In a notable economic development, S&P Global has upgraded India's long-term sovereign credit ratings from 'BBB-' to 'BBB' with a stable outlook, acknowledging the nation's economic resilience and ongoing fiscal consolidation efforts. This upgrade is seen as a testament to India's commitment to fiscal prudence and is expected to improve India's access to foreign capital and attract more business. However, India's merchandise trade deficit widened to $27.35 billion in July 2025, a sharp increase from $18.78 billion in June.
India's trade relations with the United States are currently under strain, with the US imposing a 50 percent tariff on Indian goods, including an additional 25 percent tariff over India's import of Russian oil. Despite these tensions, the Ministry of External Affairs has expressed confidence in India-US ties, highlighting that the partnership has "weathered several transitions and challenges," and announced the 21st 'Yudh Abhyas' joint military exercise in Alaska.
Meanwhile, India's economic and diplomatic engagement with China is showing signs of warming, with discussions underway to reopen border trade in locally manufactured goods and resume direct passenger flights. Prime Minister Narendra Modi is also scheduled to attend the Shanghai Cooperation Organization (SCO) Summit in Tianjin on August 28, 2025. In another significant diplomatic move, External Affairs Minister S. Jaishankar is set to visit Moscow on August 21 to meet his Russian counterpart, Sergei Lavrov, for discussions on bilateral and defence matters.
Domestically, the Union Cabinet has approved ā¹4,600 crore for four new semiconductor projects in Odisha, Punjab, and Andhra Pradesh under the India Semiconductor Mission (ISM), aiming to strengthen the country's semiconductor manufacturing capabilities. The government also plans to establish two new defence industrial corridors in Maharashtra and Assam to boost self-reliance in defence manufacturing. Furthermore, the Union Health Ministry launched SHRESTH ā the State Health Regulatory Excellence Index, a national initiative to benchmark and strengthen state drug regulatory systems.
In a major legislative update, the New Income Tax Bill 2025 was passed on August 12, 2025, and is set to replace the six-decade-old Income Tax Act 1961, effective April 1, 2026. This bill aims to simplify tax laws and promote digitization. The government has also launched the PM-PRANAM scheme, which incentivizes states to adopt balanced use of chemical fertilizers by granting 50% of the saved fertilizer subsidy. Separately, the Comptroller and Auditor General (CAG) reported that the Centre failed to transfer ā¹3.69 lakh crore worth of cess collections to the relevant funds.
Other notable news includes UPI transactions in India soaring to a historic 1,946.79 crore in July 2025. India has also achieved a 100 GW Solar PV Manufacturing Milestone under the Approved List of Models and Manufacturers (ALMM) scheme.