Sovrenn Times: Macroeconomy Update | 26 Aug 2025
90% of Japanese Firms in India Profitable; Executives See ‘FOMO’ Driving Fresh Capital
At a panel on the Indo-Japan corridor, senior Japanese executives highlighted India’s size, growth, demographics, and regulatory stability as unmatched long-term investment drivers. Over 1,500 Japanese firms operate in India, and 90% of those present for 10+ years are profitable, making India their most favoured destination in annual surveys. Executives cited government programmes like Make in India, Startup India, and PLI schemes as catalysts for the China-plus-one strategy. Case studies include Suzuki, Honda, Kawasaki, Kansai, and JSW–JFE steel collaborations. Mizuho’s Koichi Zaiki said capital-rich Japan faces shrinking population and slowing demand at home, pushing firms to India where “Japan has processes, India has vibrancy.” With C-suite delegations now leading investment explorations, and cash-rich firms pressured to deploy capital, Zaikinoted India’s recent credit rating upgrade adds momentum. Credit Saison’s Kosuke Mori added that digital rails like UPI and Jan Dhan give Japanese NBFCs tools to bridge India’s credit demand–supply gap, fueling growth.
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Govt Cuts Honey Export MEP by 30% to $1,400/Tonne; Exports Worth $177.5M in FY24
The government has reduced the minimum export price (MEP) of natural honey from $2,000 to $1,400/tonne (–30%), effective immediately and valid until Dec 31, 2025, per a DGFT notification. Exports below this threshold remain prohibited. India’s key honey export markets are the US, UAE, Saudi Arabia, and Qatar, while major producing states include Uttar Pradesh, West Bengal, Punjab, Bihar, and Rajasthan. The MEP was first imposed in March 2024 to regulate trade flows. India exported $177.52M worth of honey in FY24, supported by the Centre’s National Beekeeping and Honey Mission (NBHM), which promotes scientific beekeeping for sectoral growth. The revision is expected to boost competitiveness and expand India’s market share in global honey exports.
Fitch Affirms India at BBB- with Stable Outlook; FY26 GDP Growth Seen at 6.5%, CAD at 0.7%
Fitch Ratings reaffirmed India’s Long-Term Foreign-Currency IDR at ‘BBB-’ with a Stable Outlook, citing robust growth and solid external finances. GDP is projected to grow 6.5% in FY26, unchanged from FY25 and far above the BBB median of 2.5%, supported by strong public capex and private consumption. Fitch flagged US tariff risks(50% proposed vs current 25%) but expects only modest GDP impact as US exports form 2% of GDP, with GST reforms likely cushioning demand. Inflation remains contained (headline at 1.6% in July 2025), giving RBI space for another 25bp rate cut after reducing repo to 5.5%. On fiscal health, the CG deficit fell to 4.8% of GDP in FY25 from 9.2% in FY21, forecast to hit 4.4% in FY26, though high GG debt (80.9% of GDP in FY25) and an interest/revenue ratio of 23.5% remain weaknesses. External buffers are strong, with $695B in FX reserves (8 months import cover) and a low CAD of 0.7% of GDP in FY26, reinforcing resilience despite structural fiscal pressures.
India’s Coal Imports Up 1.5% to 76.4 MT in Q1 FY26; CIL Output Falls 8.5% in June
India’s coal imports rose 1.5% YoY to 76.40 MT in Apr–Jun FY26, up from 75.26 MT a year earlier, per mjunction data. Imports in June climbed to 23.91 MT from 22.97 MT last year. Non-coking coal imports were largely flat at 49.08 MT vs 49.12 MT, while coking coal imports grew 6% to 16.37 MT. In June alone, non-coking coal stood at 14.85 MT(+5%) and coking coal at 5.78 MT (+6%) YoY. Meanwhile, Coal India Ltd. (CIL), which supplies 80% of domestic output, saw production fall 8.5% YoY to 57.8 MT in June, from 63.1 MT, largely due to seasonal monsoon disruptions. Despite this, Coal Minister G. Kishan Reddy assured no shortages for the power sector, with the ministry committed to sustainable growth, higher availability, and reduced import dependence. The coal sector remains central to meeting India’s energy demand and powering growth.
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UP Bans 11 Pesticides to Protect ₹50,000 Cr Basmati Exports Amid Global Rejection Risks
The Uttar Pradesh government has enforced a 3-month ban (from Aug 1, 2025) on 11 pesticides—including acephate, chlorpyriphos, tricyclazole, tebuconazole, and imidacloprid—that leave residues lowering rice quality and causing rejection in key export markets. India, one of the world’s largest basmati rice exporters (worth ~₹50,000 Cr annually), faces objections from the EU, US, Saudi Arabia, Kuwait, Qatar, and Bahrainover contaminated shipments. The ban, previously imposed two years ago, was reintroduced after recurring complaints, with authorities warning farmers that rice grown with banned pesticides may only fetch lower domestic prices. Awareness drives, press releases, and letters are being circulated to ensure compliance, while cooperatives are supplying essentials like urea to farmers. Early adoption is visible in districts like Moradabad, where cultivators have shifted toward chemical-free practices to safeguard export opportunities and avoid past losses from returned consignments.