India's economic landscape continues to show resilience and dynamism, marked by optimistic growth forecasts, significant tax overhauls, and strategic policy initiatives. Rating agency S&P Global has reaffirmed its projection for India’s Gross Domestic Product (GDP) growth at 6.5% for fiscal 2025-26, highlighting the nation's ability to remain the fastest-growing major economy amidst global challenges. This robust outlook is attributed to ongoing economic reforms, substantial infrastructure development, and process improvements that have strengthened India's competitive edge.
Transformative GST Reforms on the Horizon
A major development in the Indian economy is the impending implementation of "GST 2.0" reforms, effective September 22, 2025. These comprehensive changes aim to simplify the Goods and Services Tax (GST) structure, reducing it to two primary slabs: 5% and 18%. Essential items will be exempt from tax, while select luxury goods will face a 40% rate. Union Finance Minister Nirmala Sitharaman stated that these reforms are expected to inject ₹2 lakh crore into the economy, increasing disposable income, boosting consumption, and benefiting the middle class, farmers, and Micro, Small, and Medium Enterprises (MSMEs). Notably, GST rates on textile goods, small cars, and various daily essentials are being reduced, making them more affordable and stimulating demand and exports.
Positive Outlook for Exports and Stock Markets
Union Commerce Minister Piyush Goyal expressed confidence that India's exports would grow by approximately 6% this year, despite global headwinds, including tariffs imposed by the US. The government is actively pursuing Free Trade Agreements (FTAs) with several countries to further bolster trade.
The Indian stock market is anticipated to open on a positive note on September 18, 2025, following the US Federal Reserve's decision to cut interest rates by 25 basis points. Both the Sensex and Nifty 50 closed higher on September 17, indicating sustained investor confidence.
RBI's Regulatory Measures and New Policies
The Reserve Bank of India (RBI) has been active on the regulatory front, issuing final guidelines for payment aggregators. These regulations, effective immediately, classify aggregators into three categories (physical, cross-border, and online) and impose stringent capital requirements for non-bank entities. Additionally, the RBI introduced new rules for co-lending arrangements, effective January 1, 2026, to ensure greater clarity, fairness, and safety for both borrowers and lenders. In its August 2025 Monetary Policy Committee (MPC) meeting, the RBI maintained the repo rate at 5.50%, following a 50 basis point cut in June 2025.
Strategic Initiatives for Sustainable Growth
In a move towards sustainable energy, India launched its first national policy on geothermal energy on September 15, 2025. This policy aims to boost clean power generation, repurpose old oil and gas wells, and attract both domestic and international investment through various incentives. Furthermore, the Indian government is preparing to roll out a comprehensive, integrated electronic database of land records. This initiative is expected to streamline land markets, reduce disputes, and attract further investment, aligning with broader economic reforms.