India's textile and apparel exports declined by 2% year-on-year in FY2025-2026, totaling $35.80 billion, down from $36.61 billion in FY25. Despite this, a significant rupee depreciation against the US dollar (from 86.60 to 94.83) aided exporters. While orders from the US faced challenges due to tariff threats, demand from China, Bangladesh, and Sri Lanka improved, balancing regional trade. The industry hopes for a market revival with Free Trade Agreements (FTAs) and the end of the US-Iran war, with AEPC planning buyer-seller meets in the EU.
- India's textile and apparel exports saw a 2% decline in FY2025-2026, reaching $35.80 billion.
- The depreciation of the Indian rupee against the US dollar significantly aided exporters during this period.
- While US orders faced tariff-related challenges, demand from other Asian markets like China and Bangladesh improved.
The article argues that India is experiencing American unilateralism under the "America First" policy, where the US demands subordination without commensurate benefits. Historically, countries partnered with the US for security, market access, and technology in exchange for strategic autonomy. However, the Trump administration's approach, characterized by extended export controls on AI technologies and disregard for Indian concerns in the Iran conflict, reveals a shift towards dominance without hegemony. This bipartisan American consensus, where sheer power takes center stage, makes US partnerships costly to maintain and leave, urging India to recognize strategic autonomy as elementary realism.
- India is increasingly facing American unilateralism under the "America First" policy, which prioritizes US dominance without reciprocal benefits.
- The traditional bargain of strategic autonomy for security and economic advantages from the US is eroding.
- US actions, such as export controls on AI technologies and disregard for Indian concerns in the Iran conflict, exemplify this unilateral approach.
Prime Minister Narendra Modi conducted bilateral meetings with UK Prime Minister Keir Starmer and UAE ruler Sheikh Mohamed bin Zayed Al Nahyan (MbZ) on the sidelines of the G7 Summit in Evian. Modi described his meeting with PM Starmer as "wonderful," noting the outstanding India-U.K. relations and the economic cooperation fostered by the signed trade deal. He also met MbZ, discussing ways to strengthen their partnership and thanking the UAE for supporting the Indian expatriate community, especially after recent attacks in West Asia.
- PM Modi held bilateral discussions with UK PM Keir Starmer and UAE ruler Sheikh Mohamed bin Zayed Al Nahyan at the G7 Summit.
- Discussions with PM Starmer focused on enhancing India-U.K. ties and operationalizing the signed trade deal.
- Modi thanked the UAE for its care of the Indian expatriate community, particularly in light of recent West Asia conflicts.
Prime Minister Narendra Modi met his Canadian counterpart Mark Carney on the sidelines of the G7 Summit in Evian, France, for their fourth meeting in less than a year. Discussions focused on trade, economy, energy, technology, and people-to-people ties. Modi expressed hope to visit Canada and finalize an India-Canada Free Trade Agreement (FTA) soon. He highlighted Canada as a potential major partner in energy security, noting the CAD $2.6 billion commercial agreement for uranium supply (2027-2035) signed in March. The meeting occurred amidst past accusations by Canada regarding Indian agents' involvement in the killing of a pro-Khalistan individual.
- PM Modi and Canadian PM Mark Carney held bilateral talks at the G7 Summit, their fourth meeting in under a year.
- Key discussion areas included trade, economy, energy security, technology, and people-to-people ties.
- India aims to finalize a Free Trade Agreement (FTA) with Canada soon.
Wholesale Price Index (WPI) inflation in India surged to 9.7% in May 2026, marking the highest rate since at least April 2024, primarily driven by soaring prices of crude oil, natural gas, and mineral oils, exacerbated by the West Asia crisis. The Ministry of Commerce and Industry released a new WPI series with an updated base year of 2022-23 and an expanded scope of goods, making historical comparisons prior to April 2024 unavailable. Inflation in crude oil and natural gas jumped to 61.5%, while mineral oils accelerated to 49.8%, partly due to a low base effect from the previous year. The government also announced plans to phase out the WPI within five years, replacing it with the Producer Price Index (PPI) to align with global best practices and IMF recommendations.
- WPI inflation surged to 9.7% in May 2026, primarily due to rising fuel prices, including crude oil, natural gas, and mineral oils.
- The Ministry of Commerce and Industry released a new WPI series with an updated base year of 2022-23 and a wider ambit of goods.
- The high inflation rate is partly attributed to the West Asia crisis and a low base effect from the previous year.
India's unemployment rate (UR) experienced a marginal increase of 0.3 percentage points, reaching 5.5% in May, up from April's figures. Data from the Periodic Labour Force Survey (PLFS), released by the Ministry of Statistics and Programme Implementation, indicates a rise in rural unemployment from 4.6% to 5.1%, while urban unemployment saw a slight decrease from 6.6% to 6.4%. Among specific demographics, rural males aged 15 and above recorded an unemployment rate of 5.2%, and rural females stood at 4.7%. Urban females faced a higher unemployment rate of 8.2% compared to 5.9% for urban males. The Labour Force Participation Rate (LFPR) for individuals aged 15 and above also marginally declined to 54.4% in May from 55% in April.
- India's overall unemployment rate increased marginally by 0.3 percentage points to 5.5% in May.
- Rural unemployment rose to 5.1%, while urban unemployment slightly decreased to 6.4%.
- Unemployment rates varied by gender and region, with urban females experiencing the highest rate at 8.2%.
India's merchandise exports surged to a record high of $45.2 billion in May 2026, an 18% increase from the previous year, while services exports also grew by 13.2% to $36.8 billion. Despite this robust export performance, the overall trade deficit widened significantly to $10.5 billion, up from $6.8 billion last May, primarily due to a sharper growth in imports of both goods and services. Merchandise imports jumped 22.1% to $73.4 billion, leading to a merchandise trade deficit of $28.2 billion in May, 25% higher than May 2025. Key export sectors like engineering goods, electronic goods, and chemicals showed strong growth, indicating a broad-based increase.
- India's merchandise exports reached a record high of $45.2 billion in May 2026, an 18% increase year-on-year.
- Services exports also saw significant growth, rising by 13.2% to $36.8 billion in May 2026.
- Despite strong export growth, India's overall trade deficit widened to $10.5 billion due to a sharper increase in imports.
British forces intercepted and detained the sanctioned oil tanker Smyrtos, linked to Russia's shadow fleet, in the English Channel. This operation, described as the first U.K.-led action of its kind, was welcomed by Ukraine's Foreign Minister as a blow to Russia's war machine. Royal Marine Commandos boarded the Cameroon-flagged vessel, which had departed from Russia's Ust-Luga port. The U.K. has sanctioned hundreds of vessels suspected of bypassing Western embargoes on Russian oil since the 2022 invasion of Ukraine. The operation, supported by various helicopters and naval vessels, aims to curb Russia's ability to fund its conflict.
- British forces intercepted and detained the oil tanker Smyrtos in the English Channel.
- The vessel is linked to Russia's "shadow fleet," which bypasses Western sanctions on oil.
- Ukraine's Foreign Minister welcomed the operation, calling Russia's shadow fleet a "tool of war."
Union Minister Ashwini Vaishnaw anticipates significant new investments in India for memory chip manufacturing, with existing players also scaling up production to address the global demand-supply gap. The worldwide shortage of memory and advanced chips has led to higher prices and increased production costs for electronic products. Vaishnaw highlighted that India's data center investments are expected to exceed $200 billion soon, requiring billions of gigabytes of storage capacity. He stated that both new companies and existing players are likely to invest, with the India Semicon Mission (ISM) 2.0 prioritizing design and manufacturing of machines for semiconductors.
- Union Minister Ashwini Vaishnaw expects new investments and scaled-up production for memory chips in India.
- The global shortage of memory and advanced chips is driving up prices and production costs for electronics.
- India's data center investments are projected to reach over $200 billion, necessitating vast storage capacity.
Prime Minister Narendra Modi, inaugurating Bharat Innovates 2026 in Nice, France, emphasized India's emergence as a technology provider and called for inclusive, human-centric technologies. He invited global investors and entrepreneurs to "design and develop in India" to create solutions for the world, highlighting India's innovation ecosystem in defense, space, and clean energy. French President Emmanuel Macron echoed the sentiment, stressing trust and cooperation in technology, and noted France's commitment to "Make in India." Both leaders acknowledged the current geopolitical and technological upheavals, underscoring the world's need for reliable partners.
- PM Modi inaugurated Bharat Innovates 2026 in Nice, France, advocating for inclusive and human-centric technology.
- He positioned India as an emerging technology provider and invited global entities to innovate in India for worldwide solutions.
- PM Modi highlighted India's innovation in defense, space, and clean energy, referencing recent legislative changes like the SHANTI Act.
Drop shipping is an e-commerce business model where an online individual or agent sells products without holding any inventory, passing customer orders to a maker/seller who then directly ships the product. This model, popularized by platforms like Amazon and Shopify, allows anyone with internet access to sell products, often leveraging AI for customer services and insights. While generally legal if transparent and compliant with tax laws, drop shipping poses several risks for shoppers. These include scams, inflated prices, defective or pirated products, long delivery times, lack of safety standards, and data privacy concerns due to multiple parties handling information. Shoppers are advised to research sellers to mitigate these risks.
- Drop shipping is a business model where sellers act as middlemen, taking orders without holding inventory and passing them to third-party suppliers for direct shipment.
- Platforms like Amazon and Shopify facilitate drop shipping, and AI tools are increasingly used for customer service and business insights.
- The practice is generally legal if transparency is maintained and tax laws are followed.
India's Insolvency and Bankruptcy Code (IBC) 2026 Amendment introduces the Creditor-Initiated Insolvency Resolution Process (CIIRP), a hybrid model aiming for time-bound resolutions while allowing existing management control under supervision. This addresses protracted litigation and procedural delays seen in the previous IBC. However, the amendment's restrictive framework, limiting CIIRP initiation rights to "notified financial institutions," creates an arbitrary hierarchy among financial creditors. This exclusion disenfranchises operational and smaller financial creditors, compelling them towards more disruptive Corporate Insolvency Resolution Processes (CIRP) and compromising the equity of the insolvency ecosystem. A "universal CIIRP" model based on financial exposure, rather than institutional identity, is proposed for a fairer and more efficient system.
- The IBC 2026 Amendment introduces the Creditor-Initiated Insolvency Resolution Process (CIIRP) to improve resolution efficiency.
- CIIRP is a hybrid model allowing current management to retain control under a resolution specialist, reducing judicial intervention.
- The amendment restricts CIIRP initiation rights to "notified financial institutions," creating an arbitrary hierarchy among creditors.
India's May retail inflation reached 3.93%, a 15-month high, reflecting the pass-through effects of surging food and fuel costs. Food inflation rose to 4.78%, and transport inflation, driven by petrol and diesel price increases, surged by 1.75%. Commercial LPG prices also significantly increased, impacting the restaurants and accommodation sector. Despite the RBI's 4% target and 2%-6% tolerance band, the central bank maintained a neutral stance due to concerns over future price pressures. While core inflation remained stable and U.S.-Iran rapprochement improved rupee stability, fuel prices are expected to remain sticky, making a rapid decline in inflation unlikely.
- India's May retail inflation hit 3.93%, the highest in 15 months, indicating significant pass-through of food and fuel costs.
- Food inflation increased to 4.78%, and transport inflation rose by 1.75% due to petrol and diesel price hikes.
- Commercial LPG price increases contributed to inflation in the restaurants and accommodation services category.
As India anticipates the 8th Central Pay Commission (CPC), the discussion should shift from mere salary revisions to reforming the broader framework of public compensation. The article argues for a coherent, equitable, and fiscally sustainable system, addressing issues like inter-service parity, the absence of a common evaluative framework, and the complexities of pension systems. It suggests moving towards continuous, institutionalised mechanisms for reviewing public sector compensation, possibly through a National Compensation Authority, rather than the decadal Pay Commission model, to ensure transparency, consistency, and public trust.
- The 8th CPC should focus on reforming the overall public compensation framework rather than just salary revisions.
- Current pay commissions lack a common evaluative framework, leading to inconsistencies in assessing different services and roles.
- The existing pension system is complex, with multiple schemes, raising concerns about fiscal sustainability and inter-generational equity.
India's retail inflation, measured by the Consumer Price Index (CPI), increased to 3.9% in May, up from 3.5% in April. This surge is primarily attributed to rising food prices, with the Consumer Food Price Index (CFPI) inflation reaching 4.8% in May, compared to 4.2% in April. This marks the fastest pace of retail price increase since January 2025 (4.06%), making the May figure the highest in 16 months. The current inflation rate is just 0.07% short of the RBI's target of 4%, driven by increases in cereal, tomato, and fuel prices, while onion deflation slowed.
- India's retail inflation, measured by CPI, rose to 3.9% in May, primarily due to an increase in food prices.
- The Consumer Food Price Index (CFPI) inflation increased to 4.8% in May from 4.2% in April.
- This inflation rate is the highest in 16 months, surpassing the 3.5% recorded in April.
The Union government has removed central excise duty on petrol blended with higher quantities of ethanol (22%, 25%, 27%, and 30%) to popularize biofuels. This exemption aims to prevent a dual levy, as petrol already bears excise duty and ethanol bears GST. While this is a preliminary step for introducing higher blends, the government clarified it does not indicate an immediate rollout, which will follow extensive testing and consultation. Industry associations have welcomed the move, seeing it as a strong signal of policy stability and commitment to attracting investments in the ethanol blending value chain.
- The Union government exempted higher ethanol-blend petrol (E22, E25, E27, E30) from central excise duty.
- This measure aims to popularize biofuels and prevent a dual levy on the blended product.
- The exemption is a preliminary step towards eventually introducing higher blends, pending further testing and consultation.
The implementation framework for India's four labour codes (Code on Wages 2019, Industrial Relations Code 2020, Social Security Code 2020, Occupational Safety, Health and Working Conditions Code 2020) is complete, but critics argue the rules fail to address key concerns, leaving workers vulnerable. Gaps include vague definitions of "floor wage," lack of minimum tenure for Fixed-Term Employment, and inadequate safeguards for gig workers. The rules also do not clarify employment relationships in the gig economy or mandatory gratuity insurance, and set a high 30% membership threshold for union recognition, weakening workers' bargaining power.
- India's four new labour codes have been operationalized, but the accompanying rules are criticized for failing to protect workers adequately.
- Critical gaps exist in defining "floor wage" and establishing minimum tenure or renewal limits for Fixed-Term Employment.
- Gig and platform workers remain vulnerable as the rules do not clarify their employment relationship or ensure mandatory gratuity insurance.
China's State Council issued guidelines to promote basic public services for residents regardless of their hukou status, aiming to include migrants in urban services like education, housing, and social insurance. This builds on reforms since 2014, which gradually equalized benefits for migrants in smaller cities. The goal is to increase permanent urban residents to nearly 70% by 2029, driven by demographic concerns and the economic imperative to boost domestic consumption and create a unified market. However, structural constraints persist, as local governments, responsible for service delivery, face budget issues, and differing social insurance standards still disadvantage migrant workers. The reforms aim for inclusion without fully abolishing the hukou system.
- China's State Council issued guidelines to extend basic public services to residents regardless of their hukou (residence registration) status.
- The reforms aim to include migrants in urban services like education, public rental housing, and social/medical insurance.
- The initiative is driven by demographic concerns and the economic need to boost consumption and create a unified national market.
India called for urgent action on the shrinking climate finance pool and the widening adaptation finance gap at the UN climate negotiations in Bonn, Germany. India emphasized that the Paris Agreement's provision obliging developed countries to provide funds to developing nations must be given dedicated agenda space. India aligned with positions of the G77 and China, LMDC, and BASIC bloc. The Bonn meeting, a mid-year session preparing for COP31 in Antalya, Turkiye, focuses on shifting to an implementation phase, with key items including the Global Goal on Adaptation and the Just Transition Work Programme. India also pressed for dialogue on unilateral trade measures like the EU's Carbon Border Adjustment Mechanism (CBAM).
- India advocated for addressing the shrinking climate finance and widening adaptation finance gap at the Bonn climate talks.
- It stressed the importance of the Paris Agreement's provision for developed countries to fund developing nations.
- India aligned with the Group of 77 and China, Like-Minded Developing Countries (LMDC), and BASIC bloc.
The article highlights China's increasing diplomatic engagement, evidenced by recent visits from top leaders of UNSC permanent members. It emphasizes China's independent foreign policy of peace, advocating for multilateralism, non-aggression, and dispute resolution through dialogue. President Xi Jinping's discussions with U.S. President Trump focused on "constructive strategic stability" and the Taiwan question, while talks with Russian President Putin reinforced their strategic partnership. The article also underscores economic and trade cooperation as a priority, with China aiming to be a key contributor to global economic growth and an advocate for a fairer, more just, and equitable global economic governance.
- China has become a central hub of global diplomacy, hosting leaders from all other UNSC permanent members recently.
- Its foreign policy emphasizes peace, multilateralism, non-aggression, and dialogue for dispute resolution.
- Discussions with the U.S. focused on "constructive strategic stability" and the sensitive Taiwan question.
Union Rural Development Minister Shivraj Singh Chouhan announced an interim allocation of ₹95,962 crore for the new rural employment scheme, Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission Gramin (VB-GRAM G). This allocation aims for a "seamless transition" from MGNREGS and ensures no State faces fund reduction. The combined outlay for the scheme will be ₹1.25 lakh crore, with States contributing an additional 40%. The new program emphasizes wider presence in economically weaker States, proposing the use of the 16th Finance Commission's horizontal devolution formula for Central allocations. 26 States have completed procedural requirements, while four are still pending.
- An interim allocation of ₹95,962 crore has been announced for the new rural employment scheme, VB-GRAM G.
- The scheme aims to ensure a seamless transition from MGNREGS without reducing funds for any State.
- States are expected to contribute an additional 40% of the allocated sum, bringing the combined outlay to ₹1.25 lakh crore.
Mazagon Dock Limited (MDL), a leading shipbuilding company, is now considering investing over ₹29,000 crore in a mega shipbuilding cluster in Andhra Pradesh, after its plans for a greenfield shipyard in Thoothukudi, Tamil Nadu, faced setbacks. MDL had committed ₹15,000-18,000 crore for the Thoothukudi project, but the Tamil Nadu government allegedly onboarded a foreign company, HD Hyundai, without competitive bidding, raising questions about transparency and adherence to the Shipbuilding Development Scheme Guidelines. This move by Tamil Nadu is seen as undermining efforts to promote indigenisation under the Maritime Amrit Kaal Vision 2047, prompting MDL to explore alternative investment opportunities.
- Mazagon Dock Limited (MDL) is exploring a ₹29,000 crore investment in a shipbuilding cluster in Andhra Pradesh after issues in Tamil Nadu.
- MDL's initial plan for a ₹15,000-18,000 crore greenfield shipyard in Thoothukudi, Tamil Nadu, was reportedly sidelined.
- The Tamil Nadu government allegedly signed an 'Exclusive Business Cooperation Agreement' with foreign company HD Hyundai for the Thoothukudi shipyard without competitive bidding.
Amid global pressure on LPG supplies due to the West Asia conflict, the Centre has reduced the number of subsidised refills available under the Pradhan Mantri Ujjwala Yojana (PMUY) from nine to four cylinders per year. Under the scheme, beneficiaries receive a ₹300 subsidy per cylinder. Despite the reduction, Petroleum Ministry officials argue that PMUY consumers still receive a significant 'indirect subsidy,' as the effective price of ₹642 per cylinder is a 60% discount compared to international LPG prices (estimated at ₹1,600). The PMUY scheme has provided around 10.55 crore LPG connections as of May 26 this year.
- The government has reduced the number of subsidised LPG refills for PMUY beneficiaries from nine to four cylinders annually.
- This decision comes amidst global LPG supply pressures exacerbated by the West Asia conflict.
- Under the Pradhan Mantri Ujjwala Yojana (PMUY), beneficiaries receive a direct subsidy of ₹300 per cylinder.
The India-Oman Comprehensive Economic Partnership Agreement (CEPA), effective June 1, 2026, aims to deepen trade, investment, and economic cooperation. It offers significant opportunities for Indian exporters, with Oman providing duty-free access on 98.08% of its tariff lines, covering 99.38% of India's exports by value. The CEPA streamlines trade procedures, recognizes Indian certifications, and focuses on services and professional mobility. Strategically, Oman's location at the crossroads of the Gulf, Indian Ocean, and East Africa positions it as a gateway for Indian businesses to the wider GCC region and East African economies, strengthening India's global manufacturing and services ambitions.
- The India-Oman CEPA, effective June 1, 2026, aims to significantly boost bilateral trade, investment, and economic cooperation.
- Oman grants duty-free access to 98.08% of its tariff lines, covering 99.38% of India's exports by value, providing a competitive edge for Indian manufacturers.
- The agreement includes trade facilitation measures like mutual recognition of certifications (e.g., India's Export Inspection Council, NPOP, Halal) and streamlined customs.