How Middle East war could impact India’s trade and macro stability: NITI Aayog report

Ongoing battle within the Middle East might need a direct impact on India’s financial system. According to NITI Aayog, the Iran war poses dangers to New Delhi’s trade and macroeconomic panorama, placing stress on the present account deficit (CAD) and the trade fee. In its quarterly report Trade Watch Oct–Dec (Q3) FY 2025-26, launched on Monday, the coverage assume tank stated that instability within the area can be slowing down talks on the India–Gulf Cooperation Council (GCC) Free Trade Agreement (FTA). This, in flip, is affecting efforts to widen India’s trade base and enhance entry to new markets.At the discharge of the report, NITI Aayog Vice Chairman Suman Bery stated that trade offers work each methods. “Let us be clear that FTAs are not a one-way street, nor should they be, which is to say that in the way that we are seeing them as a tool for market access, others are seeing it as a tool for market access too,” he stated. Commenting on India’s enterprise entrance, Bery highlighted that merchandise trade has remained regular regardless of world uncertainty. He additionally famous that providers trade has proven robust efficiency through the “very confusing year” of 2025. He additional identified the function of imports in making the financial system extra aggressive. “For trade economists, imports matter much more than exports. It is imports that force you to be competitive, so we should welcome the imports as much as we welcome the market access,” he stated. Bery added that India’s macroeconomic stability stays robust, with the financial system rising at a median of 6% over the previous 20 years. The report additionally targeted on the gems and jewelry sector, suggesting a shift in the direction of higher-value exports. It known as for design-led manufacturing, cluster-based analysis and improvement, and promotion of GI-branded merchandise, particularly in light-weight, vogue and males’s jewelry. “India’s gems and jewellery sector should strengthen trade facilitation and raw material access – align FTAs, streamline duty drawback/refunds, expand IIBX access, and improve raw material supply to cut input costs and boost MSME margins,” the report stated. It additionally really helpful simpler entry to finance for MSMEs via collateral-free loans, credit score ensures, curiosity subvention, export factoring and provide chain finance.