What’s in Today’s Article?

• RBI Repo Rate Cut 2025 Latest News
• Key Highlights of the MPC Meeting
• Reason Behind RBI's Decision to Cut Repo Rate
• RBI Repo Rate Cut 2025 FAQs

RBI Repo Rate Cut 2025 Latest News

• The Reserve Bank of India’s Monetary Policy Committee cut the repo rate by 25 basis points to 6% and lowered the FY2026 growth forecast from 6.7% to 6.5%, citing global uncertainties from ongoing trade wars. 
• RBI Governor warned that new tariffs could hamper domestic growth and exports, though inflation risks remain limited due to falling commodity and crude oil prices.

Key Highlights of the MPC Meeting

• RBI Cuts Repo Rate Amid Global Uncertainties
  • MPC reduced the repo rate by 25 basis points to 6%, marking the second consecutive rate cut. 
    • The repo rate is the interest rate at which commercial banks take or borrow money from the Reserve Bank of India.
  • This move aims to support economic growth amid increasing global trade tensions and uncertainties arising from reciprocal tariffs announced by the US.
• Monetary Policy Stance Turned Accommodative
  • The MPC also shifted its stance from ‘neutral’ to ‘accommodative’, signalling the possibility of further rate cuts in the future. 
    • A neutral stance gives the central bank flexibility to adjust rates based on inflation and growth conditions. 
    • An accommodative stance focuses on promoting economic growth by lowering interest rates. 
    • In contrast, a withdrawal of accommodation aims to control inflation through rate hikes or tighter monetary policies.
  • RBI Governor clarified that this stance indicates only two possible directions ahead — either status quo or further cuts.
• Growth Forecast Lowered
  • The RBI revised India’s GDP growth forecast for FY2026 down to 6.5% from 6.7%, citing the negative impact of trade wars and policy uncertainties on global and domestic economic activity.
• Inflation Risks Under Control
  • While global uncertainties pose risks to inflation through possible currency pressures and imported inflation, the fall in commodity and crude oil prices is expected to keep domestic inflation within control. 
  • The CPI inflation forecast for FY2026 was revised down to 4% from 4.2%.
  • As per the RBI, growth concerns outweigh inflation worries at present. 
  • Trade frictions are expected to hurt investment, consumption, and net exports, thereby impeding domestic economic momentum.
• Additional Measures Announced by the RBI
  • Introduction of forward contracts in Government securities
  • Access of SEBI-registered non-bank brokers to NDS-OM
  • Comprehensive review of trading and settlement timings across various market segments
  • Introduction of ‘bank.in’ exclusive Internet Domain for Indian banks and ‘fin.in’ domains for other non-bank entities
  • Enabling Additional Factor of authentication in cross-border Card Not Present transactions

Reason Behind RBI's Decision to Cut Repo Rate

• Global Trade Tensions Drive Caution
  • The US administration’s 26% reciprocal tariff on Indian goods and rising global trade tensions have increased economic uncertainty, prompting a cautious and proactive monetary response from the RBI.
• Risks to Growth Take Priority
  • The MPC emphasized that growth remains fragile, especially after a weak first half in FY2024-25, and now faces fresh risks due to the global slowdown. 
  • Domestic recovery needs continued support, even though inflation is under control.
• Improved Inflation Outlook Enables Policy Support
  • Falling food inflation and a decisive improvement in the inflation outlook have given the MPC the room to prioritize non-inflationary, sustainable growth.

RBI Repo Rate Cut 2025 FAQs

Q1. Why did RBI cut the repo rate in 2025?

Ans. Due to global trade tensions and low inflation, RBI cut rates to support fragile domestic growth.

Q2. What is the new RBI repo rate?

Ans. The RBI reduced the repo rate by 25 basis points to 6% in the latest Monetary Policy Committee meeting.

Q3. What is RBI's FY2026 GDP growth forecast?

Ans. RBI lowered India’s GDP growth forecast for FY2026 from 6.7% to 6.5% due to global economic uncertainties.

Q4. What does an accommodative stance mean?

Ans. An accommodative stance signals RBI’s intent to support growth by maintaining or further reducing interest rates if needed.

Q5. Is inflation a concern for RBI now?

Ans. No, RBI noted that inflation is under control, aided by falling commodity and crude oil prices.

Source: IE | ToI | LM

What’s in Today’s Article?

• Aircraft Objects Bill Latest News
• Background
• Aligning with Global Aviation Norms
• The Need for Legal Reform
• Legal Certainty for Lessors and Airlines
• Industry Reception and Remaining Concerns
• Boost to India’s Aviation Ecosystem
• Conclusion
• Protection of Interests in Aircraft Objects Bill FAQs

Aircraft Objects Bill Latest News

• Recently, Parliament passed the Protection of Interests in Aircraft Objects Bill, 2025.

Background

• Passed by Parliament in April 2025, Protection of Interests in Aircraft Objects Bill establishes a standardized legal mechanism to manage disputes between airlines and aircraft lessors. 
• It aligns India’s domestic aviation framework with global practices under the Cape Town Convention and Protocol. 
• Amid growing aircraft fleet expansions and recent airline bankruptcies, the Bill aims to create a more investor-friendly environment, particularly in light of past insolvency cases involving GoFirst and Kingfisher Airlines.

Aligning with Global Aviation Norms

• The Bill marks India’s full implementation of the Cape Town Convention and Protocol, a United Nations treaty adopted by the International Civil Aviation Organization (ICAO) in 2001. 
• India acceded to the treaty in 2008 but lacked a domestic enforcement mechanism. The new legislation addresses this gap by giving the treaty legal force in India.
• Key provisions include:
  • Empowering the Directorate General of Civil Aviation (DGCA) as the Registry Authority.
  • Mandating record submission of airline dues.
  • Granting lessors the right to repossess aircraft within two months of default.
  • Overriding conflicting domestic laws such as the Insolvency and Bankruptcy Code (IBC).

The Need for Legal Reform

• The need for this legislation became urgent after complications in past airline insolvency proceedings. Notably:
  • GoFirst’s 2023 insolvency left lessors unable to reclaim aircraft due to court-imposed moratoriums.
  • Similar issues arose during the closure of Kingfisher Airlines and in disputes with SpiceJet.
• India’s inconsistent application of the Cape Town Protocol led to its low compliance score (50) in the Aviation Working Group’s index. 
• The passage of this Bill has already helped raise the score to 62, with further improvement expected.

Legal Certainty for Lessors and Airlines

• By clearly defining remedies and dispute resolution timelines, the Bill brings a new level of predictability and transparency for aircraft leasing contracts. 
• According to Civil Aviation Minister Ram Mohan Naidu, the Bill could reduce leasing costs by 8-10%, which may indirectly benefit passengers by lowering airfares.
• The legislation also aims to strengthen GIFT City (Gujarat International Finance Tec-City)as a hub for domestic aircraft leasing by simplifying legal procedures and encouraging foreign lessors to operate in India.

Industry Reception and Remaining Concerns

• While the Bill has been welcomed as a progressive move, the international leasing industry remains cautious. Concerns include:
  • India's complex taxation system, which often imposes additional burdens on foreign lessors.
  • Lack of clarity regarding Special Purpose Vehicles (SPVs) and their tax obligations under Indian law.
  • Scepticism about claims of lower airfares, as market dynamics, rather than lease rates, primarily determine ticket prices.
• Executives from major lessors noted that airline creditworthiness and growth prospects, particularly for carriers like IndiGo and Air India, will continue to be more influential in shaping leasing terms than legal reforms alone.

Boost to India’s Aviation Ecosystem

• Despite these reservations, the Bill is expected to foster increased confidence among investors and lessors. By mitigating risk and offering legal clarity, it may facilitate:
  • More competitive leasing terms for start-up airlines and regional operators.
  • Streamlined aircraft repossession processes, reducing litigation delays.
  • Improved compliance with global aviation norms, enhancing India’s standing in the international aviation community.

Conclusion

• The Protection of Interests in Aircraft Objects Bill, 2025, is a pivotal reform in India’s aviation sector. 
• It modernizes the legal landscape for aircraft leasing, offers safeguards to creditors, and seeks to restore global confidence in India’s aviation infrastructure. 
• While implementation challenges remain, particularly around taxation and regulatory consistency, the Bill signifies a bold step toward transforming India into a major aircraft leasing and aviation hub.

Protection of Interests in Aircraft Objects Bill FAQs

Q1. What is the Protection of Interests in Aircraft Objects Bill, 2025?

Ans. It is legislation aimed at resolving disputes between airlines and lessors and aligning India’s aviation law with international standards.

Q2. What global treaty does this Bill implement in India?

Ans. It implements the Cape Town Convention and Protocol, adopted by ICAO.

Q3. Why was this legislation considered urgent?

Ans. It addresses past complications in aircraft repossession during airline insolvencies like GoFirst and Kingfisher.

Q4. What is the role of DGCA under this Bill?

Ans. The DGCA is designated as the Registry Authority to oversee aircraft registration, de-registration, and compliance.

Q5. Will the Bill reduce airfares in India?

Ans. While it may reduce leasing costs, experts say airfares are mainly driven by market demand and supply.

Source: TH

What’s in Today’s Article?

• US-China Trade War 2025 Latest News
• A Brewing US-China Trade War
• US-China Trade Snapshot
• Escalating Tariff War
• Leverage in the Trade War – A Comparison
• Problems with Tariffs
• US-China Trade War 2025 FAQs

US-China Trade War 2025 Latest News

• President Donald Trump temporarily suspended most tariffs for 90 days amid a global market crisis, while sharply increasing tariffs on Chinese imports to 125%. This move appeared to shift the broader trade conflict into a direct U.S.–China standoff.
• The countries included in the tariff pause will now face a reduced 10% tariff, as the U.S. plans individual negotiations with each nation.

A Brewing US-China Trade War

• A full-scale trade conflict is looming as President Trump threatens over 100% tariffs on Chinese goods, effectively creating a trade embargo. 
• This move could spark a dangerous decoupling between the world's largest economies.

The Critical Question

• The critical question remains: will these measures hurt China more than the US? 
• While Trump is open to negotiations with other countries, the long-term impact of this policy gamble is still uncertain.

US-China Trade Snapshot

• Total trade between the US and China stood at $582.4 billion in 2024.
  • US exports to China: $143.5 billion (↓2.9% from 2023)
  • US imports from China: $438.9 billion (↑2.8% from 2023)
• US experiences a trade deficit of approx. $295 billion, around 1% of US GDP, contrary to Trump’s exaggerated $1 trillion claim.

Escalating Tariff War

• Both countries remain unwilling to back down. China vows to “fight to the end” and has imposed retaliatory tariffs.

Immediate Consequences of Tariffs

• High costs could make imports from China prohibitively expensive.
• The US may struggle due to dependence on Chinese goods, including:
  • Critical drug ingredients
  • Rare earth elements (vital for defense tech)
  • High-end consumer products
• Washington might be forced to find alternative suppliers or reduce consumption.

US Strategy: Delay with China, Engage the Region

• The US is prioritizing talks with Japan, South Korea, and others in China’s neighborhood.
• A negotiation with Beijing may come later, if at all.

Beyond Tariffs: Core Trade Concerns

• The main US grievances extend beyond tariffs:
  • Currency manipulation: China keeps the renminbi undervalued to boost exports.
  • Non-tariff barriers: Restrictions on foreign firms in sectors like consumer banking and high-end manufacturing.

Leverage in the Trade War – A Comparison

• The US imports far more from China than vice versa, giving it nominal leverage.
• Meanwhile, China’s economy still depends heavily on exports due to weak domestic consumption.

China’s Strategic Advantages

• Political Stability - Unlike Trump, Xi Jinping faces no elections or significant internal opposition.
• Economic Planning - China is rolling out a stimulus package combining fiscal and monetary measures.
• Long-Term Strategy - Beijing can continue fiscal stimulus longer and strengthen domestic consumption, which could absorb surplus if exports dip.

US Weaknesses and Political Pressure

• Consumer Impact - Americans rely on Chinese imports for everyday essentials – clothing, shoes, electronics. Tariff costs are passed on to consumers, especially affecting low-income groups.
• Limited Fiscal Tools - Washington has few options left other than extending Trump-era corporate tax cuts.

China’s Internal Narrative and Xi’s Image

• The Chinese view the trade war as US bullying, and Xi cannot afford to appear weak.
• Domestic rhetoric and nationalism make it harder for China to back down unless the US makes a move first.

Problems with Tariffs

• Tariffs: Difficult to Roll Back
  • Tariffs imposed by Trump during his first term remained under Biden and were even increased.
  • Once implemented, tariffs tend to become permanent, making them hard to dismantle politically.
• Little Economic Benefit to the US
  • A major academic study found that Trump’s tariffs did not significantly impact employment, including in steel plants.
  • Retaliatory tariffs by China and others hurt American farmers, with job losses in agriculture.
• Global Market Implications
  • A prolonged trade war could push China to redirect exports to new markets.
  • There’s a high chance that China will dump surplus goods in the EU and India, affecting local industries there.

US-China Trade War 2025 FAQs

Q1. Why did the US increase tariffs on China in 2025?

Ans. To pressure China amid trade tensions; Trump aims to isolate China while negotiating individually with other trade partners.

Q2. What is the new US tariff rate on Chinese goods?

Ans. The US raised tariffs on Chinese imports to 125%, effectively creating an embargo-like trade barrier.

Q3. How much is the US trade deficit with China?

Ans. The US trade deficit with China stands at approximately $295 billion, about 1% of US GDP.

Q4. What are the risks of these tariffs to the US?

Ans. US consumers face higher prices, especially for essentials; the economy lacks tools to offset tariff-driven inflation.

Q5. What are China’s strengths in the trade war?

Ans. China has political stability, strong economic planning, and room for prolonged fiscal stimulus to counter export losses.

Source: TH | IE | BBC