India at the turning point of the new world order.

Thai products, especially in the food, petrochemical, construction materials, and innovative product sectors, still have significant potential for market expansion to meet the continuously growing demand from Indian consumers for higher quality products.

Recently, the Canadian Prime Minister stated at the World Economic Forum that the world is not simply undergoing a normal “transition,” but rather facing a “turning point” of turmoil that abruptly reshapes the existing world order. It’s as if we are entering an era of competition between superpowers, where the fundamental rules of the world order are crumbling and being replaced by an environment where the strong can act as they please, while the weak inevitably face the consequences.

At a time when Canada views itself as a middle-power in the Western world, one that continues to stand strong and strengthen, on the Eastern side, India stands in a similar position: a middle-power and one of Asia's key forces playing a prominent role in shaping the modern world order.

The economy remains strong.

According to Moody's Ratings, India remains the fastest-growing economy among the G20 countries, with its real GDP projected to expand by 6.4% in the fiscal years 2569-2570.

Meanwhile, the International Monetary Fund (IMF) has revised its forecast for India's economic growth in fiscal year 2026 upwards by 0.7 percentage points to 7.3%, following better-than-expected third-quarter expansion and strong momentum expected to continue into the fourth quarter. The IMF stated that India is one of the key drivers of global economic growth.

This trend aligns with the World Bank's forecast, which has revised upward its estimate of India's GDP growth to 7.2%. This forecast is based on the assumption that the United States will maintain its 50% import tariff for the entire duration of the forecast.

Even under these conditions, India is still projected to maintain its position as the fastest-growing economy among the world's major economies. Furthermore, despite the US increasing tariffs on some Indian exports, growth estimates remain "unchanged" from the June forecast, as the negative impact of the tariffs is offset by stronger-than-expected domestic demand and exports that are more resilient than previously estimated.

Diversify your risks to reduce the impact of US taxes.

India's exports to the United States fell by 21.77% to $6.6 billion, partly due to the imposition of a 50% import tariff that went into effect on August 27. This followed a temporary trade agreement between the two countries, in which the US lifted the 25% punitive tariff on Indian goods since February 7, while retaliatory tariffs were also set to be reduced from 25% to 18%. As a result, India's exports have regained their competitiveness on par with regional rivals.

Conversely, India's imports from the United States in January increased by 23.71% to $4.5 billion. In terms of trade relations with China, India's exports to China rose by 55.65% to $1.63 billion in January, while imports from China increased by 16.67% to $12.23 billion.

India's exports also showed positive growth to other key countries and economies, including the United Arab Emirates, the Netherlands, Germany, Saudi Arabia, Italy, Hong Kong, Spain, Belgium, Malaysia, and Vietnam. Conversely, exports to the United Kingdom, Bangladesh, Singapore, Australia, France, and Brazil declined.

On the import side, India saw a decrease in imports from Russia, Iraq, South Korea, Germany, Thailand, and Australia, while imports from the United Arab Emirates, Saudi Arabia, Switzerland, Singapore, Japan, and Indonesia increased.

The Global Trade Research Initiative (GTR) indicates that the latest trade figures for January 2569 reflect a significant negative impact from U.S. tariffs on India's export performance, while also signaling a greater diversification of trade risks into other markets.

Joining forces with Europe.

India and the European Union first began negotiating a free trade agreement in 2550, but talks stalled in 2556 due to disagreements on issues of patent protection, data security, and the rights of Indian experts to work in Europe. Negotiations resumed in 2565.

In recent years, geopolitical factors have played a significant role in accelerating the conclusion of trade agreements, with both India and the European Union seeking to diversify their export markets amid escalating tensions with the United States.

In late January, India and Europe reached a historic free trade agreement, dubbed "the biggest deal of all," aiming to reduce trade barriers and open doors to new export opportunities. This initiative creates the world's largest free trade area, encompassing over two billion people and representing nearly a quarter of global GDP.

Under this agreement, India has agreed to eliminate or reduce import tariffs on 96.6% of the value of its exports from the European Union, saving the EU a combined US$4.7 billion annually in import and export tariffs and potentially doubling its export value by 2575. In return, the EU will reduce tariffs on 99.5% of goods exported from India.

Furthermore, the European automotive industry benefits significantly from the reduction of tariffs on Indian cars from a maximum of 110% to 10% within 5 years. India, in turn, receives immediate duty-free status for labor-intensive exports such as textiles, garments, and jewelry. The agreement also supports India's agricultural and food sectors with preferential market access, and in the services sector, the EU opens markets in over 144 areas, including IT, professional services, and education, while facilitating greater labor mobility.

Opportunities for Thai businesses

As India opens its economy and expands its markets through global trade agreements, opportunities inevitably arise for close trading partners like Thailand. According to the Ministry of Commerce, India is Thailand's fourth-largest export market. During the first 11 months of 2025 (January-November), total trade between Thailand and India amounted to US$20,316.65 million, a 28.56% increase compared to the same period the previous year. This comprised Thai exports valued at US$14,787.94 million, a 40.78% increase, and imports at US$5,528.72 million, a 4.33% increase.

India is a highly potential market, particularly due to the rapid expansion of its middle class, which currently numbers around 500 million and is expected to grow to 800-900 million by 2578. This growth presents significant opportunities for Thai manufacturing and service sectors across various industries.

Thai products, especially in the food, petrochemical, construction materials, and innovative product sectors, still have significant potential for market expansion to meet the continuously growing demand from Indian consumers for higher-quality products. Furthermore, the construction materials and real estate sectors, particularly green building materials, are industries with high potential.

However, analysts believe that in the future, the sustainability of India's economic growth will depend on continued infrastructure development, coupled with prudent debt management, a shift toward clean energy, trade diversification, and poverty reduction. If these challenges are effectively addressed, India will be well-positioned to maintain its strong economic growth momentum.

Follow and read other columns in the March 2569 Bank Finance Journal, Issue 527, in digital format: https://goo.gl/U6OnIi

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