This was a busy week for anyone who does business with India. A new free trade agreement came into force, the Reserve Bank of India explained why it raised interest rates for the first time since 2023, and fresh data showed business activity at a four-month high even as hiring stalled. Here is what happened and what it means for diaspora businesses and families.
At a glance
- India–New Zealand trade deal: in force since 20 October, with duty-free access to New Zealand for all Indian exports.
- Interest rates: RBI repo rate at 5.50% after a 25 basis point rise on 7 October; minutes published on 21 October.
- Inflation: 5.54% in September, up from 4.83% in August, with food inflation at 7.74%.
- Business activity: HSBC flash composite PMI 56.7 in October, the strongest since June.
- Rupee and oil: the rupee was trading around ₹95 to the US dollar on 27 October, with Brent crude around $115 a barrel.
1. India’s trade deal with New Zealand is now in force
The India–New Zealand free trade agreement came into force on 20 October 2026, coinciding with Dussehra. It was signed in New Delhi on 27 April and ratified by both countries in September.
- Goods: every Indian export to New Zealand now enters duty-free. New Zealand’s tariffs were already low, at up to 10%, but sectors such as textiles, clothing, leather, engineering goods and processed food gain an edge over competitors.
- What India protected: dairy, sugar, edible oils and some other farm products are excluded from India’s tariff cuts.
- Investment: New Zealand has committed to facilitate around US$20 billion of investment in India over 15 years.
- People and services: the agreement opens a wide range of services sectors and, according to the Commerce Ministry, provides around 6,000 visas a year for Indians, including temporary employment visas for skilled professionals and working-holiday visas.
Trade between the two countries is still small, at about US$1.15 billion in 2025–26, which is exactly why there is room to grow. The large Indian community in New Zealand is well placed to act as a bridge. If you export to New Zealand, check that your goods meet the agreement’s rules of origin and ask your importer to claim the preferential rate.
2. Why the RBI raised interest rates
Minutes published on 21 October showed that all six members of the Monetary Policy Committee voted on 7 October to raise the repo rate by 25 basis points to 5.50%. It was the RBI’s first rate rise since February 2023, and the bank changed its stance to “calibrated tightening”, so near-term cuts look unlikely.
The reasons are high oil prices linked to the conflict in West Asia, a weaker rupee, and rising inflation. Official figures released on 12 October showed consumer price inflation at 5.54% in September, the highest since October 2024, with food prices up 7.74%. The RBI now expects inflation of 5.2% for the 2026–27 financial year.
What it means: borrowing in India is getting more expensive, so expect higher rates on business loans and home loans, especially floating-rate ones. On the other side, deposit rates may rise, which can make rupee fixed deposits more attractive for non-resident Indians (NRIs) with NRE or NRO accounts.
3. Business activity is up, but hiring has stalled
The HSBC flash India PMI, published on 23 October, showed the private sector growing at its fastest pace in four months. The composite index rose to 56.7 from 55.9 in September (anything above 50 means growth). Services led the way at 56.2, while manufacturing eased slightly to 54.9.
- Export orders grew at their fastest pace in six months, with manufacturers reporting stronger demand from the US, the UK, West Asia and Bangladesh.
- Cost pressures eased: input cost inflation was the lowest in almost a year.
- Hiring stalled: services employment was flat, ending a nine-month run of job growth, and factory hiring rose only slightly.
Other data pointed the same way. Output in India’s eight core industries rose 7.9% in September, with electricity up 11.4% and refinery products up 10.3%, and bank credit is growing faster than deposits.
4. The rupee and oil prices
The rupee was trading around ₹95 to the US dollar on 27 October. It is a little stronger than in early October, when it fell to about ₹96.8 after the rate decision, close to its all-time low. Brent crude was around $115 a barrel, and high oil prices remain the biggest pressure on India’s import bill and on the rupee.
What it means: a weak rupee stretches money sent home further, which matters with Diwali on 8 November. It also makes Indian goods and services cheaper for overseas buyers. But it raises the cost of anything India imports, from fuel to electronics, and exchange rates can move quickly. If you are making a large transfer or paying a supplier, compare rates and fees before you send money, and think about fixing a rate in advance for big invoices.
5. Trade talks with the EU and the US
Commerce and Industry Minister Piyush Goyal spent the week in Europe, leading an industry delegation to Germany and then visiting the Netherlands from 24 to 27 October. India and the European Union concluded negotiations on their trade agreement in January 2026, and ministers have said they aim to sign it by the end of the year, with the deal taking effect in 2027. Until it is signed and ratified, nothing changes for EU–India trade.
There was no new announcement on a US–India trade deal this week. Our article Is a US–India trade deal finally close? explains where talks stand and what to do in the meantime.
What to do this week
- Exporters to New Zealand: check your products’ tariff lines and rules of origin, and tell your buyers the new zero-duty rates are available.
- Borrowers in India: check whether your business or home loans are on floating rates, and plan for higher repayments.
- Sending money for Diwali: compare exchange rates and fees across providers before you transfer.
- Trading with Europe or the US: keep your supplier origin records up to date so you can claim lower tariffs quickly when deals take effect.
Where to start
Looking for partners in India, New Zealand or anywhere else in the diaspora? Browse business deals, post your own, or find professionals such as accountants, lawyers and customs brokers who work across borders.
Official sources
- Government of India: Department of Commerce
- Reserve Bank of India
- Ministry of Statistics and Programme Implementation (inflation data)
- S&P Global PMI (HSBC India PMI)
Last updated 27 October 2026. Exchange rates and oil prices change daily. Based on official releases from the Commerce Ministry, RBI and MoSPI, and on HSBC and S&P Global flash PMI data as reported in the Indian press.