Policy , Regulation and Trade Issues - Newspaper Summary

 The sources highlight an intense period of activity in policy, regulation, and trade issues in October 2025, marked by critical trade disputes, regulatory overhauls in finance and technology, and significant geopolitical maneuvers influencing market dynamics.

I. Global Trade Disputes and Geopolitical Maneuvers

India's WTO Dispute with China

A major development is China formally filing a complaint at the World Trade Organization (WTO) against certain Indian incentive schemes.

• China's Complaint: Beijing requested consultations with India through the WTO’s Dispute Settlement Body, alleging that three key Indian schemes violate global trade rules:
  • The Production Linked Incentive (PLI) National Programme on Advanced Chemistry Cell (ACC) Battery Storage Scheme.
  • The PLI Scheme for the Automobile and Auto Component Industry.
  • The Scheme to Promote Manufacturing of Electric Passenger Cars in India (EV passenger cars scheme).
• Alleged Violations: China argues these schemes are contingent upon the use of domestic over imported goods or otherwise discriminate against goods of Chinese origin. These measures allegedly violate India’s obligations under the SCM (Subsidies and Countervailing Measures) Agreement, the GATT 1994, and the TRIMs (Trade-Related Investment Measures) Agreement.
• India's Stance and Defense: Experts in India believe the goal of these schemes is not to discriminate, but rather to develop domestic manufacturing in new technology areas. Developing countries, particularly India, should maintain policy space to support their infant industries, although satisfying the conditions for defending production subsidies at the WTO would be necessary.
• WTO Appeals Process: The functionality of the WTO Appellate Body is currently compromised due to the US blocking the appointment of new judges, meaning China may struggle to secure a resolution through standard legal channels if the verdict is unfavorable to India.

India-US Bilateral Trade and Energy Negotiations

India and the US are nearing completion of a bilateral trade agreement (BTA) intended to slash current US tariffs on Indian exports to 15-16% from a punitive 50%.

• Tariff Reduction and Preconditions: The BTA aims to reduce the punitive levy of 25% imposed due to India's Russian oil purchases, along with the reciprocal 25% tariffs announced in April. However, the US has conditioned the deal on India stopping Russian oil imports.
• Energy Trade Concessions: India is considering gradually reducing purchases of Russian oil and is likely to allow higher imports of non-genetically modified (GM) American corn and soymeal into its markets, meeting key US demands. State-run oil marketing companies may be informally advised to diversify crude sourcing toward the US. Reliance Industries Ltd (RIL) has already increased buying of Middle Eastern crudes, signaling a potential shift away from Russian flows possibly due to Western pressure.
• GM Food Barrier: The Rajasthan High Court ruling prohibiting the sale, manufacture, distribution, or import of genetically modified (GM) food until FSSAI frames specific regulations poses a potential obstacle to the Indo-US trade talks, as Washington seeks market access for its GM corn and soybeans.
• Trade Timing: The finalization of the BTA is reportedly aimed for the ASEAN Summit later in October, although participation by both President Trump and Prime Minister Modi was unconfirmed at the time.

Other Global Trade and Geopolitical Factors

• US-China Tensions and Rare Earths: The US-China trade tensions are flaring again, partly due to China's clampdown on rare-earth exports, which are critical for high-tech manufacturing. The US is aggressively seeking alternative supply chain partners, including India, suggesting a global geopolitical shift influencing trade alliances. The US has committed to investing in domestic rare-earth production and purchasing output to withstand low-priced Chinese mineral influx.
• EU-India Strategic Agenda: The European Union (EU) member nations unanimously backed a new strategic agenda with India, focusing on significantly ramping up two-way ties in areas like defence, trade, technology, connectivity, and sustainability. Both sides are aiming to finalize a balanced, ambitious, and economically meaningful free trade agreement (FTA) by the end of the year.
• Global Fertilizer Suspension: China suspended exports of key fertilizers, likely for six months, which could trigger global shortages and lead to a 10-15% price increase due to tight global supplies. India is heavily dependent on China for these specialty fertilizers and is exploring alternative sources.

II. Domestic Policy and Financial Regulation

Financial Sector Regulatory Changes

• Expected Credit Loss (ECL) Model: The RBI has floated a draft circular proposing a transition from the "incurred loss" provisioning rule to a forward-looking Expected Credit Loss (ECL) framework for scheduled commercial banks, starting April 2027. Banks must classify assets into three stages and make forward-looking provisions based on potential credit losses, recognizing stress much earlier. Large private lenders are optimistic about managing the transition smoothly, supported by strong profitability, though public sector banks may face greater provisioning pressures.
• Corporate Debt and Insolvency: The effectiveness of the Bankruptcy and Insolvency Code of 2016 is noted to have been "watered down over the years" due to weak enforcement and frequent breaches of its strict time limits.
• Auditing and Corporate Law Reform: The government is likely to move a bill in the winter session to amend the Companies Act 2013, with amendments in Sections 141 and 144 being critical. The aim is to create an "enabling environment" for Indian Multi-Disciplinary Partnership (MDP) firms to compete with the Big Four audit companies, addressing issues like advertising bans, restrictions on MDPs, and fragmented licensing.
• Market Regulation (Sebi & NSE): SEBI is tightening its grip on insider trading due to a surge in illicit financial gains, expanding the definition of Unpublished Price Sensitive Information (UPSI) and ramping up investigations. The NSE CEO suggested that people trading in derivatives should have minimum net worth and expertise qualifications, aligning with SEBI's considerations for regulating this volatile market segment.
• GIFT City Tax Exemption Request: The GIFT City regulator (IFSCA) relayed a demand to the Finance Ministry that the Tax Collected at Source (TCS) be exempted on investments made by resident Indians into GIFT City funds. Fund managers argue this would simplify compliance, reduce friction, and channel more funds into the IFSC instead of foreign jurisdictions.

Technology and Infrastructure Regulation

• Cloud Computing Risk: The global 15-hour outage suffered by Amazon Web Services (AWS) highlighted the extreme interconnectedness of the internet, emphasizing the risk for firms, especially AI companies, that rely heavily on a few dominant cloud providers. This event serves as a warning for firms rapidly scaling for the AI era.
• Electric Vehicle (EV) Charging Restrictions: Draft provisions in the National Building Code (NBC) which restrict EV charging, specifically prohibiting it below the ground floor in residential and commercial buildings, are feared to hinder EV adoption. Industry players advocate for a more balanced approach focusing on robust safety designs like smart chargers and certified equipment, noting that internal combustion engine (ICE) fires are statistically more likely than EV fires.
• Digital Sovereignty and AI Governance: The Ministry of Electronics and Information Technology (MeitY) is pushing for India to become a "product nation" and encourages home-grown cyber security and digital products due to global geopolitics and the risk of foreign services being denied for strategic issues. The government is working on an AI governance policy and a data center policy, but currently does not wish to legislate on AI.

Policy Issues in Consumer, Welfare, and Migration

• GST Implementation Challenge: Nearly a month after GST rate cuts came into effect (September 22), small, unorganized retailers (many outside the GST system) remain a weak link in ensuring consumers receive the tax benefits, sometimes selling old inventory at printed prices rather than reduced rates.
• Toxic Cough Syrup Regulatory Gap: India has made strides in requiring medicines to be tested for contaminants before export, but the WHO official noted a "regulatory gap" as no such rule exists for syrups sold locally, following deaths linked to toxic cough syrups.
• US H-1B Visa Fee Clarification: New clarification from the USCIS indicates that the proposed $100,000 H-1B visa fee will not apply to Indian students already in the US who apply for a change of status, offering a "definite breather" for F-1 visa holders seeking employment.
• Right to Information (RTI) Erosion: The efficacy of the RTI Act is endangered by the Data Privacy and Protection (DPDP) amendment, which removed the public-interest overrider, potentially allowing privacy claims to trump public accountability. This shift risks citizens struggling to enforce transparency.