India

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Key Developments in India’s Budget 2026: Rural Growth, FMCG Demand, and Agricultural Modernization

Jan. 15, 2026 | Macroeconomics & Growth

Stakeholders emphasize targeted fiscal and policy measures in India’s Union Budget 2026 to sustain consumption growth, bolster rural development, and modernize agriculture.

The fast-moving consumer goods industry urges the government to maintain consumption growth and advance rural development through increased capital expenditure on infrastructure, targeted tax reforms—including reducing GST on mass-consumption home care products from 18 percent to 5 percent—and policies that foster entrepreneurship, domestic manufacturing, innovation, and secure strategic supply chains.

**Rural demand for FMCG products has outpaced urban consumption for nearly seven consecutive quarters, making rural-focused development measures crucial.**
Industry leaders expect the full benefits of GST 2.0 implementation to materialize in the March quarter of 2026, potentially driving further growth in household consumption beyond urban centers.

**Private consumption accounts for more than 56 percent of India’s GDP, according to FICCI’s pre-budget memorandum, so trends in household spending directly influence economic performance.**
Facing inflationary pressures and monsoon variability, the FMCG sector calls for enhanced agricultural and dairy infrastructure and accelerated adoption of modern technologies in rural markets to stabilize supply and demand.

**Agriculture employs about 46 percent of India’s workforce but contributes only 15 percent to GDP, reflecting persistent low productivity.**
Small landholdings (86 percent classified as marginal and small), irrigation coverage on roughly half of cultivated land, crop yields below global benchmarks, and limited market access for small farmers all constrain output. Existing government measures—direct financial aid, expanded market linkages, crop insurance, and credit provision—have improved conditions but require sustained policy focus and structural reforms for medium- and long-term growth.

**Budgetary allocations for agriculture rose to an average of 3 percent of total expenditure in FY21–25, up from 1.7 percent in FY11–15, yet research and development funding has stalled at about 0.2 percent.**
The FMCG industry urges the government to prioritize productivity enhancements by broadening technology adoption, boosting R&D in climate-resilient agriculture, and implementing targeted measures to reduce post-harvest losses, which currently range between 15 percent and 20 percent.

**High-value agri-allied sectors such as fisheries and livestock delivered compound annual growth rates of 8 percent and 6 percent respectively during FY20–24, offering significant potential to increase rural incomes and labor productivity.**
Agri-processing—which represents about 12 percent of organized employment—requires further investment in transportation and storage infrastructure. Agricultural exports account for approximately 12 percent of India’s goods exports and grew at a 6 percent CAGR from FY21–25, with emerging segments like horticulture and floriculture presenting new opportunities.

**While deep-rooted structural issues limit the feasibility of sweeping reforms, stakeholders believe that incremental changes—particularly a stronger emphasis on R&D and support for entry into high-value segments—can meaningfully raise farmer incomes, narrow rural-urban income disparities, and strengthen India’s agricultural economy in line with the vision of a Viksit Bharat.**

Silver and Gold Rally to All-Time Highs Amid Global Uncertainty

Jan. 15, 2026 | Financial System

Surging investor demand and global uncertainties have propelled silver and gold to unprecedented price levels.

**Silver climbed to a record above $88 an ounce and later topped $90 by January 14, 2026.**
Gold spot prices reached $4,625 an ounce, with March futures at $4,635.29. US gold futures rose 0.5% to $4,624 an ounce, while spot gold traded at $4,615.85. In Mumbai, silver spot surged to ₹263,062 per kilogram, MCX March futures hit ₹279,419 and the intraday high reached ₹281,649. Gold in Mumbai closed at ₹140,284 per 10 grams, and February MCX futures traded at ₹142,858, with February contracts up 0.36% at ₹142,760.

**These gains reflect several key factors.**
Softer-than-expected US inflation data, with the core Consumer Price Index rising 0.2% month-on-month against forecasts of 0.3%, bolstered expectations of Federal Reserve rate cuts. Escalating geopolitical tensions—particularly the crisis in Iran and widespread civil unrest—have driven investors toward safe havens. US political developments, including President Trump’s calls for rate cuts, heightened scrutiny of Fed Chair Jerome Powell and anticipation of a Supreme Court ruling on Trump-era tariffs, have further supported precious-metals demand.

**Tightening inventories amid robust industrial and investment demand have reinforced silver’s upward momentum.**
In the jewellery sector, observers report a 20–30% rise in demand for lightweight gold pieces driven by wedding and festive purchases. Consumers are increasingly treating both metals as stores of value during uncertain times.

**Analysts point to key technical levels and outlooks for further movement.**
After gold broke through the $4,570 resistance, projections now target $4,745–4,750 and a longer range of $4,966–4,970. Silver appears set to challenge $88–$93 an ounce, with strong support at $70. On the MCX, analysts cite gold support around ₹141,700 and upside targets of ₹143,000 to ₹144,200. Silver buying ranges center on ₹266,000–₹272,000, aiming for ₹280,000–₹285,000.

**Other precious metals have also gained ground.**
Platinum traded at $2,388.50 and palladium at $1,919.50 an ounce. Year-to-date through early 2026, gold has appreciated by 7%, white precious metals by over 24%, and platinum and palladium by more than 16.5%.

**In major Indian cities, retail gold prices vary by carat and location, generally ranging between ₹106,000 and ₹114,500 per 8 grams.**

Monitored Intelligence for India - Jan. 15, 2026

News
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178

Government
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Embassy
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1

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0

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Border to trade, BJP raises key points with Chinese delegation

Times of India | English | News | Jan. 15, 2026 | Shifting Geopolitical Alliances

The Bharatiya Janata Party (BJP) engaged with a visiting Communist Party of China (CPC) delegation in New Delhi to address key issues impacting India-China relations. The discussion, sought by the Chinese embassy, covered border tensions, trade concerns such as export restrictions on tunnel boring machines, and rare minerals. BJP representatives emphasized that these issues hinder the improvement of bilateral ties, while CPC expressed interest in resuming party-to-party interactions, which had been stalled since 2019.

This meeting marked a significant political engagement after over six years, seen amid signs of a potential thaw in bilateral relations. Meetings were also held with the RSS and Congress, the latter drawing criticism of BJP from Congress for alleged secrecy and hypocrisy, particularly related to a prior MoU between BJP and CPC. BJP rebutted these claims, stating transparency and highlighting past Congress interactions with Chinese officials during diplomatic standoffs.

Congress demanded more information about the closed-door talks, accusing BJP of a weak approach to China, while BJP defended its stance, citing improved India-China relations including resumption of flights and trade efforts. The CPC delegation was led by Sun Haiyan and included Chinese ambassador Xu Feihong, and the meetings were approved by India's Ministry of External Affairs.

LAC needs constant vigilance, India rejects CPEC 2.0: General Upendra Dwivedi

The Hindu | English | News | Jan. 15, 2026 | Geopolitical Conflict and Disputes

Army Chief General Upendra Dwivedi emphasized the need for constant vigilance along the Line of Actual Control (LAC) despite ongoing efforts by India and China to improve military trust. He highlighted a significant understanding reached on October 21, 2024, following multiple high-level meetings, including those between top leaders in Kazan and Tianjin, as well as dialogues involving Special Representatives, Working Mechanism for Consultation and Coordination (WMCC), and bilateral ministerial talks. These interactions have fostered a mutual commitment to maintaining border calm by resolving minor issues locally through open communication channels.

General Dwivedi reaffirmed India's rejection of the 1963 Pakistan-China Shaksgam Valley agreement, calling it illegal and not approved by New Delhi. He also dismissed the joint China-Pakistan statement on CPEC 2.0 as an unlawful act. The Indian Ministry of External Affairs has issued statements supporting this stance.

On future military capabilities, the Army Chief stressed the importance of establishing a dedicated rocket-missile force in India, citing similar forces in Pakistan and China. He noted advancements such as the Pinaka rocket system, which has been tested with a 120 km range and is planned to extend up to 300–450 km. Mentioning other systems like Pralay and BrahMos, General Dwivedi signaled a strategic focus on enhancing India’s long-range precision-strike and missile capabilities.

Ministry of Defence to consider IAF’s 114 Rafale jet acquisition proposal

Hindu Business Line | English | News | Jan. 15, 2026 | UndeterminedMergers & Acquisitions

The Ministry of Defence is evaluating a proposal for the ₹3.25 lakh crore procurement of 114 Rafale fighter jets from France. This proposal, submitted by the Indian Air Force, includes plans to manufacture a significant portion of these jets domestically, targeting around 30 percent indigenous content, while acquiring over 12 aircraft in fly-away condition from France.

The Ministry of Defence leadership is expected to deliberate on the proposal within the week, with considerations around integrating indigenous weapons on the Rafale platforms under a government-to-government agreement. India is pursuing this acquisition amid offers from the US and Russia for their fifth-generation fighters.

Currently, the Indian Air Force operates 36 Rafales, which saw action in Operation Sindoor, and the Indian Navy placed an order last year for 26 naval Rafale variants. If the Ministry of Defence approves the proposal, it will require clearance from the Cabinet Committee on Security, potentially marking the largest defence deal in India's history.

This acquisition is driven by the Indian Air Force's fighter fleet falling below mandatory strength levels amid security concerns from China, Pakistan, and recent developments in Bangladesh, which collectively have heightened India's strategic vulnerabilities.

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