India’s Structural Reforms: Opportunities and Risks

Key Updates

1. Structural reforms

The Government of India constituted three high level Reform Panels to prioritize and fast-track structural reforms affecting land, labor, GST simplification & implementation protocols, single-window clearances and sectoral ease-of-doing-business bottlenecks. The Panels have a mandate to produce a scoreboard of “quick wins” and coordinated state-center reforms.

The panels are aiming to reduce fragmentation across ministries/states and to convert MoUs into executable projects.

Implication: If the effort succeeds at delivering concrete procedural changes (single-window approvals, standardized land/permit templates), project timelines for large foreign investors could shorten materially, lowering build-time and capex risk.

2. Indian naval visit to Japan

India’s indigenously built stealth frigate INS Sahyadri made a port call to Sasebo, Japan on 28 October 2025, receiving a formal welcome from the Japan Maritime Self-Defense Force. The visit underscores growing India–Japan maritime interoperability and signals closer operational cooperation in the Indo-Pacific (joint exercises, port visits, information-sharing). The maritime security partnership underpins corridors for trade, critical-mineral shipping and energy logistics.

Indian Navy termed the visit a symbol of “India-Japan strategic alignment.”

3. Japan-anchored investment window

The ¥10 trillion mobilization, and active prefecture-to-state MoUs create multiple entry points for Japanese companies, and financiers in manufacturing, EV supply chains, data-center and green hydrogen projects. State-level engagement (Haryana, Maharashtra, Telangana, etc.) signals faster land, power, subsidies and approval pipelines for early movers. Japanese financial institutions are active in project financing and green-transition deals. These flows are accelerating deal-making on the ground.

 4. Modi’s virtual ASEAN participation

In late October, Prime Minister Modi attended the ASEAN Leaders’ Summit virtually. Reporting attributed the unusual decision (citing Modi’s penchant for attending multilateral summits, in-person) to domestic political priorities (Bihar assembly elections) and to avoiding potentially awkward bilateral optics in Kuala Lumpur (including a possible in-person interaction with President Trump). It signals New Delhi’s preference for low-risk diplomacy while prioritizing domestic political timetables.

5. Bihar legislative assembly election

Eastern state Bihar’s assembly election is set in November. Bihar is politically consequential: it is large, electorally influential, and sensitive to agrarian and employment concerns. The election will shape center-state relations, policy continuity on subsidies and labor reforms, and short-term market sentiment — especially for sectors with substantial presence in the state (infrastructure, consumer goods, textiles).

6. Semiconductor, electronics & green energy cooperation with Singapore

Singapore entities are looking at India based OSAT (Outsourced Semiconductor Assembly and Test) pilot projects, packaging partnerships and workforce skilling. Semiconductor investments are focusing on mid-stack ecosystem (test, packaging, tooling) rather than headline fab projects — a pragmatic, faster-to-implement approach.

Implication: Opportunity to plug into these near-term opportunities (test equipments, specialty chemicals, precision tooling) with shorter payback profiles than greenfield fabs.

7. Afghan engagement

The bilateral discussions are narrowly focused on project continuity (power line, road links), consular issues and a limited framework to protect Indian-funded assets and personnel involved. India is pragmatically preserving future connectivity options to Central Asia.

8. India–EU FTA talks accelerate

Negotiations with the EU advanced on several technical chapters (customs facilitation, digital trade standards, certain services disciplines and sustainable-trade provisions). The discussion is focused on technical alignment (regulatory equivalence, customs modernization) rather than immediate tariff liberalization on politically sensitive agricultural lines.

This reflects a tactical pivot: both sides prioritize regulatory and services chapters that unlock investment flows ahead of broad tariff deals.

Implication: European investors/exporters may gain clearer entry rules for clean-tech, pharmaceuticals and financial services: this opens EU co-investment and co-sourcing partnership possibilities for Japan-India joint ventures.

9. China’s WTO complain against India

On 15 October 2025, China lodged a formal WTO complaint against India, alleging that New Delhi’s Production-Linked Incentive (PLI) scheme for electric vehicles and batteries grants domestic firms an unfair advantage through localization requirements and discriminatory subsidies. Beijing claims it violates WTO rules on national treatment and import-substitution. The move reflects China’s anxiety over India’s rising push for manufacturing self-reliance and supply-chain diversification in sectors long dominated by Chinese producers. Geoeconomically, Beijing aims to deter India’s industrial ascent, while New Delhi views the challenge as proof that its EV and clean-tech ambitions are beginning to unsettle the established Asian production order.

Notes for the investors

1. Implementation risk is the key

The success metric is not the MoU announcement but the speed and reliability of implementation (land allocation, grid connection, workforce availability, regulatory consistency). Reform panel outcomes and state cooperation will materially affect project viability.

Actionable: Include implementation-lead KPIs in any MoU negotiations and insist on central-and-state-level commitments (escrowed approvals, timelines) before firm commitments.

2. Competitive & partnership dynamics

EU and Singapore engagement intensify competition in services, semiconductors and green sectors. That said, these actors also create partnership windows (co-financing, technology licensing). Joint trilateral consortia (Japan–India–Singapore or Japan–EU–India) can be structurally attractive.

Practical recommendations (next 2-4 months)

Prioritize ‘plug-and-play’ opportunities: Target OSAT/ATMP, test equipment, battery-ancillary lines, and mid-stack semiconductor roles where project gestation is shorter and ROI timetables are acceptable.

Implementation-first diligence: When negotiating MoUs, require concrete KPIs (land allotment, PPA tenor, labor skilling commitments) and timelines; seek JBIC/NIIF co-finance or state guarantees to de-risk execution.

Form trilateral consortia: Where competition from EU/Singapore is strong, think trilateral JV models.

Shape the reform trajectory: Use industry associations (JETRO, CII, FICCI) to input into the Reform panels’ quick-wins list; corporate representation can accelerate regulatory support.