B2K Analytics Private Limited

TARIFF TURMOIL: THE US-CHINA TRADE FALLOUT

The Trump administration's tariff war has created turmoil and uncertainty in the global markets. The United States has imposed the highest tariffs on China with tariff rates going up to 245%. China is one of its largest trading partners. China has responded with significantly high tariffs of its own, currently placing rates of 125% on all US imports. The trade relationship between the two countries has deteriorated significantly which places India in a precarious position. The US and China are India's two largest trading partners with India importing the most from China and exporting the most to US. This trade war between the two countries could either be a significant opportunity for India or cost considerable pain.

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RBI MPC Meeting: A Dovish Policy Guidance

The Reserve Bank of India’s Monetary Policy Committee (MPC) decided to cut the repo rate by 25 basis points (bps), on 9th April 2025, bringing it down to 6%. Additionally, the policy stance was shifted from neutral to accommodative. These measures aim to address the challenges posed by uncertain global economic conditions, which could hinder the already slowing domestic economic growth. The accommodative stance and rate cut are expected to support the economy by stimulating demand and investments.

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India Retail sector -A Tug of war for growth and Profitability

India’s retail sector is $1 trillion market and ranks 5th globally. The sector is moving towards to become a $2 trillion market by 2030, driving to significant shift from unorganised market to organised market. The retail industry landscape is changing in terms of consumer behaviour, technological changes and mode of operation. There is severe competition among modern retailers and the emergence of Q-commerce is further intensifying this competition impacting growth and profitability. E-commerce players are showing high growth but facing challenges in achieving profitability. Q-commerce too are witnessing steep losses despite strong sales growth.

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Trump’s Tariff Thump

Trump has stated that the new tariffs will persist until the trade discrepancies between the US and it’s trading partners disappear. His aim is to reduce trade deficits with other countries.US accounts only about 6% of India’s total imports and 18% of total exports. In FY2024, India had a trade surplus of $35 billion.

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From Strength to Strength: India’s Fisheries Sector Surges Ahead

In a significant stride of sustainable economic growth, the Indian fisheries sector is making remarkable advancements that will reshape the industry. It is the 3rd largest producer of fishes in the world and contributes nearly 8% to the total production globally. The sector contributes overall 1.1% to the country’s GVA and 6.72% to agriculture GVA of India. With outstanding 8% annual growth rate since 2014 and 10.34% annual growth in FY 22, the fisheries sector is one of the definite cornerstones of India’s economic growth to being a USD 5 trillion economy.

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Pharma sector: Riding on an aspirational growth path

India’s pharmaceutical industry continues to be a key player in the global pharmaceutical market and has experienced a significant growth over the years. The total operating revenue has increased from Rs 4,766 crore in FY91 to Rs 449,694 crores in FY22. The Indian pharmaceutical market has witnessed consistent growth due to increasing population, rising middle class income and improved healthcare infrastructure. The market is projected to expand further, driven by the factors such as an aging population, increasing incidence of lifestyle diseases and the growing demand for generic drugs, both in domestic and international market.

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MPC likely to maintain status quo in August meeting

In the upcoming Monetary Policy Committee (MPC) meeting, the RBI is expected to maintain the status quo and keep the repo rate unchanged at 6.5%. The MPC is also expected to continue with the stance of withdrawal of accommodation given that liquidity in the banking system is still in surplus. Considering the spike in food inflation, it is likely to underline a cautionary note as well. The net durable liquidity averaged above 2 trillion due to the transient events such as the withdrawal of Rs 2000 banknotes announced on 19 May 2023.

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The Debt Dilemma: Saving the Burden on the Future Generation

Elevated levels of India’s fiscal deficit and public debt have been a matter of concern in India for a long time. Even before the pandemic, debt levels were among the highest in the developing world and emerging market economies. The pandemic pushed the envelope further and relative to the GDP, the fiscal deficit in FY21 increased to 13.3% and the aggregate public debt to 89.6%.

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Automobile Industry: Driving the Growth Agenda

The automobile industry is one of the major industries that has expanded rapidly over the reform periods in India. India is one of the biggest automobile manufacturers in the world and has emerged as one of the major contributors to India’s economy. The auto sector contributes nearly 7% to India’s GDP (FY22) and occupies 49% of the manufacturing GDP. The industry is the major contributor of GST to the government as well and provides employment to four and a half crore people in India.

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Status Quo on Policy Rates

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), unanimously decided to pause and keep the policy repo rate unchanged at 6.5% in today’s announcement. Also, the MPC decided to emphasise on the withdrawal of accommodative stance, with a 5-1 majority. The decisions are in conformity with our expectations.

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MPC likely to pause in the June Meeting

A better-than-expected FY23 GDP data released by the government on 31 May 2023 has renewed the optimism about India’s promising growth recovery. Since the April Monetary Policy Committee (MPC) meeting, the domestic economic conditions have continued to remain resilient, despite the global banking crises and their fallout on global economic environment. Sustaining the quickening of momentum seen in the last few months in FY23, the PMIs in both manufacturing and services have shown creditable expansion in the first two months of FY24. Added to this, CPI inflation eased below 5% in April 2023, for the first time since November 2021.

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Sugar Industry Is Not So Sugary: B2K Analytics

The sugar industry witnessed a watershed moment in Sugar Season (SS) 2021-22, with India becoming the world’s second-largest exporter of cane sugar. From a financially distressed sector in 2017-18, the Indian sugar industry was transformed into a state of self-sufficiency, breaking records in sugarcane and sugar production. This outcome was not accidental but predominantly due to a supportive ecosystem provided by collaborative efforts, timely interventions, and governmental policies.

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MPC Pauses; No change in policy rates and stance

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), unanimously decided to keep the policy repo rate unchanged at 6.5% in today’s announcement. The calibrated withdrawal of accommodation stance of the MPC continues to remain unchanged, with a 5-1 majority. Today’s policy decision by MPC comes as a bit of a surprise as the market expected a 25-bps rate hike.

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A moderate dose of another rate hike likely in April MPC

Since the February Monetary Policy Committee (MPC) meeting, the emergence of global banking crises and their fallout have changed the global economic environment. The financial stresses in addition to the prolonged war between Russia and Ukraine triggered additional concerns about the global recovery and outlook, which was otherwise termed as less gloomy by the IMF in its January 2023 World Economic Outlook report.

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Fiscal Policy Stance is Clearer: On to the Monetary Policy

There were considerable apprehensions about how the Finance Minister would balance the fiscal consolidation objective with the objective of reviving growth by increasing infrastructure spending. The budget proposes to compress the fiscal deficit by half a percentage point to GDP to 5.9% while increasing the capital expenditure from 2.7% of GDP to 3.3%. In nominal terms, this is 37% higher than the revised estimate of the previous year and comes on the back of 23% higher outlay than the revised estimate of the previous year and 39% increase in the year before.

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No Indications of Pause; Inflation Precedes Growth

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), in a 4-2 majority decided to increase the policy repo rate by 25 basis points to 6.5% with immediate effect. The calibrated withdrawal of accommodation stance of the MPC continues to remain unchanged, with 4-2 majority. Today’s rate hike decision by MPC is in line with B2K Analytics expectations. This is the sixth straight hike in the policy rate by RBI, and cumulatively the rates have been increased by 250 bps since May 2022, taking the repo rate to the August 2018 level.

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Growth - Inflation Dilemma: Modest hike in policy rates by RBI likely

TThe balancing act of supporting growth and controlling inflation remains a priority for RBI’s MPC. After going through successive shocks such as Covid pandemic, lockdowns and geopolitical crises, the domestic economy is expected to grow at a rate of 7% in the current fiscal (FY23). This growth is lower than the 8.7% reported in the previous fiscal (FY22).

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Union Budget 2023-24 - Brief Impact Analysis

The total size of the FY24 Budget has increased by 7.5% to Rs 45.03 lakh crore over FY23 revised estimates. Capital expenditure is estimated to increase by a whopping 37.4% in FY24, whereas revenue expenditure is estimated to increase by just 1.3%.

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The Inflation-Growth Dilemma: Walking the Tight Rope

This is budget time again and speculations are rife and expectations galore. Although the economy is in a recovery phase, the global headwinds of slowdown, inflation and recession, and continued risks of the virus in countries like China, pose serious policy challenges. In India, the government is faced with the dilemma of having to loosen the purse to fast-paced infrastructure spending to aid growth recovery while containing the fiscal deficit to return to the fiscal consolidation path. This is the last full year before the general elections to the Lok Sabha. Although as many as nine states will go for elections this year, they are unlikely to influence the budget process much.

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Impact of Covid 19 on the Uttar Pradesh Handloom Industry A case study by B2K Analytics

This report “The Impact of COVID-19 Pandemic on the Handloom Industry of Uttar Pradesh” is prepared keeping in view the special role of the handloom industry through its contribution to employment generation and foreign exchange earnings in the state’s economy.

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Impact of Covid 19 on the Tamil Nadu School System A case study by B2K Analytics

COVID-19 has wreaked havoc on many countries. Governments of fourteen countries have ordered school closures affecting more than 168 million school children. One in seven children have missed more than a tri-quarter of in-person classes, according to UNICEF.

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A Glimpse into the Textile Cluster of Tirupur A case study by B2K Analytics

The objective of this report is to provide an insight on Tirupur Textile Industry. From academic researchers to financial analysts, from policy makers to small and big entrepreneurs, Tirupur attracts them all alike.

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Automobile firms to require Rs 3.5 lakh crore capital expenditure to realise government’s EV Vision 2030 says B2K Analytics

The impact of Covid-19 on businesses is unprecedented, and the severity of the lockdown and challenges faced by the domestic economy have been starkly brought out by the 23.9% contraction in the GDP in Q1FY 21. Among sectors

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