India’s domestic economy shows strength with a smaller hit to exports than expected amid international trade tensions. With a positive economic outlook, India will have more room to negotiate a trade deal with the United States after the latter imposed tariffs as high as 50% on exports from India.  

Indian exports to the United States dropped 8.6% year-over-year to $6.3 billion in October in the second month with U.S. tariffs, according to Reuters, a smaller hit than the previous month’s 12% drop. While other Asian countries including Japan and South Korea have signed deals with the U.S., Indian officials have insisted they do not want to rush into a deal.  

India’s consumer-price growth continued to drop in October, in an ongoing trend that undermines hopes that the central bank will cut the interest rate, according to the Wall Street Journal. The consumer-price index rose by 0.25% in October, the lowest reading since 2012 and a significant drop from the 1.44% in September. Additionally, inflation lowered as food prices contracted and tax cut benefits filtered across different sectors. 

In an effort to overhaul workers’ laws, India introduced four new labor codes that Prime Minister Narendra Modi’s administration says will simplify the rules, improve worker protections and liberalize conditions for investment, per Reuters. With some previous labor codes dating back to British colonial rule, they have long dragged down India’s manufacturing sector, which currently contributes less than a fifth the country’s almost $4 trillion economy.  

The new labor codes will allow longer factory shifts and night work for women and raise the threshold for firms requiring approval for layoffs from 100 to 300 workers, granting companies more flexibility when managing their workforce, according to Reuters. The codes, which include social security and minimum wage benefits, will expand legal and social protection for workers outside the traditional employment structures.  

The overhaul is coming at a time when the gig workforce in India is larger than ever. Fueled by a pandemic surge in the gig economy, more than 23.5 million are expected to be employed in the sector by 2030, according to Reuters, a jump from 10 million in 2024-2025.  

Trade unions are critical of the reforms. “The labor codes have been implemented despite strong opposition from the trade unions and [they] will snatch the workers’ rights including fixed-term jobs and rights available under the earlier labor laws,” said Amarjeet Kaur, national general secretary of the All India Trade Union Congress, per Reuters.  

A majority of sales to India are to existing customers, according to FCIB’s Credit and Collections Survey, with only 18% of respondents reporting that sales are to new customers. Customers are largely offered 1-30-day terms (36%), followed by 31-60-day terms (18%), 61-90-day terms (18%) and over 90-day-terms (10%). Additionally, 18% of creditors do not extend credit in the region. On average, customers in India are seven days beyond terms, with delays largely attributed to billing disputes (50%), supply chain issues (50%) and customer payment policy (50%).  

“India is a very tricky country to do business,” one respondent wrote. “They constantly renegotiate pricing all the way to the closing of the transaction.”   “We use credit insurance as a risk mitigation strategy,” another respondent wrote. “We would also consider utilizing export letters of credit if the customer is willing.”