{"id":80038,"date":"2025-12-28T11:00:35","date_gmt":"2025-12-28T05:30:35","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=80038"},"modified":"2025-12-29T12:02:06","modified_gmt":"2025-12-29T06:32:06","slug":"reading-the-economy-what-indias-economic-signals-show-in-2025","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/reading-the-economy-what-indias-economic-signals-show-in-2025\/","title":{"rendered":"Reading the Economy: What India\u2019s Economic Signals Show in 2025"},"content":{"rendered":"<h2><b>India Economic Signals 2025 Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Indian economy in 2025 has faced a mixed and uncertain phase.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Even as the government rolled out policy measures supportive of growth, their impact has been partly offset by domestic challenges and adverse global conditions, making the economic recovery uneven and fragile.<\/span><\/li>\n<\/ul>\n<h2><b>What Went Right for the Indian Economy in 2025<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The year began on a positive note for the Indian economy with a series of growth-supporting policy moves.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In February, PM Modi and US President Trump announced plans to work towards a India\u2013U.S. Bilateral Trade Agreement by the fall of 2025, raising expectations of improved trade and investment flows.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The same month, Union Finance Minister presented Budget 2025, which <\/span><b>reduced income tax rates and slabs<\/b><span style=\"font-weight: 400;\">, easing the tax burden for most taxpayers. The move was widely seen as a boost to <\/span><b>disposable incomes<\/b><span style=\"font-weight: 400;\"> and <\/span><b>consumer demand<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In September, the <\/span><b>GST<\/b><span style=\"font-weight: 400;\"> Council <\/span><b>simplified the indirect tax structure<\/b><span style=\"font-weight: 400;\"> by scrapping the 12% and 28% GST slabs and shifting most items to lower slabs\u2014from 12% to 5%, and from 28% to 18%\u2014helping reduce prices and improve consumption sentiment.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Further, in November, the Centre announced the implementation of the <\/span><b>four Labour Codes<\/b><span style=\"font-weight: 400;\">, expanding social security coverage to contract and gig workers and ensuring benefits such as higher minimum wages, strengthening worker welfare and formalisation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Overall, these measures signalled a policy push towards demand revival, tax rationalisation, and labour protection in 2025.<\/span><\/li>\n<\/ul>\n<h2><b>Trade Agreements That Strengthened India\u2019s Economic Outreach in 2025<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">2025 marked a strong year for India\u2019s trade diplomacy, with several major agreements concluded, implemented, or pushed close to completion.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>India\u2013UK Trade Deal<\/b><span style=\"font-weight: 400;\">: The United Kingdom\u2013India Comprehensive Economic and Trade Agreement, signed in July 2025, grants India duty-free access to most UK markets and improves mobility provisions for Indian professionals and workers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>India\u2013EFTA Agreement Comes into Force<\/b><span style=\"font-weight: 400;\">: The Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association\u2014covering Switzerland, Norway, Iceland and Liechtenstein\u2014entered into force on October 1, 2025.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Beyond trade concessions, EFTA countries committed $100 billion in investments over 15 years, a target officials believe may be met earlier.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>India\u2013Oman CEPA<\/b><span style=\"font-weight: 400;\">: In December, India signed a Comprehensive Economic Partnership Agreement (CEPA) with Oman, further expanding India\u2019s footprint in West Asia.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>India\u2013New Zealand FTA<\/b><span style=\"font-weight: 400;\">: India and New Zealand concluded negotiations on a free trade agreement, under which 100% of Indian exports will receive duty-free access, alongside a $20 billion investment commitment over 15 years from New Zealand.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>India\u2013EU Talks Near Finish Line<\/b><span style=\"font-weight: 400;\">: According to Piyush Goyal, negotiations with the European Union are in their final stages, though it remains uncertain whether a deal will be concluded before the end of 2025.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Overall, 2025 underscored India\u2019s push to diversify trade partners, secure market access, and attract long-term investment through ambitious trade agreements.<\/span><\/li>\n<\/ul>\n<h2><b>U.S. Trade Tensions Undermined India\u2019s Economic Momentum in 2025<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The biggest setback for India\u2019s economy in 2025 came from trade frictions with the United States.<\/span><\/li>\n<\/ul>\n<h3><b>Tariff Shock After Early Optimism<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">After a positive start in February, when India and the U.S. announced plans for a bilateral trade agreement, President Donald Trump declared \u201cLiberation Day\u201d reciprocal tariffs in April.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India initially faced a 26% tariff, later paused for 90 days to allow negotiations.<\/span><\/li>\n<\/ul>\n<h3><b>Breakdown of Trade Talks<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Negotiations stalled over key issues, especially U.S. demands for market access in India for agricultural and dairy products.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As no agreement was reached, the U.S. imposed 25% tariffs on India on July 31, followed by an additional 25% penalty tariff a week later for India\u2019s imports of Russian oil, taking the total to 50%.<\/span><\/li>\n<\/ul>\n<h3><b>Impact on Indian Exports<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The steep tariffs severely hurt labour-intensive sectors such as textiles, apparel, leather, and engineering goods, where the U.S. is a major export destination.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While New Delhi announced an Export Promotion Mission to provide cheaper credit and help exporters tackle non-tariff barriers, details of the support measures have not yet been released.<\/span><\/li>\n<\/ul>\n<h2><b>Outlook for the Indian Economy: Cautious Growth with Data Reforms Ahead<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The year ahead is expected to be a mixed phase for India\u2019s economy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">On the downside, the Reserve Bank of India has projected 7.3% GDP growth for 2025\u201326, implying a notable <\/span><b>slowdown in the second half<\/b><span style=\"font-weight: 400;\"> of the year after strong growth averaging 8% in the first half.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In addition, <\/span><b>global trade tensions<\/b><span style=\"font-weight: 400;\"> and <\/span><b>tariff-related uncertainties<\/b><span style=\"font-weight: 400;\"> are likely to persist for several more months, weighing on exports and external demand.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">On the positive side, India is set for a long-awaited <\/span><b>upgrade of key macroeconomic indicators<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The base years and methodologies for GDP, the Index of Industrial Production (IIP), and the Consumer Price Index (CPI) will be revised.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">These updates are expected to provide more accurate, contemporary, and reliable measurements of economic activity, inflation, and industrial performance.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/www.thehindu.com\/business\/Economy\/what-are-the-signals-from-the-indian-economy-explained\/article70443208.ece#:~:text=What%20lies%20ahead%3F-,The%20New%20Year%20is%20going%20to%20be%20a%20mixed%20bag,for%20a%20few%20more%20months.\" target=\"_blank\" rel=\"nofollow noopener\">TH<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>India\u2019s 2025 economic signals show mixed trends\u2014policy reforms, major trade deals, US tariff shocks, and a cautious growth outlook. Explained with key insights.<\/p>\n","protected":false},"author":18,"featured_media":80176,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[4460,60,22,59],"class_list":{"0":"post-80038","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-india-economic-signals-2025","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/80038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=80038"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/80038\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/80176"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=80038"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=80038"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=80038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}