India's economic landscape is currently shaped by a combination of external pressures and robust domestic policies aimed at fostering growth and self-reliance.
Impact of US Tariffs and India's Export Strategy
The United States has doubled tariffs on Indian exports to 50%, a move that could potentially reduce India's FY26 GDP by 0.5% to 0.6%, particularly affecting labor-intensive sectors such as textiles and jewelry. In response, India is proactively seeking to diversify its export markets. Union Minister Giriraj Singh announced plans to target 40 countries to boost apparel exports, aiming for a significant share of the $600 billion global market by leveraging existing free trade agreements (FTAs). Despite these challenges, the Minister assured that there would be no job losses in the textile sector, which is India's second-largest employer after agriculture. Union Minister of Commerce and Industry, Mr. Piyush Goyal, emphasized the nation's unity in overcoming global challenges and urged businesses to focus on 'Swadeshi' (indigenous) products to strengthen growth and financial security, thereby reducing import dependence.
Government Reforms and Economic Boost
The Indian government has implemented significant tax reforms to stimulate the economy. A recent Goods and Services Tax (GST) cut on as many as 375 everyday items is expected to spur demand and could boost GDP by 0.2% to 0.3%. Additionally, the GST on a broad range of handicraft items has been reduced from 12% to 5%, a measure designed to make Indian handicrafts more affordable, boost exports, and support traditional artisans. These reforms align with the broader 'Atmanirbhar Bharat' (Self-Reliant India) initiative. However, Finance Minister Nirmala Sitharaman has questioned why Corporate India has not increased investments despite receiving corporate tax cuts and benefiting from GST reforms.
Economic Growth and Market Resilience
Despite the global trade uncertainties, Chief Economic Adviser (CEA) V. Anantha Nageswaran maintained India's FY26 GDP growth forecast at 6.3-6.8%, citing strong expansion in the April-June quarter, where GDP grew by 7.8%. The BSE CEO, Sundararaman Ramamurthy, expressed optimism about India's strong growth trajectory, which he attributes to robust domestic investor participation, rising consumption, and effective policy reforms. The equity markets have remained resilient even with foreign portfolio investor (FPI) outflows, largely due to strong support from domestic institutional and retail investors. India has also seen significant activity in its primary markets, raising approximately $10 billion through IPOs in the last eight months, with an additional $15 billion approved and $20 billion in the pipeline. The SME listing segment is also performing strongly.
Changing Consumer Landscape
A recent report indicates a substantial rise in Indian household average quarterly expenses, which have increased by over 33% in the last three years to Rs 56,000 in 2025. While urban families continue to have the highest spending, rural households have also shown a sharp rebound in expenses. The report highlighted that consumers are prioritizing essential items and savings, with only a small percentage (7%) allocating funds towards luxury products.
Key Industry Developments
In the automotive sector, Mercedes-Benz has affirmed its commitment to India, considering it a "priority market," and plans to continue investing in and bolstering local production despite ongoing EU-India Free Trade Agreement (FTA) negotiations. In the technology sector, Oracle has cut over 100 jobs in India as part of a workforce reshaped by artificial intelligence. Meanwhile, Hyderabad is positioning itself to become a global technology hub.