The last month of 2024 saw the impacts of a somewhat slower economic growth forecasts for India based on developments in the year. Foreign exchanges reserves also reduced and seems to have a connection with the slowly economy coupled with foreign invstors’ action of pulling out investments in the couple of months prior to December. Several State Governments have woken up to devise policies and framework to attract foreign companies desiring to set up global capability centres in India. The Government is taking steps to continue encouraging a stable and reliable intellectual property framework which is expected to give a fillip to patent filings locally here.
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Asian Development Bank – The Asian Development Bank recently released its Asian Development Outlook December 2024 Steady Growth Amid a Shifting Global Policy Landscape. The report mentioned that economic growth in developing Asia and the Pacific remains steady, but US policy changes under the incoming Trump administration may impact the region. As per the report, India’s growth forecast is lowered to 6.5% for FY2024 (ending 31 March 2025) and 7.0% for FY2025, from 7.0% in fiscal year (FY) 2024 (ending 31 March 2025) and 7.2% in FY2025 in ADO September 2024 (reported by Asia Law Portal here). The lowering of the forecast for FY2024 reflects a deceleration of growth in Q2 FY2024 to 5.4% from 8.2% in Q2 FY2023. This is on account of lower-than-expected industrial growth at 3.6% year on year, while growth in the agriculture and services sectors has remained strong at 3.5% and 7.1%, respectively. Industrial demand, on the other hand, is affected by tighter prudential norms from the central bank for unsecured personal loans and continued elevated food prices. Government capital expenditure for FY2024 also continues to lag behind the budget target, a risk highlighted in ADO September 2024. Regardless, India’s growth will remain robust, with the economy supported by higher agriculture output resulting from the summer (or kharif) crop season (which will also put downward pressure on food prices); continued resilience of the services sector; and lower-than-expected Brent crude prices in 2024 and 2025. Strong forward looking and labor market indicators (such as PMI for industry and services, urban labor force participation and Reserve Bank of India’s industrial outlook) suggest that economic momentum will recover in the coming quarters. The forecast for FY2025 has been reduced slightly due to lower-than-expected growth in private investment and housing demand, due to tight monetary policy aimed at combating inflation. Downside risks remain from geopolitical threats to supply chains and adverse weather conditions.
Foreign Exchange Reserves – India’s foreign exchange reserves fell for a third consecutive week and stood at a more-than-seven-month low of $644.39 billion as of Dec. 20, data from the Reserve Bank of India (RBI) showed on Friday. The reserves declined by $8.5 billion in the reporting week, logging their biggest weekly fall in over a month. They had declined by a total of $5.2 billion in the prior two weeks. Changes in foreign currency assets are caused by the central bank’s intervention in the forex market as well as the appreciation or depreciation of foreign assets held in the reserves. The RBI intervenes on both sides of the forex market to curb undue volatility in the rupee.
Fitch Ratings – India’s economic growth forecast for the financial year 2024-25 has been revised downward by Fitch Ratings, now standing at 6.4%, a drop from its earlier estimate of 7.0%. The downgrade follows the Reserve Bank of India’s (RBI) recent decision to cut its own growth projection for the same period to 6.6%, down from 7.2%. However, Fitch Ratings highlighted India’s relative strength compared to other global economies, stating, “The Indian economy recovered strongly from the Covid-19 pandemic shock. Although indicators point to a more mixed picture in recent months, we do not think that the softness will translate into a prolonged slump in economic activity.” Fitch remains optimistic about India’s economic resilience, citing domestic demand as a key driver, even amid global trade uncertainties. The agency expects continuity in policy initiatives such as infrastructure development, digitalisation, and business reforms to support growth. Public infrastructure investments and improved corporate and bank balance sheets are also expected to contribute to capital spending and economic activity.
Global Capability Centres – With companies planning to establish more global capability centres (GCCs) in India, states are eager to grab a piece of the action. Madhya Pradesh, Uttar Pradesh, Telangana and Andhra Pradesh are among those drafting their own GCC policies to attract multinationals with incentives to create back-office hubs outside the traditional hot spots of Bengaluru and NCR. India leads in GCCs with over 1,700 of them, accounting for 17% of the global tally, employing 1.9 million people. GCCs in India have surged 60% in the last five years contributing an estimated $64.6 billion to the country’s GDP. Nasscom estimates this will hit $100 billion by 2030.
Patent Applications – Around 92,000 patent applications were filed in India during the last financial year, signifying India’s growing maturity as a hub for technological and scientific development, a top official said on Tuesday. Unnat Pandit, Controller General of Patents, Designs and Trademarks (CGPDTM), also shared that the intellectual property (IP) guidelines are being revamped and inputs are being sought from various stakeholders for the new norms. “We are working towards efficient IP filings. This rapid growth in granted patents underscores the efficiency of India’s patent office in processing applications and granting IP rights. It also reflects the rising quality of applications being filed, with many innovations meeting global standards,” he said.
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