Sovrenn Times: Macroeconomy Update | 02 Sep 2025
India Diversifies Trade Beyond US: Engages 6+ Partners as $48Bn Exports Face 50% Tariffs
India is intensifying trade talks with partners beyond the US to safeguard exports amid tariff uncertainty. Commerce Minister Piyush Goyal recently met his counterparts from South Africa and Qatar, with trade deal discussions expected soon. India is also strengthening existing agreements with the UAE and Australia, focusing on pharma and healthcare trade facilitation. Alongside, talks are advancing with the EU, Chile, Peru, New Zealand, and Oman, while FTAs with EFTA, UK, and UAE are already concluded. The push comes as the US doubled tariffs on Indian goods, even as bilateral negotiations for a trade pact continue. Goyal emphasized India’s role as the provider of 18% of global growth, underlining the urgency of diversifying export markets.
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India’s Palm Oil Imports Hit 13-Month High at 9.93 Lakh Tons in August; SoyoilSlumps 28%
India’s palm oil imports surged 16% MoM to 993,000 tons in August 2025, the highest in 13 months, driven by competitive prices over soyoil ahead of the festive season. In contrast, soyoil imports slumped 28% to 355,000 tons, a six-month low, while sunflower oil jumped 27% to 255,000 tons, a seven-month high. India also imported 6,000 tons of canola oil, its first such purchase in nearly five years. Overall edible oil imports rose 3.6% MoM to 1.6 Mn tons, the highest in over a year. Traders expect palm oil imports to stay above 900,000 tons in September, while soyoil may rebound to 450,000 tons.
India’s Economy Holds Steady in August: GST +6.5%, UPI Crosses 20B, PMI at 17.5-Year High Despite US Tariff Headwinds
India’s economy showed resilience in August with GST collections rising 6.5% YoY to ₹1.96 lakh crore, though car sales slumped 7% and import-linked GST fell 1.2%. Domestic GST revenue grew faster at +9.6% (₹1.4 lakh cr), while refunds dipped 19.9%. UPI transactions crossed 20B for the first time, though transaction value slipped marginally to ₹24.9 lakh cr. Manufacturing PMI surged to 59.3, the highest in 17.5 years, backed by robust orders and output. Power consumption rose 4.3% YoY, reflecting steady industrial demand. Economists, however, flagged risks from 50% US tariffs, warning growth could moderate from the Q1 FY26 high of 7.8% to ~6.0-6.3% in H2.
India–UAE Deepen CEPA Ties: Focus on Pharma, Local Currency Settlement & $100B Trade Goal
India and the UAE have stepped up cooperation under CEPA, aiming for $100B non-oil, non-precious metals trade by 2030. Commerce Minister Piyush Goyal and UAE’s Thani Al Zeyoudi discussed the Local Currency Settlement System (INR–AED) and Bharat Mart as key enablers of smoother trade. In pharma, India welcomed the Emirates Drug Establishment, with both sides agreeing to expedite regulatory clearances and inspections. Healthcare and ayurveda also featured prominently, alongside UAE assurances on faster market access. The UAE raised concerns around India’s food and beverages sector, while India launched the Bharati Scheme to support 100+ agritech and food startups. Goyal also welcomed UAE’s growing investments in Indian infrastructure, logistics, and food processing.
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India’s Power Demand Rises 4.3% in August to 150.5 Bn Units Despite Heavy Rains
India’s power consumption grew 4.3% YoY in August 2025 to 150.5 Bn units, even as heavy rains lowered cooling requirements. Peak power demand touched 229.7 GW, up from 217 GW last year, with most growth led by the western region (+10.7%) and eastern region (+7.7%). Coal stocks at power plants fell by nearly 4 Mn tonnes to 50.3 Mn tonnes, reflecting seasonal depletion. On the Indian Energy Exchange, real-time market volumes surged 44.3% to 5,029 Mn units, while day-ahead volumes rose 2.6% to 4,834 Mn units. Officials attributed the uptick partly to a low base effect as demand was subdued in August 2024.