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India to become ‘connector country’ in tech, pharma amid global trade shift: RBI bulletin
May-22-2025

The Reserve Bank’s latest bulletin has said that amid global trade realignments and industrial policy shifts, India is increasingly positioned to function as a ‘connector country’ that can become a key intermediary in sectors such as technology, digital services and pharmaceuticals. It noted that the recent completion of free trade agreement with UK points to a strengthening of bilateral trade linkages. It added that going forward, notwithstanding the daunting challenges in the horizon, India stands well-positioned to navigate the ongoing global headwinds with confidence, ready to harness emerging opportunities and consolidate its role as a key driver of global growth. It further said that persistent trade frictions, heightened policy uncertainty, and weak consumer sentiment continue to create headwinds for global growth.

The bulletin emphasizing the resilience of the economy, has noted that various high frequency indicators of industrial and services sectors sustained their momentum in April. Meanwhile, it has indicated that a bumper rabi harvest and higher acreage for summer crops, coupled with favourable southwest monsoon forecasts for 2025, augur well for the agriculture sector. Besides, as the headline CPI inflation fell for the sixth consecutive month to its lowest since July 2019, primarily driven by the sustained easing in food prices, the bulletin noted that inflation pressure has eased significantly and is poised for a durable alignment with the target in 2025-26.

It highlighted that commercial banks’ (SCBs’) deposit growth decelerated from 10.6 per cent as on March 21, 2025 to 10.3 per cent as on May 2, 2025, with the base and momentum effect offsetting each other. It added that in the fiscal year 2024-25 SCBs were primarily relied on deposits for funding, while their reliance on borrowings had declined. Meanwhile, in response to the 50-bps cut in the policy repo rate since February 2025, most of the banks have reduced their repo-linked external benchmark-based lending rates (EBLRs) and marginal cost of funds-based lending rate (MCLR). The central bank said views expressed in the article are those of the authors and do not represent the views of the Reserve Bank of India.

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