Mumbai, Jul 23 (PTI) Building more resilient trade partnerships present a strategic opportunity for India to deepen its integration with global value amidst rising uncertainties and geo-economic fragmentation, Reserve Bank's bulletin said on Wednesday.

It also said India's economic activities held up during June-July despite tariff policy uncertainties.

India is scheduled to sign a free trade agreement with the UK on Thursday. Prime Minister Narendra Modi has already left for London to witness signing of the comprehensive economic and trade agreement.

New Delhi is also in discussion with Washington for a India-US free trade agreement.

An article on 'State of the Economy' in the Reserve Bank's July Bullet said the global macroeconomic environment remained fluid in June and July so far amidst geopolitical tensions and tariff policy uncertainties.

"Domestic economic activity held up, with improving kharif agricultural season prospects, continuation of strong momentum in the services sector and modest growth in industrial activity," it said.

It further said that as intense negotiations are underway for closing trade deals before the new import tariff rates kick in from August 1, 2025, the focus is back on US trade policies and their spillover effects globally.

The average trade tariff rates are set to touch levels unseen since the 1930s, the article said.

Moreover, risk of imposition of new high tariffs looms large for additional sectors. The evolving pattern of global trade flows and supply chains are far from settled.

These uncertainties pose considerable headwinds to global economic prospects.

"Amidst rising trade uncertainties and geo economic fragmentation, building more resilient trade partnerships presents a strategic opportunity for India to deepen its integration with global value chains," it said.

The article also noted that the headline retail (CPI) inflation remained below 4 per cent for the fifth consecutive month in June driven by deflation in food prices.

System liquidity remained in surplus to facilitate a faster transmission of policy rate cuts to the credit markets.

The external sector remained resilient, backed by ample foreign exchange reserves and a moderate external debt-to-GDP ratio.

Easing inflation, improving kharif season prospects, front-loading of government expenditure, targeted fiscal measures and congenial financial conditions for faster transmission of rate reductions should support aggregate demand in the economy, going forward, it added.

The central bank said that views expressed in this article are those of the authors and do not represent the views of the Reserve Bank of India. PTI NKD CS HVA

Resilient trade partnerships as a strategic response to tariff uncertainty to deepen integration with global value chains. The Reserve Bank bulletin frames rising tariff policy uncertainty and geo economic fragmentation as elevating the importance of resilient trade partnerships, urging deeper integration with global value chains amid active free trade negotiations and historically high import tariff prospects; it also records domestic resilience-services momentum, improving kharif prospects, low headline inflation, surplus liquidity aiding monetary transmission, and a resilient external sector-concluding that easing inflation, targeted fiscal measures and congenial financial conditions should support aggregate demand.