Ongoing conflict in the Middle East might have a direct impact on India's economy. According to NITI Aayog, the Iran war poses risks to New Delhi's trade and macroeconomic landscape, putting pressure on the current account deficit (CAD) and the exchange rate.In its quarterly report Trade Watch Oct–Dec (Q3) FY 2025-26, released on Monday, the policy think tank said that instability in the region is also slowing down talks on the India–Gulf Cooperation Council (GCC) Free Trade Agreement (FTA). This, in turn, is affecting efforts to widen India’s trade base and improve access to new markets.At the release of the report, NITI Aayog Vice Chairman Suman Bery said that trade deals work both ways.

“Let us be clear that FTAs are not a one-way street, nor should they be, which is to say that in the way that we are seeing them as a tool for market access, others are seeing it as a tool for market access too,” he said.

Commenting on India's business front, Bery highlighted that merchandise trade has remained steady despite global uncertainty. He also noted that services trade has shown strong performance during the “very confusing year” of 2025.

He further pointed out the role of imports in making the economy more competitive. “For trade economists, imports matter much more than exports. It is imports that force you to be competitive, so we should welcome the imports as much as we welcome the market access,” he said.Bery added that India’s macroeconomic stability remains strong, with the economy growing at an average of 6% over the past 20 years.The report also focused on the gems and jewellery sector, suggesting a shift towards higher-value exports.

It called for design-led manufacturing, cluster-based research and development, and promotion of GI-branded products, especially in lightweight, fashion and men’s jewellery.“India's gems and jewellery sector should strengthen trade facilitation and raw material access – align FTAs, streamline duty drawback/refunds, expand IIBX access, and improve raw material supply to cut input costs and boost MSME margins,” the report said.It also recommended easier access to finance for MSMEs through collateral-free loans, credit guarantees, interest subvention, export factoring and supply chain finance.