: The introduction of India’s new Labour Codes marks a significant step towards fostering a more inclusive and equitable work environment for women. These reforms aim to address longstanding challenges faced by women in the workforce, offering enhanced protections, benefits, and opportunities that align with the evolving needs of modern workplaces. By prioritising safety, equality, and flexibility, the Labour Codes seek to empower women and encourage their active participation across all sectors of the economy.

One of the most notable changes is the emphasis on gender representation in workplace grievance and advisory bodies. The Industrial Relations Code 2020 mandates proportional representation of women in Grievance Redressal Committees, ensuring their voices are heard in resolving workplace disputes. This provision not only fosters fairness but also creates a more secure environment for women to raise concerns, particularly on sensitive issues such as harassment, maternity rights, and safety. Additionally, the requirement for one-third representation of women on Central and State Advisory Boards ensures their perspectives are included in policy-making, promoting balanced and inclusive employment strategies.

The Labour Codes also introduce significant improvements to maternity benefits, recognising the importance of supporting women during and after pregnancy. Eligible women are entitled to 26 weeks of maternity leave, with up to eight weeks available before the expected delivery date. This benefit extends to adoptive mothers and commissioning mothers, who are granted 12 weeks of leave following adoption or surrogacy arrangements. Simplified certification processes for maternity-related conditions further ease access to these benefits, allowing proof to be furnished through various qualified professionals, including midwives and accredited social health activists.

To support working mothers, the Codes mandate the provision of crèche facilities in establishments employing 50 or more workers. These facilities must be located within a prescribed distance and allow women to visit up to four times a day, including during rest intervals. Nursing breaks are also guaranteed for mothers returning to work, enabling them to care for their children until the age of 15 months. These measures reflect a commitment to helping women balance their professional and family responsibilities effectively.

Flexibility in work arrangements is another key feature of the Labour Codes. Women may opt for work-from-home arrangements after maternity leave, subject to mutual agreement with their employer. This provision acknowledges the diverse needs of women and offers a practical solution for those seeking to manage childcare alongside their careers.

The Codes also address gender discrimination comprehensively, prohibiting unequal treatment in recruitment, wages, and employment conditions. Employers are required to ensure equal pay for equal work, eliminating wage disparities based on gender. This commitment to fairness extends beyond remuneration, promoting equality in hiring practices and workplace treatment. By removing barriers to equal opportunities, the Labour Codes aim to create a level playing field for women and men alike.

Safety measures for women working in hazardous industries and night shifts have also been strengthened. Women can now work in all establishments, including during night hours, provided their consent is obtained and adequate arrangements for safety, facilities, and transportation are made. This provision expands employment opportunities for women while ensuring their well-being is prioritised.

The reforms introduced by the Labour Codes collectively represent a progressive approach to addressing gender inequality in the workplace. By enhancing maternity benefits, ensuring representation in decision-making bodies, and prohibiting discrimination, the Codes create a more supportive and empowering environment for women. These measures not only safeguard their rights but also encourage greater participation in the workforce, contributing to a more resilient and balanced labour ecosystem.

The new Labour Codes introduced by the Government of India reflect a commitment to advancing gender equality and enabling women to participate fully in the nation’s economic growth. As these measures take effect, they could reshape workplaces into environments where women can thrive, free from discrimination and supported to succeed.

CBIC’s SWIFT 2.0 to streamline trade clearances

Mumbai: India’s customs administration has introduced SWIFT 2.0, a fully digital single window platform designed to transform the way imports and exports are cleared. The new system by the Central Board of Indirect Taxes and Customs (CBIC) replaces the earlier version of SWIFT with a more advanced, data-driven interface. The aim is to provide a single touch point for traders and partner government agencies, reducing duplication and delays while improving transparency.

The earlier version of SWIFT, launched in 2015 and expanded in 2016, allowed importers to lodge clearance documents online through ICEGATE. It integrated six agencies, including the Food Safety Authority, Plant Quarantine, Animal Quarantine, the Central Drugs Standards Control Organisation, the Wildlife Crime Control Bureau and the Textile Committee. While this was a step forward, traders were often required to upload additional documents on separate portals, creating inefficiencies. SWIFT 2.0 seeks to address these shortcomings by consolidating processes into one unified platform.

In its first phase, SWIFT 2.0 will onboard three critical agencies: the Animal Quarantine and Certification Services, the Plant Quarantine Management System and the Food Safety and Standards Authority of India. These agencies are central to issuing No Objection Certificates (NOCs) for consignments involving livestock, plants and food products. By integrating their requirements into a single system, the government hopes to eliminate the need for traders to navigate multiple portals and reduce delays caused by fragmented processes.

The circular outlines several new features. Importers and exporters will be able to submit additional data fields and mandatory documents directly through the platform. A unified dashboard will allow users to track applications, monitor responses to queries and review their transaction history with any agency. Real-time alerts via SMS and email will notify traders of the status of their applications and the scheduling of inspections. The platform also enables online payment of fees and provides digital receipts, further reducing paperwork.

CBIC has set 1 December 2025 as the date from which filing of consolidated data and documents for the three agencies will become mandatory. Field formations have been instructed to issue public notices to sensitise stakeholders and ensure accurate filing. The circular also notes that difficulties in implementation should be reported promptly to the Board, underlining the importance of a smooth transition.

The government has indicated that more than 60 partner agencies will be integrated in phases. This phased approach is expected to cover a wide range of regulatory requirements, from agriculture and food safety to pharmaceuticals and environmental clearances. By consolidating these processes, SWIFT 2.0 is intended to provide a comprehensive solution for trade stakeholders.

The data fields and document codes for the three agencies have been finalised after consultations with the Department of Animal Husbandry and Dairying, the Directorate of Plant Protection, Quarantine and Storage, the Food Safety Authority and CBIC itself. These requirements will be implemented through the integrated declaration in the Bill of Entry, ensuring that traders declare or upload the necessary information at the time of filing.

For businesses, the implications are significant. The ability to track applications in real time, receive alerts on inspection schedules and access approved certificates digitally will reduce uncertainty and improve planning. Online payment facilities and digital receipts will simplify financial transactions, while the unified dashboard will provide greater visibility into interactions with government agencies.

The CBIC has underscored the importance of accurate filing of data and documents, urging field formations to sensitise stakeholders through public notices. This emphasis on compliance reflects the government’s recognition that digital systems are only as effective as the quality of the information they process. Ensuring that traders are aware of the requirements and prepared to meet them will be critical to the success of SWIFT 2.0.

The launch of the platform also signals a shift towards greater accountability and transparency in trade clearances. By consolidating processes and reducing the need for physical submissions, the system is expected to minimise opportunities for delays and improve the overall experience for stakeholders.

India’s move to introduce SWIFT 2.0 comes at a time when global trade is increasingly reliant on digital platforms and integrated systems. The country’s efforts to modernise its customs infrastructure are likely to be closely watched by businesses and policymakers, particularly as more agencies are brought into the fold.

CBIC sets out a clear roadmap for the implementation of SWIFT 2.0, beginning with the mandatory filing requirements for AQCS, PQMS and FSSAI from December. As the system expands to include additional agencies, it has the potential to transform the way trade clearances are managed in India, offering a more efficient and transparent framework for businesses engaged in international commerce.

₹7,280 crore scheme for rare earth magnet manufacturing to boost India’s self-reliance

Mumbai: India has taken a significant step towards strengthening its industrial base with the Union Cabinet approving a ₹7,280 crore scheme to promote domestic manufacturing of sintered rare earth permanent magnets. The initiative is the first of its kind in the country and is intended to reduce dependence on imports while positioning India as a competitive player in the global market.

Rare earth permanent magnets, or REPMs, are among the strongest types of permanent magnets and are critical to a wide range of industries. They are used in electric vehicles, renewable energy systems, aerospace, defence and consumer electronics. At present, India’s demand is largely met through imports, leaving sectors exposed to supply chain risks. The new scheme seeks to establish 6,000 metric tonnes per annum of integrated manufacturing capacity, covering the entire process from rare earth oxides to finished magnets.

The government has emphasised the strategic importance of the move. With demand for REPMs expected to double by 2030, driven by the rapid growth of electric mobility and renewable energy, the scheme is designed to secure supply chains for industries central to India’s economic and environmental goals. It also supports the Atmanirbhar Bharat Abhiyan and the country’s commitment to achieve net zero emissions by 2070.

The financial structure of the scheme reflects its ambition. Of the total outlay, ₹6,450 crore will be provided as sales-linked incentives over five years, while ₹750 crore will be allocated as capital subsidies to set up facilities. Capacity will be distributed among five beneficiaries through a global competitive bidding process, with each allotted up to 1,200 metric tonnes per annum. The scheme will run for seven years, including a two-year gestation period for establishing facilities and five years of incentive disbursement.

Officials described the initiative as a landmark step towards strengthening the domestic REPM manufacturing ecosystem. By fostering indigenous capabilities, the scheme is expected to generate employment, enhance competitiveness and advance India’s long-term sustainability commitments. It embodies the government’s vision of building a technologically self-reliant and globally competitive industrial base under the framework of Viksit Bharat @2047.

The implications for industry are wide-ranging. For the automotive sector, domestic REPM production will support the expansion of electric vehicles, reducing reliance on imported components and improving cost efficiency. In defence and aerospace, secure access to magnets will strengthen supply chains for critical technologies. Renewable energy projects, particularly wind power, will benefit from reliable domestic supply, while consumer electronics manufacturers will gain from reduced import dependence.

The scheme also signals India’s intent to compete in a market currently dominated by a handful of countries. By investing in integrated facilities, India aims to capture a share of the global REPM market, which is expected to grow significantly in the coming decade. The competitive bidding process is designed to attract capable players and ensure that facilities are established on a sound commercial basis.

The timing of the initiative is notable. Global demand for rare earth magnets is rising sharply, while supply chains remain concentrated and vulnerable to geopolitical pressures. India’s move to establish domestic capacity reflects both economic pragmatism and strategic foresight. By reducing import dependence, the country is seeking to insulate its industries from external shocks and build resilience in sectors critical to national growth.

The Union Cabinet’s approval of the scheme underscores the government’s commitment to aligning industrial policy with sustainability goals. By supporting REPM manufacturing, India is not only strengthening its industrial base but also advancing its net zero 2070 target. The magnets are essential for technologies that reduce carbon emissions, from electric vehicles to renewable energy systems, making the initiative a cornerstone of India’s climate strategy.

As the scheme moves into implementation, attention will turn to the bidding process and the establishment of facilities. The success of the initiative will depend on the ability of selected beneficiaries to build integrated manufacturing capacity and deliver magnets that meet global standards. If successful, the scheme could mark the beginning of a new chapter in India’s industrial development, with rare earth permanent magnets at its core.

Commercial office market across top six cities approaches record low vacancy levels

Mumbai: India’s commercial office sector is entering a period of record absorption and tightening supply, according to new projections from rating agency ICRA. The firm expects net leasing activity across the country’s six largest office markets to reach unprecedented levels in the next two years, driving vacancy rates down to figures not seen in recent history.

ICRA estimates that net absorption will climb to between 69 and 70 million square feet in the financial year ending March 2026, surpassing the previous year’s tally of 66 million square feet. This momentum is forecast to continue into 2027, with absorption of more than 65 million square feet. The sustained demand is expected to push vacancy rates to 12.0–12.5 per cent by March 2027, a sharp fall from the 15.6 per cent recorded in March 2024 and 13 per cent in September 2025.

The agency notes that this will mark the third consecutive year in which demand outpaces new supply. Developers added 58 million square feet of new space in FY2025, yet leasing activity exceeded that figure. The first half of FY2026 has already seen 36 million square feet absorbed against 30.6 million square feet of new completions. This imbalance is strengthening the position of landlords and developers, with fundamentals improving across the board.

A major driver of this surge is the expansion of Global Capability Centres, or GCCs, which are increasingly choosing India as a base for strategic operations. ICRA projects that GCCs will account for 40 per cent of incremental office demand between April 2025 and March 2027, leasing 50–55 million square feet during that period. Their share of absorption has already stood at 35–37 per cent in FY2024 and FY2025.

Anupama Reddy, vice president and co-group head of Corporate Ratings at ICRA, said the resilience of GCCs has been striking despite global headwinds. “The surge in demand for office space is being driven by expanding global capability centres, flex-space operators, and the Banking, Financial Services, and Insurance sector. Despite policy tightening and trade restrictions in the US, office leasing activities by the GCCs in India have remained buoyant,” she explained. Reddy added that the combination of cost advantages, talent availability and policy support is setting the stage for a new era of growth and stability in the sector.

City-level trends underline the strength of this demand. Bengaluru continues to lead in net absorption and is projected to see vacancy rates decline from 9.2 per cent in September 2025 to between 7.5 and 8 per cent by March 2027. Chennai is expected to see vacancies dip to 5.5–6.0 per cent, reflecting limited new supply. Delhi NCR, which has historically carried the highest vacancy among the top six cities, is forecast to improve from 21 per cent to 19.5–20 per cent. Hyderabad and Pune are expected to maintain steady vacancy levels, while the Mumbai Metropolitan Region is likely to see further declines.

The broader picture is one of strengthening debt protection metrics and improved investor confidence. With vacancy rates projected to reach historic lows, ICRA believes the sector will remain attractive to both domestic and international investors. Policy support and scalable technology infrastructure are reinforcing India’s position as a global office hub.

The agency’s analysis suggests that the expansion of GCCs is not a short-term phenomenon but a structural shift. Their incremental demand for leased space signals long-term commitment from global enterprises, supported by state-level incentives such as subsidies, training programmes and infrastructure development. This is expected to accelerate investment flows and deepen India’s role in global corporate strategies.

The figures also highlight the resilience of India’s office market in the face of international uncertainty. While global economic conditions remain challenging, the country’s combination of competitive costs, skilled workforce and supportive policy environment is sustaining demand. The sector’s fundamentals are improving, with absorption consistently outpacing supply and vacancy rates falling to levels that indicate a tightening market.

ICRA’s projections point to a sector entering a new phase of stability and growth. Net absorption is expected to remain strong through FY2026 and FY2027, underpinned by GCCs, BFSI firms and flex-space operators. Vacancy rates are forecast to reach historic lows, while city-level performance shows broad-based improvement. For landlords, developers and investors, the outlook is one of strengthening fundamentals and sustained demand.

The coming two years will test the sector’s ability to balance record absorption with new supply. Yet the projections suggest that India’s office market is well positioned to capitalise on emerging opportunities, with GCCs at the forefront of this transformation. As Reddy noted, “The sustained demand from the GCCs and BFSI, coupled with India’s cost and talent advantages, is setting the stage for a new era of growth and stability in the sector.”

At a time when global markets face uncertainty, India’s office sector is charting a path of resilience and expansion. The figures released by ICRA indicate that vacancy rates are heading for historic lows, driven by record leasing activity and structural demand from global enterprises. The sector’s fundamentals are strengthening, and its role as a global office hub is becoming more firmly established.

Indian shrimp exporters turn to new markets amid tariff strain

Mumbai: India’s shrimp export industry is undergoing a marked shift as exporters reduce their reliance on the United States (US) and expand into new geographies, while also increasing the share of value-added products to sustain growth. A recent report by CareEdge Ratings highlights how exporters are adapting to tariff challenges in the American market by diversifying their destinations and product mix.

During the first five months of FY26, non-US markets accounted for 86 per cent of the incremental export value, underscoring the scale of the pivot. Overall exports rose 18 per cent year-on-year in value terms to reach $2.43 billion, with shipment volumes increasing by 11 per cent to 348,000 metric tonnes.

While exports to the US grew by a muted 5 per cent, demand from countries such as Vietnam, Belgium, China and Russia surged, lifting non-US export values by 30 per cent to $1.38 billion compared with $1.06 billion in the same period last year.

Vietnam has emerged as a key re-export hub, while Belgium has benefited from improved compliance with traceability standards. Together, these markets have helped raise the non-US share of India’s shrimp exports to 57 per cent, up from 51 per cent a year earlier. This shift reflects a deliberate strategy by exporters to reduce dependence on the US, which has long been India’s largest buyer but is now a more difficult market due to tariff pressures.

Since early FY26, higher tariffs have eroded India’s price competitiveness in the US. CareEdge notes that India’s effective tariff rate stood at around 18 per cent between April and August 2025, compared with 13–14 per cent for competitors such as Ecuador and Indonesia. 

Following the imposition of reciprocal duties on August 27, 2025, India’s effective duty surged to 58 per cent, while competitors faced rates between 18 and 49 per cent. This disparity has had a direct impact on shipments, with exports to the US falling by 35 per cent in August compared with July.

Priti Agarwal, senior director, CareEdge Ratings, said the industry must accelerate bilateral trade agreements and strengthen compliance frameworks in areas such as traceability, sustainability and cold-chain infrastructure. “Developing a future-ready shrimp sector requires moving beyond reactive export strategies and focusing on building a geopolitically balanced and demand-driven supply chain,” she noted.

Exporters are also betting on value-added products to cushion margins. Globally, value-added shrimp exports grew 27 per cent during the period, with non-US markets recording a 78 per cent increase. This trend is expected to reduce reliance on commodity-grade exports and improve profitability. 

CareEdge projects a moderation in operating margins by 150 basis points in FY27, but the growing share of value-added products, partial cost pass-through and softer farm-gate prices are likely to provide some relief.

The report suggests that Indian exporters are taking proactive measures to mitigate the impact of US tariff headwinds. Approvals for exports to the European Union and Russia have increased, opening up new opportunities. At the same time, the industry is focusing on compliance and sustainability to strengthen its position in these markets. The emphasis on diversification and product innovation reflects a broader effort to build resilience in the face of global trade uncertainties.

India’s shrimp industry has long been a critical component of the country’s seafood exports, and the current shift marks a significant departure from its traditional US-centric strategy. By expanding into new geographies and investing in higher-value products, exporters are positioning themselves for more balanced and sustainable growth. The challenge will be to maintain momentum in these markets while continuing to navigate tariff pressures in the US. For now, the pivot appears to be cushioning the industry against immediate headwinds and laying the groundwork for longer-term resilience.

Passenger traffic grows as industry battles rising costs

Mumbai: Domestic air travel in India continued to expand in October 2025, with passenger numbers rising 4.5 per cent year-on-year to 14.28 million, according to the latest assessment by ICRA Limited. The increase was supported by a healthy passenger load factor of 84.7 per cent, reflecting strong demand despite a series of operational and financial challenges that have weighed on the sector. Capacity deployment also edged higher, with airlines scheduling 1.7 per cent more flights than the same month last year, underscoring their efforts to meet demand even as grounded aircraft constrained overall fleet strength.

The broader outlook for the financial year remains stable, with ICRA projecting domestic traffic growth in the range of 4–6 per cent. International travel is expected to expand more robustly, at 13–15 per cent, driven by sustained demand for overseas routes. Yet these gains are tempered by the industry’s financial position. Net losses are forecast to widen to between ₹95 billion and ₹105 billion in FY2026, compared with an estimated ₹55 billion in FY2025. Rising aviation turbine fuel (ATF) prices – up 4.4 per cent year-on-year in November 2025 – have squeezed margins, while the weakening of the rupee against the dollar has amplified foreign exchange losses, much of which remain unrealised but nonetheless weigh heavily on balance sheets.

Operational hurdles have further complicated the picture. Around 133 aircraft were grounded as of March 2025 due to supply chain disruptions and engine failures, particularly linked to Pratt & Whitney engines. This represented 15–17 per cent of the total industry fleet, reducing available capacity and forcing airlines to rely on costly wet leases and older aircraft with lower fuel efficiency. Although some compensation has been provided by engine manufacturers, the financial strain of maintaining operations under these conditions has been significant. The grounding of aircraft has also led to higher lease rentals and increased operating expenses, eroding the benefits of strong passenger demand.

The industry’s resilience is evident in its ability to sustain traffic growth despite these pressures. However, the balance between demand and cost remains precarious. As Kinjal Shah, Vice President at ICRA, noted in the report, “Healthy yields and high passenger load factors are helping to absorb the impact to an extent, but the structural challenges of rising costs and supply chain constraints continue to weigh on the sector.” The interplay between passenger traffic trends and industry challenges highlights the fragile equilibrium in which Indian aviation currently operates – one where growth is possible, but profitability remains elusive.

Production Linked Incentive scheme attracts ₹1,914 crore in fresh investments with strong MSME participation

Mumbai: The fourth round of the Production Linked Incentive (PLI) Scheme for White Goods has attracted 13 new applications worth ₹1,914 crore, with more than half of the applicants being micro, small and medium enterprises (MSMEs). Officials said the level of MSME participation reflects growing confidence among smaller firms in joining the air conditioner and LED manufacturing value chain.

Nine applicants have committed ₹1,816 crore to air conditioner components such as copper tubes, aluminium stock, compressors, motors, heat exchangers and control assemblies. Four others have pledged ₹98 crore for LED components including chips, drivers and heat sinks. The proposed projects span six states, 13 districts and 23 locations, and are expected to contribute to regional industrial growth and employment generation.

The scheme, launched in 2021 with an outlay of ₹6,238 crore, aims to establish a complete component ecosystem for air conditioners and LED lights in India. So far, it has attracted ₹10,335 crore of committed investment from 80 approved beneficiaries. The government expects the scheme to generate production worth ₹1.72 lakh crore and create around 60,000 direct jobs nationwide. The initiative is designed to increase domestic value addition from the current 15–20 per cent to 75–80 per cent, positioning India as a global manufacturing hub for white goods.

Officials noted that the strong presence of MSMEs in the latest round is significant, as it broadens the base of manufacturers and strengthens supply chains. By encouraging smaller enterprises to invest in high-value components, the scheme is expected to reduce import dependence and enhance competitiveness in the sector.

The PLI programme has already spurred localisation of production and attracted investment in critical components. With MSMEs now taking a larger share of participation, the government sees further momentum in building a resilient domestic manufacturing ecosystem for white goods.