The resilience of India’s external sector has been a key factor in maintaining a stable macroeconomic environment amid a global trade landscape marked by tariff adjustments and rising uncertainty, the Finance Ministry said in its Monthly Economic Review. The report stated that India has introduced bold reforms to mitigate the impact of global shocks.
Persistent challenges such as tariff-related uncertainties, geopolitical tensions, and supply chain disruptions have affected global trade. While some resilience has been observed, growth remains subdued. According to WTO forecasts, world merchandise trade is expected to grow by 0.9 per cent in 2025, well below the earlier projection of 2.7 per cent before tariff increases. The review noted that the full impact of these tariffs is still unfolding and may dampen trade through late 2025 and 2026.
“Given the importance of the US market for India’s goods exports and the tariff rates applicable to a large share of India’s merchandise exports to the United States, India could face the impact of these measures unless the uncertainty is resolved with lower duties,” the review stated.
To strengthen growth, Prime Minister Narendra Modi has announced several initiatives focusing on structural reforms. A Task Force for Next-Generation Reforms has been set up to simplify regulations, reduce compliance costs, and support start-ups, MSMEs, and entrepreneurs.
The review also highlighted the planned rollout of next-generation GST reforms, aimed at lowering the tax burden on essential items, providing relief to households, and boosting consumption. Alongside these, an expected rating upgrade is likely to ease borrowing costs, attract foreign capital, expand access to global markets, increase disposable income, reduce inflationary pressures, and lower input costs for businesses.
State-level deregulation measures, such as lifting restrictions on women working night shifts and improving ease of doing business, are also expected to raise productivity and stimulate growth.
The government’s focus on employment generation through schemes like the PM Viksit Bharat Rozgar Yojana, along with reforms in education and skill development, aims to prepare the workforce for emerging global demands, the Finance Ministry added.
-IANS