India continues its slow economic recovery while Covid-19 cases are rising once again in the country. The economic growth forecasts have been reduced by global financial institutions amidst internal issues including inflation and external issues comprising largely due to the supply chain disruption arising out of the war in Ukraine. India has been actively engaging with global organisations and countries to strengthen its trade requirements. After a gap of 9 years, discussions have commenced with the European Union to negotiate an effective trade pact.  

World Bank – The World Bank recently released its Global Economic Prospects report through a press release titled ‘Stagflation Risk Rises Amid Sharp Slowdown in Growth’. The report mentioned that in India, growth is forecast to edge down to 7.5 percent in fiscal year 2022/23, with headwinds from rising inflation, supply chain disruptions, and geopolitical tensions offsetting buoyancy in the recovery of services consumption from the pandemic. Growth will also be supported by fixed investment undertaken by the private sector and by the government, which has introduced incentives and reforms to improve the business climate. This forecast reflects a 1.2 percentage point downward revision of growth from the January 2022 projection, which was an upgrade to 8.7% at that time, as reported by Asia Law Portal. Growth is expected to slow further to 7.1 percent in 2023/24 back towards its longer-run potential, which is slightly higher than 6.8% projected in January 2022.

Fitch – Fitch Ratings recently cut India’s growth forecast for FY 2023 by 70 basis points to 7.8 per cent. It has however raised India’s growth outlook to ‘stable’ from ‘negative’ on the back of reduced risks to India’s economic growth. The rating agency also said India’s growth is expected to be robust in comparison to its peers. Fitch Ratings said despite the global uncertainties, especially the headwinds from the global commodity price shock amid Russia Ukraine war, the downside risks to India’s medium-term growth have diminished. This is due to its rapid economic recovery and easing of India’s financial sector weaknesses. The global rating agency also said it has further cut India’s economic growth expectations because inflationary impacts of the global commodity price shock are dampening some of the positive growth momentum. In March, Fitch Ratings had cut India’s growth forecast for FY 2023 to 8.5 per cent, as reported by Asia Law Portal. Fitch also said India’s strong medium-term growth outlook relative to peers is a key supporting factor for the rating and will sustain a gradual improvement in credit metrics. “We forecast growth of around 7% between FY24 and FY27, underpinned by the government’s infrastructure push, reform agenda and easing pressures in the financial sector,” the rating agency added.

India EU Trade DiscussionsAfter a 9-year lull, India and EU relaunched negotiations for India-EU Free Trade Agreement (FTA). Besides, negotiations were also launched for a stand-alone Investment Protection Agreement (IPA) and a Geographical Indicators (GIs) Agreement. Both partners are now resuming the FTA talks after a gap of about nine years since the earlier negotiations were left off in 2013 due to difference in the scope and expectations from the deal. This would be one of the most significant FTAs for India as EU is its second largest trading partner after the US. The India-EU merchandise trade has registered an all-time high value of USD 116.36 Billion in 2021-22 with a year-on growth of 43.5%.  India’s export to the EU jumped 57% in FY 2021-22 to $65 billion.  India has a surplus trade with EU. While the proposed IPA would provide a legal framework for cross-border investments to enhance the confidence of investors, the GI pact is expected to establish a transparent and predictable regulatory environment, to facilitate trade of GI products including handicrafts and agri-commodities.  Both parties are aiming to negotiate all the three agreements in parallel and conclude them simultaneously.  The first round of negotiations for all the three agreements are currently being held from 27th June to 1st July 2022 in New Delhi.

New Cyber Security Reporting Requirements – Further to the developments relating to cyber security directions issued by the Indian Computer Emergency Response Team (CERT-In) last month (as covered by Asia Law Portal), the Government received requests for the extension of the 60 day timeline for implementation of these Cyber Security Directions from the smaller enterprises and other organisations. The matter was considered by CERT-In and it has been decided to provide extension till 25 September, 2022 to Micro, Small and Medium Enterprises (MSMEs) in order to enable them to build capacity required for the implementation of the Cyber Security Directions. In addition, Data Centres, Virtual Private Server (VPS) providers, Cloud Service providers and Virtual Private Network Service (VPN Service) providers are also provided with additional time till 25 September, 2022 for implementation of mechanisms relating to the validation aspects of the of subscribers/customers details.

Posted by Sourish Mohan Mitra

Sourish Mohan Mitra, India-qualified lawyer from Symbiosis Law School, Pune and currently working as an in-house counsel in Delhi, India; views expressed are personal; he can be reached at sourish24x7@gmail.com; Twitter: @sourish247

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